Producers survey finds near-flat revenue in 2000 as market slowdown takes toll

The third Delvinia Inc. Interactive Media Producers Survey (IMPS) has confirmed the new media industry’s perceptions that the year 2000 saw a serious slide in the latter half, but estimated gross revenues for the sector remained nearly unchanged over 1999. The interactive media sector added $1.8 billion to its top line in 2000, an increase of almost three per cent over the previous year. But the report’s authors say the figure masks a serious turn in the sector’s fortunes over the latter half of 2000 in the wake of the meltdown in public markets in March/April of that year. While the extent of that slowdown won’t be known until Delvinia conducts a fourth survey – preparations for which will get underway this summer – Delvinia’s chief knowledge officer Sam Punnett characterizes the final months as a "disaster", though the shakeout should also be considered a positive step in the maturation of the market. "There was a rationalization of services that just had to occur. There were a whole bunch of people in the business that had no business being there," Punnett says. Factors in the slowdown include the well-publicized downturn in public markets, but Punnett says there is also likely the element of changing perceptions of the Internet. Companies no longer have a build-it-and-they-will-come mentality about the web, and the downturn reflects a new commitment to return on investments and a new desire to apply metrics to areas such as web advertising. In other survey findings, the independent interactive media industry employs slightly over 30,000 people in Canada – not including in-house staff at large enterprises engaged in such activities internally. Punnett says the full-time staff count experienced only minor shrinkage. Nearly 60 per cent more companies achieved $100,000 in revenue per employee, a key benchmark to measure the maturity of the industry. The number of companies engaged in export fell slightly from 1999 to 60 per cent of the companies surveyed. Just over half of all companies are engaged in some form of partnership with another corporate entity, half of which are international alliances intended to win access to broader markets. Over 60 per cent of companies served the Canadian market in both English and French, and over one-quarter serve even more language markets. Finally, and not unexpectedly, Delvinia found that the overall state of the economy was identified as the main barrier facing interactive firms. Canadian Heritage, a key sponsor of the survey, will likely be interested in the finding that the number of companies engaged in the creation of original intellectual property fell from 21 per cent in 1999 to 13 per cent in 2000. Punnett questions whether the fall is as dramatic as the numbers indicate, though, since the survey question may have encapsulated computer code – regarded as IP by programmers, but not commonly thought of by government and other bodies as the goal of funding policies. The survey captures data from 277 companies that consented out of 400 contacted. Answers were gathered over the course of approximately a month, mainly in September 2001. As preparations get underway for a fourth survey, Delvinia president Adam Froman expresses disappointment that Statistics Canada, Industry Canada, and Human Resources Development Canada still haven’t provided financial support for the survey, which represents the only attempt to quantify the industry in this country. StatsCan continues to hold off gathering statistics on the industry until it can be funded as a research avenue by sponsors. But Froman says government departments such as Canadian Heritage are realizing the value of the now-significant trend data gathered by Delvinia. He says Heritage is using the data to validate its recent measures in support of the industry, and HRDC and Industry Canada should be taking a greater interest. "In the absence of a unified voice representing the industry in Canada and pushing the agenda championing this, it’s rather odd from the government point of view that you have this private company taking the initiative to study the industry," Froman says.

Producers survey finds near-flat revenue in 2000 as market slowdown takes toll

News | 05/16/2002 4:00 am EDT

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