U.S. game maker THQ is to open a Montreal development studio and create up to 400 local jobs over five years.

Los Angeles-based THQ, best known for its UFC and World Wrestling Entertainment video game franchises, said it struck a deal with the Quebec provincial government to take advantage of local subsidies, tax breaks and talent.

‘Government support, in the form of reimbursable tax credits and other incentives, enabled Montreal to stand out as the best combination of creative talent and favorable economics of the cities we evaluated for our new studio,’ said Steve DeCosta, THQ senior vice-president of core games, operations and finance.

Dave Gatchel, currently general manager of THQ’s Paradigm Entertainment studio, will head up THQ Montreal, which is expected to specialize in 3D animation and cinematic sequences for games developed locally or in THQ’s global studio network, which includes a presence in Europe and Asia/Pacific.

The Montreal studio will also help THQ translate and adapt titles for worldwide distribution.

THQ already runs the Relic Entertainment studio in Vancouver.

The shift in Montreal and its tax credits follows THQ unveiling a company restructuring, including job cuts, to reduce costs as it deals with falling video game sales industry-wide in a challenging economy.

The Canadian soft money for THQ comes from the Quebec Ministry of Economic Development, Innovation and Export Trade, Invest Québec and Montréal International.

The proposed studio will open in the second half of 2010 with an initial 60 employees. The studio will then ramp up to release its first titles after development and production in 2013.

THQ is joining industry rivals Electronic Arts, Eidos, Ubisoft and A2M in opening Canadian development studios with government subsidies.

Besides tapping government subsidies, video game publishers like THQ work with local colleges and training institutions to stay in step with a fast-changing games and technology market.

French game maker Ubisoft, which has a strong presence in Quebec, recently unveiled plans to open a Toronto development studio.