On the eve of TennoCon 2024, The Lodgge chats with Michael Schmalz, former president of London-based Digital Extremes, to reflect on his time in the industry, the evolution of game development in Ontario, and how his work helped move the Ontario video games and XR sector forward.

Michael Schmalz’s journey with Digital Extremes reflects the evolution of Ontario’s video game industry from humble beginnings to the thriving industry we know today. Founded in 1993 by Michael’s brother, James Schmalz, Digital Extremes quickly made a name for itself with titles such as Epic Pinball as well as Unreal and Unreal Tournament, which it co-developed with North Carolina-based Epic Games, the creators of Fortnite.

Like any young company, Digital Extremes faced numerous challenges as it grew – from talent acquisition to securing government support and navigating the rapidly changing industry landscape – but the challenges faced by this small game studio would help lay the groundwork for what the Ontario video games and XR industry would eventually become.

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Early Days & Growth

Digital Extremes initially set up shop in a small office near the University of Waterloo campus in Waterloo, Ontario, near the epicenter of what was quickly becoming one of the largest technology hubs in North America thanks to companies like Research in Motion. Reflecting on why the company ended up in southwest Ontario, Schmalz recalls that it was a no-brainer: “There wasn’t a lot going on in Toronto at all at the time. It didn’t even really warrant a lot of discussion.”

Eventually, Digital Extremes moved to London, Ontario – where it remains to this day – a move that was driven less by practical considerations and more because it was what everyone in the fledgling company could agree on. “The lease on our old office came up and it just happened that there was a cool office in London on the north edge of town that everyone could agree upon,” Schmalz said with a laugh.

Digital Extremes would also open up a Toronto office, but despite their growth and growing geographic footprint, finding skilled talent remained a challenge. “The co-op education in video games just wasn’t quite there,” Schmalz recalls, highlighting the industry’s nascent state at the time. However, Ontario’s educational institutions gradually adapted, producing graduates ready to dive into game development.

“It’s so much better now – they know, they get it,” he said, ”it’s really grown up and I think that’s a testimony to the tax credits and the support that we’ve had.”

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Challenges & Adaptation

Digital Extremes faced significant hurdles as the games industry evolved. Schmalz recalls that the transition to larger teams for then-next-gen Xbox 360 and PlayStation 3 consoles was particularly challenging for the company:

“The sizes of teams went, you know, past 20 to up to a hundred very, very, very quickly… finding talent and managing those teams became a completely different challenge.”

The company eventually consolidated its operations, moving from Toronto back to London, where they scaled up their team for projects like 2008’s Dark Sector.

This era also saw the company diversify by supporting other studios with major projects, such as developing the multiplayer mode for 2K Games’ BioShock 2, and creating new titles based on existing IPs like The Darkness II (2012) and Star Trek (2013).

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Warframe & Building a Global Community

In 2013, Digital Extremes achieved significant success with the release of Warframe, an online free-to-play action RPG game that – after a modest launch – grew to become a major hit with a massive, passionate community around the world.

“The turning point was when we started to add in the narrative aspects and explain to players what they were trying to do and what this universe that they were in was,” Schmalz said, “our big updates with the story quests really started to take things to the next level.”

This focus on storytelling and community engagement proved crucial for the company, with events like the TennoCon conference – which attracted over 2,000 Warframe fans from around the world to London last summer – fostering a strong bond between the developer and fans. 

“You go there and everyone wants your autograph and they want to talk to you about what you’ve done on this game,” Schmalz said, “All of a sudden you really feel like you’ve affected a lot of people – there’s no feeling like that in the world.”

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Thinking Back & Looking Forward

In December 2023, Schmalz was recognized by the TechAlliance of Southwestern Ontario and given their inaugural Limitless 2024 Visionary Award for “exemplary achievements, unwavering dedication and pioneering innovations” in the tech industry.

“I was just touched by it… I was a little speechless,” Schmalz recalls, “Outside of my work inside Digital Extremes, I felt like the business environment was so difficult, not only in Canada or in Ontario, that I did spend a lot of time both volunteering, working with Ontario Creates and what it was called before that, OMDC, to help with the tax credits. I advocated with the local tech ecosystem with Tech Alliance. I helped with other video game companies kind of providing advice, and I was always glad to see their success.”

Reflecting on the award and his time in the industry, Schmalz expresses pride in how Digital Extremes’ work helped bolster the broader Ontario video games and XR industry. 

“I’m super proud of everything that Digital Extremes has accomplished, but I’m also proud of the Ontario ecosystem,” he said. “I’m glad that I was a part of that, advocating for it, because I think that we’ve cleared the path for future game developers.”

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As Ontario continues to attract world-class talent and foster innovation in the games and XR space, Schmalz’s journey with Digital Extremes serves as a testament to the power of perseverance, community, and visionary leadership in the video game industry.