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Can Puerto Rico be the Silicon Valley of the Caribbean?

Development scene could endure economic crisis well with a growing pool of local talent and tax credits up to 90%

In recent years, Puerto Rico has been making a big push to establish itself as a go-to filming destination for Hollywood. The commonwealth's tropical setting has made it an effective stand-in for exotic locales in films like Fast Five, Captain America: Civil War, and Pirates of the Caribbean: On Stranger Tides, while its status as a US territory makes it easier for American production companies who would prefer not to deal with foreign exchange rates or unfamiliar labor laws.

As of last year, it also has one of the most generous tax incentive programs for movies in the world, offering up to 90 percent in tax production credits on expenditures made to Puerto Rico residents or companies. And while the legislation was written with encouraging film development in mind, Puerto Rico is also using it to encourage growth of the local game development scene, which by the sounds of it is still gestational.

One of the larger operations in Puerto Rico right now is Space Rhino Games, developer of Breach TD and Breach Arena. Studio founder Michael Hoyos (pictured) recently told GamesIndustry.biz that the growth in the scene has been noticeable even since he launched his shop in 2014.

"From then 'til now, it's gotten a lot better," Hoyos said. "It used to be solely revolving around game jams and hobbyist game developers. It's started to take a little bit more form."

Heri Martinez de Dios, CEO and founder of animation and gaming studio Gladius, agreed.

"If anybody would have taken the tech industry in Puerto Rico seriously... We've been exporting the top talent on the island for... forget the past decade, for the past 40 or 50 years"

Michael Hoyos

"It has huge potential," Martinez de Dios said. "From the get go, when we did the first moves, meetings, developments, academic programs, and created the first cluster, we knew it was just a matter of time for the industry to start growing here in Puerto Rico. And it is in that process, step by step, little by little, but it is growing."

Martinez de Dios is involved with that process not just as a developer, but also as an educator. He has been working with Guayanabo-based Atlantic University College for nearly 30 years, and serves as the school's dean of technology and marketing.

Both Hoyos and Martinez de Dios said one of the challenges facing the development scene in Puerto Rico at the moment involves finding the right people to make games.

"There's a lot of talent," Hoyos said. "The issue is expertise... Tech talent has never been the bigger issue, but actual people who have been dedicated to development of video games is a whole different story. There's a learning curve and a training factor to this whole thing."

Hoyos noted that NASA has recruited plenty of engineers from the University of Puerto Rico at Mayagüez, and there's no shortage of kids who would love to make games, but finding the overlap of people with technical knowledge as well as game development and design interest has been difficult. As for artists, the local market for them is considerably more mature. Hoyos said Atlantic in particular has produced some great artistic talent, and he expects the entire educational pipeline to improve in the coming years.

That said, there are two big concerns with talent at the moment. The first, Puerto Rico's tendency to export its best and brightest, is clearly a source of frustration for Hoyos.

"[Investors are] thinking, 'Yeah, it's Puerto Rico. There could be a coup d'état and the whole country goes up in flames and we lose the investment.' And it's just not true"

Michael Hoyos

"If anybody would have taken the tech industry in Puerto Rico seriously," Hoyos said, letting the half-finished sentence hang for a few moments. "We've been exporting the top talent on the island for... forget the past decade, for the past 40 or 50 years. That has always been the case. It could have been that 10 years ago, sure, you could have set up a top-notch studio to go after the console [market]. It could have been the case. The talent is there. That's never been the question. It's just training the guys in the specifics of what you need them to do. And sadly, it's gotten to a point where an engineering student looking to graduate wants to get a job at Google, wants to get a job at Facebook, or just a really nice tech company that pays better than what you can get locally."

Despite that, Hoyos has managed to recruit Space Rhino's team of 18 developers entirely locally. That's fortunate, because the other big concern is the difficulty of importing talent to the island.

"It's not like Cali, not like Palo Alto, these places that you know if you go there and draw a circle around you, you'll be able to run into 10 other companies that do something similar to you. That kind of ecosystem doesn't exist here."

The low cost of living and tropical setting could certainly prove enticing to mainlanders, but it doesn't help that most of the mainstream media headlines about Puerto Rico lately have been talking about its ongoing economic crisis, and the rest have been concerned with the Zika virus.

"It impacts everything and every industry; yes, it is very tough," Martinez de Dios acknowledged. "We have faith that a solution will come soon, but in the meantime, it has no impact on the motivation, passion and desire that we have for innovating and creating beautiful things, or doing what we can to develop new economic opportunities. These are new and powerful industries, and we know that we can do our part and also hope for the best."

Hoyos acknowledged the economy is in a bind, but said it hasn't really impacted him or the local tech sector in general because nobody is relying solely on the local population to make their games or apps a success. What has had an impact is the negative perception the outside world has of Puerto Rico thanks to those headlines.

"The issue I've encountered is people create a direct relationship between the country's economic well-being and what that means for the health of a company," Hoyos said. "I think what we need to do is take a look at the actual sectors they're looking to invest in and raise the right questions. Is it actually being impacted by the situation? And right now, the answer is no, to be honest. But when you're able to get a meeting with [foreign investors], they're coming into the meeting and thinking, 'Yeah, it's Puerto Rico. There could be a coup d'état and the whole country goes up in flames and we lose the investment.' And it's just not true."

"...the resources are ready and they will keep getting better per year... We can be the Silicon Valley of the Caribbean"

Martinez de Dios

And that gets to what Hoyos sees as the single biggest challenge facing Puerto Rico: access to capital.

"Right now if you want to develop games down here and you're an indie, good luck," Hoyos said. "You're going to have to bootstrap it, because the local investors aren't investing in this kind of project yet. And I think it's just because they don't understand the industry. For us, our whole pitch [with Breach Arena] is around the idea of setting up an eSport that has been designed for mobile, and it helps that the eSports industry itself is making a lot of noise right now. So I'll be able to entice somebody, but even so, getting somebody to pull the trigger down here has been a challenge."

Martinez de Dios agreed, saying, "We need more investors and distributors to take notice of the amazing things that we are doing in this paradise called Puerto Rico and invest or co-produce with us or buy our products. The capital is the gasoline needed to raise the bar and develop even greater or more complex productions and for their distribution, but the set and the resources are ready and they will keep getting better per year... We can be the Silicon Valley of the Caribbean."

For Hoyos, the Puerto Rico game development scene is on the precipice of success; it just needs a push to get the snowball rolling. Of course, having an Ubisoft, a Blizzard, or a Riot wooed by tax incentives to set up a studio could also do wonders to create jobs and retain local talent. And while Hoyos wouldn't dismiss that out of hand, the preference is clearly to see the scene create its own relevance rather than import someone else's.

"Puerto Rico's at a place where we really want to see our own stuff succeed," Hoyos said. "It would be great if [prospective developers] could really rally around a successful local-brewed project that has been able to scale beyond our tiny little island. And it can be done. We've seen it, just look at Rovio... I think once they start seeing successful projects, companies and businesses going into the space, then they'll say, 'Yeah, I can stay here, I can grow in that company, and maybe someday I can even start my own.'"

Latest comments (2)

Roberto Dillon Associate Professor, James Cook University10 months ago
Interesting read. If we look at Singapore to see how a tiny island can achieve all this in a few years, the first step is definitely to set up a proper educational structure where kids are not only supported but actually encouraged to study these subjects across well articulated diploma and degree programs. That's the main path to grow the local talent pool as it's extremely difficult to rely on hobbyists and passion alone. Naturally, this implies a strong support from the government as well, first in supporting the local Institutions and then by providing seed funding opportunities to help graduates in setting up their own startups..
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Gonzalo Sánchez Professor Game Design & Digital Animation, SAE Institute Mexico10 months ago
Did you see Last Week Tonight with John Oliver: Puerto Rico?... it's an interesting analysis about the situation in the island.
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