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When Behaviour Interactive released Naughty Bear, they discovered that players loved being the bad guy.

It took a teddy bear on a rampage to unleash one of the greatest recent successes in Canadian gaming.

When the Montreal video-game studio now known as Behaviour Interactive Inc. released Naughty Bear for Xbox and PlayStation consoles in 2010, they discovered that players loved being the bad guy – in this case, a maligned teddy bear seeking retribution from his furry brethren.

Behaviour had developed original games before, but it was more broadly known as a work-for-hire studio. But the audience response to Naughty Bear presented a hypothesis that Behaviour wanted to keep testing. So a team built a prototype, and then a game, atop it: Dead by Daylight, which was first released in 2016. In the horror film-inspired game, one player controls a villain – such as Ghostface from the Scream franchise or Pinhead from Hellraiser – as other players scramble to survive and escape the villain’s grasp.

Their hypothesis was not just proven correct – it effectively transformed the studio.

Behaviour says its revenue reached $225-million last year, driven by the success of Dead by Daylight, which has been played by more than 50 million people. Its work force has more than tripled since the game’s launch to nearly 1,000 staff. It just secured minority funding from Haveli Investments, the Austin, Tex.-based venture capital firm led by former Vista Equity Partners co-founder Brian Sheth.

It is now one of the biggest independent gaming studios in the country – going so far as to bill itself as the biggest. And on Monday, Behaviour will unveil a new downtown Toronto office, where it plans to hire at least 50 people to start as it continues its expansion.

All this expansion would have been unfathomable a little more than a decade ago, when the company had to turn to layoffs as the Great Recession and changing consumer habits left Behaviour’s future uncertain. It wasn’t just Dead by Daylight’s gameplay that shifted the tides: It was Behaviour’s strategy. It took the reins as the game’s publisher soon after the game was first released, giving it greater control over its fate and user base – an opportunity not before seen in the company’s nearly three decades of operations.

“We have a direct connection with the players, which we never had,” said Rémi Racine, Behaviour’s chief executive officer, in an interview last week.

Now the company is developing new concepts based on Dead by Daylight and two entirely new original games scheduled for release next year. The pipeline will be critical to maintaining Behaviour’s momentum as it competes with the giants of gaming for attention and talent, particularly in Montreal, where Ubisoft Entertainment SA and Electronic Arts Inc. have massive shops – but also as it expands to Toronto. In 2021, the Entertainment Software Association of Canada found that 83 per cent of Canada’s 32,300 video-game workers worked for non-Canadian companies.

Behaviour was founded in Quebec City in 1992 as Megatoon, though its current form did not emerge until 1999 – after it was acquired, and merged with another gaming company co-founded by Mr. Racine, who then spun the company out with other investors. By then, the studio had had its first major success: 1998′s Jersey Devil, in which the titular character roams a 3-D world, first available for the PlayStation and later personal computers. It sold about 450,000 units.

Jersey Devil soon became the template for another game set in the Looney Tunes universe – Bugs Bunny: Lost in Time, which Mr. Racine says sold 1.2 million units. Though it made less money than Jersey Devil, it helped to open up a lucrative business line for the studio: work-for-hire jobs for other companies, working on games for franchises such as Scooby Doo! and Kim Possible. Between 1999 and 2008, the company grew to 450 staff. Original Behaviour titles such as Scaler and Wet, meanwhile, got moderate reviews and sales.

But as the Great Recession hit and social media blew up, the company, renamed Behaviour in 2010, grappled with a shrinking market for children’s video games. Its staff soon fell to 275.

Then came Naughty Bear, whose more than 800,000 console-unit sales and mobile-gaming success propelled the Behaviour team to consider honing the thrill-of-the-bad-guy thesis. In that game, because of the absurdity of a murderous plush bear, “you laugh because you’re scared,” Mr. Racine said. But what if the company doubled down on the scariness?

They workshopped a game where players could inhabit both survivors and a killer – first as a board game, and then as a bare-bones split-screen game. “We actually cut a piece of cardboard and bisected the screen” so that the killer and survivor couldn’t see each other, said Stephen Mulrooney, a former Ubisoft programmer who is now Behaviour’s chief technology officer, overseeing its original games.

The game was released in 2016, allowing four players to evade a fifth – the killer – with each play. With new downloadable content available every three months, including familiar horror-franchise characters, users gradually began falling in love with it. “We knew we had something,” Mr. Racine said.

The 25 staff dedicated to Dead by Daylight tripled within six months. Its publishing company, the Swedish firm Starbreeze Studios, didn’t want to invest any more – so Behaviour bought it out, became its publisher, and oversaw its growth. Now it’s Behaviour’s biggest success: By controlling Dead by Daylight as publisher, they could ascertain a greater understanding of its user base, like a platform would, and closely monitor player feedback. “We’re trying to satisfy our players with what they tell us,” Mr. Racine said.

Now publishing accounts for 75 per cent of Behaviour’s business, and it employs about 940 people – a significant turnaround since the dark days of the recession.

But it still faces industry headwinds. “There is a tendency right now in the gaming industry toward mergers and acquisitions and concentration of ownership,” said Felan Parker, a culture-industry professor specializing in gaming at the University of Toronto.

Dr. Parker said the industry’s focus on ever-updating games such as Dead by Daylight can consume much of the gaming industry’s oxygen, potentially hindering the audience for games by much smaller independent studios. But he acknowledged that as an independent studio itself, Behaviour’s success is unique.

“Everyone is trying to make the forever game,” he said. “It’s a stabilizing thing. … It’s interesting to see a medium fish kind of swimming alongside the big fish in this context, as opposed to having already been absorbed into some larger thing.”

At the age of 30, Behaviour sees itself as learning a whole new way to swim. “We were never a publisher, and now we are,” Mr. Racine said. “I wanted to be a publisher many, many years ago. Publishers were always between us and the players.”

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