Digital interactive media sector larger than broadcast, says new MMSG survey

The multimedia industry has grown as large as the broadcast sector, according to a new report that digital media champions hope will convince government to provide better funding and tax incentives to their industry. The MultiMediator Strategy Group’s (MMSG) Canadian Interactive Media Producer’s Survey 2000, presented at the Canadian Institute’s New Media Business Conference in Toronto last week, shows that the sector is growing and maturing, even if it isn’t thriving just yet. While the majority of firms surveyed by MMSG are profitable, old bugbears such as retention of intellectual property and access to funding for the creation of original content continue to plague the industry. Still, companies are engaged in fewer activities than ever, indicating a process of streamlining of business plans that augers well for the sector. Among its most interesting findings is the new claim that the interactive media sector now beats out broadcasting for the number of people working in the industry. Using extrapolated data from the survey of 289 participating companies from the MMSG directory, research staff found that the sector now employs around 50,000 people. The broadcasting sector is closing in on 41,000 employees. MMSG defines an interactive media company as one which derives its primary revenue from digital media. The top three activities for those companies, according to the report, are web site development, design/graphics, and strategic consulting. Internet development work constituted over half of the respondents’ primary activity. That represents a 1999 total of $3.5 billion in revenue. Of the 191 companies that reported their revenues to MMSG, 90 per cent were profitable. Most of the 10 per cent of companies that reported losses are located in Ontario. The study also found that the industry is consolidating, and that some of the stability in revenues and profits may be due to streamlining in the sector. MMSG divides the industry into 33 categories of activity, and the number of companies involved in more than 15 of those activities fell by half from 1998 to 1999. Fee-for-service prevalent One result the industry will find discouraging, however, was that nearly three quarters of companies were involved primarily with fee-for-service work, largely for export. As the conference attendees repeatedly heard over the two-day event, you can’t make money at producing original content when you do fee-for-service work. Of those companies which reported creating intellectual property, only one-fifth were successful in retaining copyright over the content. Also dispiriting are new numbers which show only 27 per cent of companies achieved the MMSG productivity benchmark of $100,000 in revenue per employee. One quarter of companies achieved a borderline result on productivity, with the remaining half missing the benchmark target altogether. Of those organizations that did meet the target, nearly half are in Ontario, and nearly half are focused on Internet development. MMSG director of research Amy Sullivan told Canadian NEW MEDIA that the report will provide much-needed ammunition for the industry as it seeks better funding and taxation models. She says the types of recommendations being made by the group to organizations such as the Ontario Ministry of Energy, Science and Technology, the Cultural Human Resources Council of Canada, Human Resources Development Canada, and Canadian Heritage, won’t change dramatically as a result of the new numbers. In its lobbying work, she says MMSG will continue to press for a tax-favourable environment, especially to encourage the creation of more original content. "We have the numbers, now we’ll show you why we need this. That’s particularly around IP. We can really firmly state that IP is struggling." Undisclosed figures in the report indicate that the production of IP occurs more frequently in Quebec and Alberta. Sullivan will only say that the number is "significantly" higher in those areas than in the rest of Canada. In Quebec, Sullivan credits better access to government funding for the higher number, and says companies are more experienced navigating the programs available. "When we talk to these companies, Quebeckers are telling us, ‘yes, we’ve applied for new media development funding, yes, we’ve applied for HR-related funding,’ in greater numbers than companies in any of the other provinces. And, they’re more successful in getting it, as well. They’re more practiced at getting it," she says. "It’s not only the labour tax credits. There’s a lot of artistic credits, and other sources that we just don’t have (in Ontario)."Sullivan also says more work is needed to encourage new media companies to take advantage of export opportunities, and resources such as trade consuls who can help Canadians sell their product abroad. "We have some indication (that)… the young entrepreneurs are not aware of the opportunities that are out there. More senior entrepreneurs – they know how to navigate through the system, and are taking advantage of the opportunities to get into trade shows abroad, get the exposure and penetrate the markets."

Digital interactive media sector larger than broadcast, says new MMSG survey

News | 11/29/2000 5:00 am EST

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us