Decision Makers Series: Kenton Low predicts dire future for BC digital media sector unless government and academia intervene

Kenton Low doesn't mince words when it comes to predicting the fate of British Columbia's digital media sector. "It will be gone in 10 years", he told the province's Finance committee this fall. But the president of New Media BC (NMBC) is also optimistic, having scored some initial victories on both the political and academic fronts to ensure no more companies take flight to jurisdictions with cheaper labour and better tax incentives.(Click here for the complete transcript of this Decision Makers interview.)On the positive side, the former Universal Studios executive like to brag that BC is easily one of the top 10 - perhaps even top five - global destinations for new media creation and commercialization. But while BC has been a dominant player in the digital media space, cracks are starting to appear."The industry is still strong here but you can see that it's cracking and we're hemorrhaging. It will be gone in 10 years," Low told the BC government's Finance committee in late September. "EA (Electronic Arts) has already opened up the Montreal studio. Radical (Entertainment) has already downsized 120 employees. Backbone Entertainment closed in the month of August."Big players like Walt Disney, which has an interactive studios unit in Vancouver, are looking at consolidating their quality assurance in one location, says Low. "British Columbia isn't on their list to look at, because unfortunately, the economic incentives just don't come close to what the other jurisdictions are offering," he told the Finance committee."I've talked to all the companies," he added, "and they've come back to me and said: ‘We can't tell when we're going to choose to leave but right now the ground is getting a little bit shaky in British Columbia."No doubt, digital media is a major economic sector - it has the highest concentration of new media companies per capita in Canada, generates $2 billion in revenue from more than 1,100 companies and employs more than 16,000 professionals in gaming, animation, digital effects, marketing, e-learning and Web 2.0 design and development. Low is urging the provincial government and academic institutions to take steps to keep the sector strong."Right now we are in discussions with the BC Government to create a more favourable economic climate that allows our industry to be more competitive," Low said in an interview with Canadian New Media. "We've got ministers and MLA's that clearly are starting to understand this industry and see this as a great industry for the future of this province."In mid-November, the provincial government's Finance committee published its areas of focus for the 2009 budget. "The digital media industry was mentioned as one industry that the government needs to focus on for the future ... I see that as a direct result of the meetings I've been having with all these government officials and leaders to educate government about what our industry is all about and what an engine (it) can be for economic and cultural growth."Specifically, the committee embraced NMBC's recommendation that tax credits are an effective way to finance innovation. Low asked the government to consider labour tax credits (Quebec and Ontario offer credits of 30 per cent plus), and an expansion to the film and television tax credit to include games, "especially in the development of new original IP (intellectual property)... If we could create original content that resides here in British Columbia, that's how we can win the long-term digital media game."Other industry recommendations include changing the visual effects tax credit to include digital animation, audio effects and post-production activities, and introducing a new tax incentive for commercializing IP.Expanding academic digital media programs Producing highly trained graduates is another way NMBC hopes to stem the flow of high paid digital media jobs. In September, Low said BC's post-secondary education had become "less connected with industry".However, following recent talks between NMBC and industry representatives, Low says the British Columbia Institute of Technology (BCIT) has agreed to revise its computer science curriculum to include a specialty in games development. "We want to develop the talent that can land with their feet running in industry. So my hat's off to BCIT for stepping up."Low notes that the province already has a unique educational asset in the Center for Digital Media, which is in its second year of offering an applied masters program in digital media. "I can see the calibre of students that are here from all over the world. They're going to be phenomenal talent that will be scooped up immediately once they've completed the program." Talks are also underway with Simon Fraser University, the University of British Columbia and Emily Carr University, among others, to develop a master's degree in digital media.From ringing cash registers to conducting advocacyAlthough it's not always apparent from his resume, Low is a Canadian, born and raised in Vancouver who later attended graduate school at UCLA. "I started off by getting a very strong foundation in marketing and strategy from the global giant Nestle ... That led me to work for a number of years at the Walt Disney Company."He started off in Disney Interactive and then secured "the dream job of a lifetime" when he was appointed as an "Imagineer" and charged with helping to determine the location of the next Disney theme park (Hong Kong, he notes, was the ultimate destination).After his work as an Imagineer, Low moved to Disney's Internet group, where he helped launch the Go Network, "which I think goes down as one of the great failures in Internet history." Launched in 1999, Go.com was Disney's entry into the portal world and was designed to challenge the dominance of AOL and Yahoo.After his Disney stint, he was recruited to become corporate chief marketing officer for all of Universal Studios, where he eventually became president of Universal Studios' online division. "Then Vivendi bought Universal Studios, so then I moved up to working as vice president of marketing for the corporate parent and leveraging digital technology for corporate marketing purposes."After a short stop in San Francisco's Bay Area, he landed back in BC and went to work for the BC Lottery Corporation, where he did corporate marketing and customer service training in its "location-based" assets, such as bingo facilities and casinos.After BC Lottery, Low was recruited to join Robeez Footwear Ltd., where he helped negotiate the company's sale to US footwear company Stride Rite. Throughout his time in Vancouver, he also taught a graduate course at UBC's Sauder School of Business.For someone who's entire adult life has been geared towards making "cash registers ring", the transition to the non-profit world wasn't that big of a departure. Running a non-profit association, he says, is not dissimilar from running a corporation."You still have to do the same things as they relate to various departments, like human resources, marketing, finance, all those things. Probably what you do is you watch the bottom line with a much finer eye because every penny counts at a non-profit organization." What the future holds for BC New MediaWhile global brands like Electronic Arts suck up most of the headlines, Low says a host of plucky smaller companies - including Deep Fried Entertainment, Hothead Games, Rainmaker Entertainment, Next Level Games and Bardel Entertainment - are quietly generating original information technology, applications and content.These are just some of the companies across the province that are no longer working simply, "as a service factory for big American companies." Although many have the potential to be major players, he admits that investment capital is sometimes in short supply. "One of the biggest challenges for companies in our industry is having capital and having investment ... that ultimately allows them to continue to grow."Low believes the current global financial climate will lead to "a little bit of retrenching, or hunkering down" in the next calendar year. But he expects the province's new media industry to grow quickly once the recessionary period ends. Part of this growth will be attributed to a willingness among new media companies to stay ahead of the curve by embracing the "seamless integration of content" across different communications platforms."What I mean is you don't just go see a movie anymore. You see the movie, you want to play the game, you want to talk about it in social networks around the Internet, you want to get content on your mobile devices ... I believe we'll see a lot more collaboration going on between companies. And you'll see more content in a variety of platforms."While BC's new media companies move towards this new business model, Low will focus on ensuring that the provincial market is as competitive as possible and that it's positioned to attract investment away from both emerging and established locales."Over time we have a good critical mass here. But if you look over your shoulder you see Montreal, Atlanta, Singapore, Dublin. These are other centres of the world that that are building up their digital media capabilities. The rest of the world is seeing what BC has seen and they're trying to also grow major digital media centres."As long as industry, government and academia continue to collaborate, he says, there's no reason why BC can't be at the very centre of the world's digital media marketplace. "All the wheels and gears are clicking, they're in place. But we all have to work together."

Decision Makers Series: Kenton Low predicts dire future for BC digital media sector unless government and academia intervene

Broadcast | December 1, 2008

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