Aslin UnlusoyAslin UnlusoyTrade CommissionerTrade Commissioner

Canadian Embassy in DublinCanadian Embassy in Dublin

April 30, 2009April 30, 2009

Overview ofDigital Media

in Canada

Agenda� Who we are

� Understanding Canada

� Canadian ICT

� Canadian Digital Media

� Video Gaming

� Computer Animation & Digital Effects

� Education and Training Products

� Business Applications & Web Marketing

� Enabling Technologies

� Wrap up

� Canada’s most comprehensive network of intl trade professionals

� 270 diplomatic and consular offices in 180 countries

� Sector specific, in line with local strengths

� Access to an extensive network

� We are your first points of contact

Oh Canada!� Second largest country in the world; polite neighbour in the North

� 17 of 20 largest cities are within a 90 min drive to the US border.

� 10 provinces, 3 territories; federal and provincial rules / programs

� Strong ties and shared like-mindednesswith the Irish (incl 13% of our population!)

Oh Canada!� Great access to the US through NAFTA; + 443 million consumers!

� Two Canadian banks rank among only seven banks worldwide that stillcarry a Moody’s triple-A credit rating.

� Canada rated as the #1 place to do business in the G7 for the next 5years (Economic Intelligence Unit )

� Canada has the lowest business taxrates and payroll taxes among the G7.

Positive Business Climate

� Canada’ business climate ranked first in the G-7; fourth out of 82 countriesEconomist Intelligence Unit’s global business rankings for the forecast period (2009-2013)

� Canada ranks well for its infrastructure, market opportunities, taxes, andforeign trade and exchange controls.

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Business Environment of Top Ten Countries, Forecast 2009-2013

Canada understands the importance of its business community and has createdan environment to encourage its success.

Best Educated Workforce� The overall skill level of Canada’s workforce ranks high among

competing countries.� Canada has the highest percentage of individuals achieving at least

college or university education, among OECD member countries.

54.0 53.051.4 51.0 50.0

47.8

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%

Higher Education Achievement

Source: IMD, World Competitiveness Yearbook 2008

Canadian ICT� Canada ranks 9th in the world for ICT competitiveness

� 32k companies, 600k employees; 43% w a university degree

� 79% companies are in software and computer services

� Average annual growth of 5% since 2002

� 92 universities produce 50k math, comp science & engineering grads

� ICT is Canada’s largest private investor in R&D: $5.7 billion annually

� Canada is 3rd largest for digital entertainment (Vancouver, Montreal)

� The Greater Toronto Area IT cluster is the 3rd largest in N Americaafter San Francisco and Boston; several IT clusters across Canada.

� Three main ICT sub-sectors are: Wireless, Software, Digital Media

Canadian Wireless & Software� Wireless: Cellular Equipment, Mobile Devices & Customer Premises

Equipment, WIMAX and Software Defined Radio Solutions� In the top 10% for global broadband penetration rates� Canada ranks #2 among the G7 for patent and copyright protection� RIM, Nortel, Redknee, Belair, Sierra, Wavesat and Intrinsyc

� Software: Enterprise Application Software, Web solutions, E-securityand Green IT� One of the highest levels of broadband penetration and high speed� Very low overall communications costs� Mature, technologically advanced telecomms infrastructure� Corel, Constellation, Enghouse, Open Text, Platform Computing

Canadian Digital Media� Canada is reputed for its expertise in digital media and has a

remarkably successful track record.

� Strengths of Canada’s Digital Media firms include:

� Animation and special effects� Video and computer games� Education and training products� Business applications and web marketing� Enabling Technologies in the

Transmission of Digital Content

Digital Media – Quick Facts� Over 3,200 companies employing more than 52,000 people

� Growth rate is 5.9% CAGR compared to the US at 5.6%

� 60 post secondary institutions provide digital media programs

� Major international companies have chosen Canada for their operations:Electronic Arts, Bioware, Disney, Ubisoft, THQ, Microsoft and Vivendi

� Over 60% firms export; firms with revenues over $10M export at 98%

� 71% firms are engaged primarily in content creation; remainder, enablers

� 11 research labs in 3D imaging

� Very competitive tax incentives at the provincial level

Canadian Programs Summary

� Ontario and Manitoba both emphasize interactivity in the products itsupports. Although funding levels are not as high in Manitoba, theprovince does offer marketing support.

� Quebec has succeeded and continues to attract large gaming contentdevelopers (eg. Ubisoft).

� British Columbia overall casts a wide net and supports investment in newmedia ventures, versus the development of a particular product.

� Technical funds provide significant support for those that qualify (specificR&D definition); focus on technically challenging business segments likegaming and mobile content.

Note: All programs are listed and detailed in the Appendix.

There are many Programs and Policies (Federal, Provincial, and Technical) thatprovide support and funding for New Media:

Video Gaming Industry� Canada is ranked third in the world in video games, after the US and Japan.

20% of the top selling games in N America developed in Canadian studios.

� Sales hit record levels in 2008, +$2 billion; a 23% increase over 2007.

� Canadian gaming companies are positioned across the value chain:hardware, infrastructure and services, enablers and tools, developers andpublishers, and game-ware innovation.

� The video-gaming software sector alone comprises of 247 companies w14,000 employees. 10% of Canada’s software jobs are in this industry.

� Thanks to generous tax incentives, Canada has the world’s two largestvideo-game development centres: Ubisoft (QC) and Electronic Arts (BC).

Video Gaming Industry� The Quebec games subsidy means studios can claim back up to 37.5%

of their creative staff’s salaries; also a possible 40% tax credit for R&D.

� Canadian advantage: cheaper to run a company, lower cost of living

� The studios pursue close ties with education to ensure strong talent.

� Cryptologic, leader in Internet casino and branded gaming software� Demonware, gamers can play ea other over the internet, Dublin & Vcr� Groove Media launched SkillGround in Dublin; free games download� Bioware, computer and console video games� GameLoft, huge catalogue of games for download to mobile phones� Next Level Games, Mario Strikers Charges for the Wii

Video Gaming Clusters� Canada’s video gaming industry has an emerging cluster that is targeting

the non-console markets and showing strengths in ‘middle-market games’:� Mobile Content� Serious Gaming. Canada has all the assets to become the 3rd ranked

global producer targeting the US and UK markets.� Business applications and web marketing.� Casual Games: There are 24+ companies employing 400 people.

� Revenue models: trial-to-purchase, subscriptions, advertising supported,in-game advertising, advergames, micro-transactions, skill-based gamesthrough tournaments, retail sales, or single-purchase via downloading.

� Canadian mobile content developers and publishers are also takingadvantage of wireless handsets to provide entertainment on the go:egs. IUBO Mobile Entertainment, Blister Entertainment, Magmic Games

Computer Animation and Digital Effects� For years, almost every film nominated for an Academy Award in special

effects was produced with Canadian-developed technology.

� Films: Batman Returns, Shrek the Third, King Kong, The Lord of the Ringstrilogy, the Harry Potter series, and the Chronicles of Narnia.

� Side Effects Software, two-time Oscar winner and Toon Boom Animation,Emmy Engineering Award winner for its animation software.

� Major studios such as Rainmaker and Mr.X are clustered in Vancouver,Toronto, and Montreal; also FatKat (NB) and Mercury Filmworks (ON)

� Canada is also home to development facilities for the likes of Softimage(Avid), Side Effects Software and Autodesk.

Computer Animation and Digital Effects� This industry is comprised of companies that produce content and/or

provide other services for film and tv markets in Canada & internationally.

� Their primary customer base includes film studios, distributors, contentproducers and television broadcasters.

� The primary source of service work remains in the United States, followedby Europe and Canada; new Canadian players are emerging

� Canadian animation companies are focussing on international co-venturesand co-productions, particularly in television, feature films, advertising,mobile and gaming.

Co-production Agreements� Contribute to the further expansion of the film and video production

industries for both countries as well as to the development of theircultural and economic exchanges.

� In 2008, Section 481 set up to improve Ireland’s competitive position asa location for International film and television production.

� Co-production agreement on “Film and Video Relations Between theGovernment of Canada and the Government of Ireland”:http://www.irishfilmboard.ie/financing/Canada/11

� Funding benefits for producers in Canada:http://www.pch.gc.ca/pgm/ai-ia/ppp-ppp/coprod/ap_bp-eng.cfm

Education and Training Products� Canadian multimedia is setting new standards in courseware design,

edutainment, consulting and flight simulation.

� For business, Canada provides instructional solutions for thetransportation, communications and manufacturing sectors.

� CAE is a world-leading manufacturer of full-flight simulators for allmajor aircraft types.

� Kutoka Interactive develops award-winning interactive educationalmaterials for children; products in 40 countries, 123 languages.

� The NECTAR Foundation develops state-of-the-art curriculum-basedmultimedia software for math, languages and science education.

� VitesseLearning is the largest independent business in the NorthAmerican customized learning marketplace.

Canadian Education� Canada’s professional schools and educational institutions offer more

than 100 new media programs.

� The Art Institute of Vancouver, with its centre for Digital Imaging andSound, is a multi-million dollar facility that trains more than 1300 studentsa year. Its graduates are employed worldwide.

� The Great Northern Way Campus in BC is embarking on the developmentof a professional master’s program in Digital Media.

� Sheridan College in ON is the third-largest classical and computeranimation school in the world. Hollywood studios like Industrial Light +Magic, Pixar Animation and Disney all regularly send talent scouts (andendowments) to Sheridan.

� The National Animation and Design Centre in Montreal enjoys anenviable international reputation in digital animation and effects training.

Business Applications & Web Marketing� Canadian companies have shown how to use multimedia to design and

deliver superior interactive experiences for business applications and webmarketing.

� The Autodesk (formerly Alias) AliasStudio line manages workflow fromconcept sketch through to engineering. It is used by BMW,Designworks USA, Nokia and General Motors.

� Blast Radius designs Internet customer experiences for leading globalbrands such as Nike, Nintendo, BMW, Heineken and Sony.

� Eccentricarts specializes in web strategy, design and development.Its state-of-the-art webware includes FlashMX and ColdfusionMX.

Enabling Technologies� Enabler firms are defined in the sector as suppliers of software

development and design, video and audio compression technologies,internet applications such as graphic rendering programs, audio-visualcontent management systems, and interactive broadcasting.

� Canada has pioneered achievements in telecommunications and R&D inaudio-visual transmission technologies.

� Corporate R&D investments: Multimedia Broadcasting, Interactive TV,Digital Radio, Satellite Transmission, Internet TV, IPTV and 3D TV.

� The Communications Research Centre Canada is collaborating withinternational partners (application developers, users, device integratorsand chip set makers) in new projects such as interactivity with 3D TV andImmersive TV over wireless networks.

Enabling Technologies

� Miranda Technologies (300+ employees) and one of its spinoffs, Agolith,both based in Montreal are R&D nodes of video processing solutions.

� Bluestreak Technologies’ awarded-winning MachBlue ™ powerssophisticated applications and user interfaces on mobile phones andtelevisions set-top boxes.

� International Datacasting is recognized for their transmission technologiesof 3D video/films to exhibitions/cinemas on high-speed broadbandconnectivity via satellite and have their hardware and software installed inover 100 countries.

Common business models are selling products and services at tradeevent through certified distributors, or directly to decision-makers.

A significant number of Canadian companies supply leading-edge technologies in thevastly growing digital and mobile broadcast markets.

Upcoming Events� Game Developers Conference, May 12-13

The GDC covers industry-leading methodologies in game design,production, programming, visual arts and writing for big-budgetmultiplatform games: http://www.gdc-canada.com.

� Vancouver International Partnering Forum, May 12-13VIPF offers businesses and industry hopefuls the opportunity to meetindustry veterans, decision-makers and cutting edge creators throughnetworking sessions & hand selected B2B meetings: http://2009.vipf.ca.

� Ottawa International Animation Festival, October 14-18This festival is the largest of its kind in North America, attracting filmbuffs, art lovers, filmmakers, and cartoon fans from around the world tothe nation's capital. The 6th annual Television Animation Conference willtake place the first two days: http://ottawa.awn.com/index.php.

� Montreal International Game Summit, November 16-17This summit smashed several records last year with more than 100speakers and 1,500 participants: http://www.sijm.ca/2009/en.

What We Can Do For You� The Canadian Embassy in Ireland has direct access to investment

and partnership contacts at national, provincial and municipallevels within Canada, and is well positioned to assist in attracting andexpanding your investment, and/or help locate partnership opportunities.

� Doing Business with Canada(Info on selling to Canada, buying Canadian, business travel, etc)www.canadainternational.gc.ca

� Invest in Canada(results of KPMG studies, CEO’s Guide to International BusinessCosts, breakdown of key industry sectors, etc)www.investincanada.gc.ca

Think Canada!Ms. Aslin UnlusoyTrade Commissioner, ICT Digital Media, Investment, Wind EnergyTel: 01 234 4061 E-mail: aslin.unlusoy@international.gc.ca

Mr. John SullivanTrade Commissioner, ICT Wireless & Software, Life Sciences, Agri-foodTel: 01 234 4019 E-mail: john.sullivan@international.gc.ca

APP: Canadian Programs - FederalFederal Departments and Agencies: Description of Programs or Policy by Organization Funding/Support Available

Canadian Radio-Television and Telecommunications Commission (CRTC)

Currently re-evaluating stance:� Four possible outcomes, some not mutually exclusive: (i) continue to rely on market forces, (ii)introduce/increase subsidies, (iii) add “opt-in” and “incentive-based” reg. mechanisms, (iv)introduce more conventional reg. mechanisms� “New media broadcasting” and “mobile broadcasting” are currently exempt from BroadcastingAct

Main Interests in new media:� Net neutrality: Interested in ensuring proper traffic management no undue discriminatoryconduct by ISPs (e.g. limiting access to certain websites, throttling)� Content: CTRC has divided content in 3: UGC, inexpensive commercial content (news,information) and high-quality, expensive programming� Asking if new media will/has fundamentally changed „casting business model� Access to infrastructure: also an issue (affordability and availability of services)

� No direct funding support.However, if an ISP levy isintroduced there would be fundingthrough an equivalent of the CTF

Canadian Television Fund (CTF)� CRTC recently proposed changes to CTF that include the establishment of a new mediastream of production funding� This fund potential targets among „new media‟ segments were not discussed� Stipulates that broadcaster must pay for ancillary (e.g. web/mobile) rights� Rates of these rights are to be determined in terms of trade negotiations

Bell New Media Fund (IPF)

To be eligible projects must� include both NM and TV elements,� obtain a minimum of 8 CAVCO points,� have a broadcast commitment for the TV component� not be news, reporting, or sports

� Production, NM component:75% of costs up to $250k(+ possible $100k bonus to matchbroadcaster contribution)� Development, NM component:75% up to $50k (+ training element)

Total Funding (2007): $8.3 mil

APP: Canadian Programs - FederalFederal Departments and Agencies: Description of Programs or Policy by Organization Funding/Support Available

CFC (TELUS Innovation Fund)� Part of Canadian Film Centre� Key criteria are innovation and narrative� Innovation Fund invests in new forms of high-quality, original Canadian content that explorenew ways of approaching entertainment and storytelling. This fund supports projects in the form ofa recoupable contribution towards the production of innovative film, television, new media, orcross-platform content projects.� Requires that 50% of funding be in place

� Up to $100k per project

Total Funding (annually):up to $300k

Fonds Quebecor� Funds the production of an interactive multimedia product that will use ICT includingnecessarily high speed Internet or interactive television; projects must be associated to TVprograms that have been „picked-up‟ by a broadcaster.� Quebecor Fund “favours projects where use is made of advanced technologies permittinginteractivity at the televisual production level as well as at the level of multimedia intended for highspeed Internet.”

$500k per project up to 35% ofproduction and NM combinedbudget

Total Funding (2007): $3.5 mil

Canadian Broadcasting Corporation (CBC)� 4 Internet services (cbc.ca, radio-canada.ca, radio3, bandeapart and RCIviva)� Most popular broadcaster-related site in Canada (2008), but not in top 25 of video content� Revenues more than double target in 2006/07� TV and Radio websites grew 19% and 13% respectively from 2005/06 to 2006/07� Signed deal with Quattro Wireless to provide real-time, ad-supported news, sports andentertainment content through mobile phones� Negotiates with content providers for right in all formats� Widely applauded for multi-platform approach (e.g. trad. radio shows w/ websites and weeklypodcasts)� Have commissioned 1st web-only video content recently (Bloody Immigrants)

� $10.3 mil spent in 2006-2007 on“cross-media programming”

APP: Canadian Programs - FederalFederal Departments and Agencies: Description of Programs or Policy by Organization Funding/Support Available

Canada New Media Fund (administered by Telefilm on behalf of the Department ofCanadian Heritage

� Total annual budget is about $14.5M (2007) several layers of involvement (i.e. approvals) inproduction process� Requires that copyright to be retained by CDN company� 3 components of CNMF administered by Telefilm:

• Product Assistance – conditionally repayable advances for interactive digital culturalcontent products in both official languages that are intended for the general public

• Sectoral Assistance – conditionally repayable (and non-repayable) advances toinitiatives that contribute to the industrial and professional development of the interactivedigital content industry in Canada.

• Sectoral Development – Telefilm driven initiatives to address gaps in industrial supportthrough events and initiatives that contribute to the industry’s participation at industryevents in Canada and abroad.

Product Assistance accounts for80% of all funding

Total Funding (2007): $14.5 mil

Canadian Culture Online (CCO)

� The funder for the CNMF (administered by Telefilm Canada)� Recently wound up 3 programs� Purpose is to develop policies and programs related to the Internet and digital technology tobring our country's cultural content to Canadians.

On-going funds:� Gateway Fund – aims to increase access to diverse Canadian cultural content online,specifically aboriginal and “ethnocultural” content� Partnerships Fund – Aims to provide meaningful and seamless access to content that helpsdeepen an understanding of Canada; primarily aimed at public, educational and NFP sectors

Recently Discontinued Funds:� Canadian Memory Fund – goal was to encourage federal agencies to digitize their collectionsand make them available online to Canadians� aimed at supporting innovative applied research at the intersection of technology and culture� New Media R&D Initiative – a pilot project that was not continued to build a foundation for theinteractive media sector; funding totalled $27.3 million.

� Gateway Fund – up to $50k forany single project, with 25% of theproject budget contributed by theapplicant

� Partnerships Fund – up to$500k or 75% of project budget (thelesser of the two)

APP: Canadian Programs - ProvincialProvincial Ministries and Agencies: Description of Programs or Policy by Province Funding or Support Available

Ontario� Recently identified “digital media” as a key growth sector� Recently expanded interactive digital media tax credit by 5% to 25% of eligible labourexpenditures� Geared to helping Ontario-based businesses with particular products� Interactive digital media fund (an OMDC Fund) supports the creation of original IP, assist incapitalization, and contribute to financing.� Applies to consumer, commercial projects� Also has tax credit (recently extended through 2012)

Fund: 50% of budget up to $100k

Tax Credit: 25% of labourexpenditures

Total funding (2007): $870k

Quebec

� Commits significant support to gaming industry through a series of one-off tax incentive(e.g. for Ubisoft, Eidos)

� SODEC does not include „new‟ or „digital‟ media as a supported area� The Quebec government's refundable tax credit for the production of multimedia titles helpscompanies lower their production costs. Depending on the category of titles produced, assistancecan represent up to 37.5% of labour costs.

� Strategic investment on a case-by-case basis in addition to taxcredit

British Columbia� New Media Venture Capital Program – to support manufacturing/export or development ofinteractive new media products

� 30% non-refundable tax creditfor venture capital investment in NMby corporations (no max)� 30 % refundable (max $60k) pertax credit per year for individuals

Manitoba

� Falls under the jurisdiction of Ministry of Science, Technology, Energy and Mines (STEM).Manitoba’s rendition of “interactive” media mirrors that of Ontario� Manitoba Interactive Digital Media Fund (MIDMF) goals:

• to provide recoupable financial support to Manitoba companies for the development,production, and marketing/distribution of high-quality, original, Interactive Digital Mediaproducts;

• to assist in the growth and development of a Manitoba Interactive Digital Media productionand distribution industry that is competitive in international markets;

• to raise the profile and presence of Interactive Digital Media creators in both domestic andinternational markets (including providing travel assistance) while providing opportunitiesfor professional development

MIDMF has 3 components:

1) Market Research &Prototyping:up to 50% of approved eligiblecosts, to a max of $20k

2) Product Development: up to50% of approved eligible costs, to amax of $50k

3) Marketing Assistance: up to50% of approved eligible costs, to amax of $25k

APP: Canadian Programs - TechnicalTechnical Funds: Description of Programs or Policy by Organization Funding or Support Available

Scientific Research and Experimental Development (SR&ED)� Maximum expenditure limit (and other limits) increase to tax years ending after February 2008.� A federal tax incentive program to encourage Canadian businesses of all sizes and in allsectors to conduct research and development (R&D) in Canada that will lead to new, improved, ortechnologically advanced products or processes� Supports R&D for improved technologically advanced products or processes (e.g. gamingdevices and game-related software)� A firm-level investment tax credit that is phased out as a company group

� 35% tax credit up to $2 mil onlabour, overhead, equipment;20% above $2 mil

Industrial Research Assistance Program (IRAP)� Provides advice to technology innovators� Provides non-repayable contributions to Canadian SMEs interested in growing by usingtechnology to commercialize services, products and processes in Canadian and internationalmarkets� Also administers a network of innovators and financiers� Recently committed to increasing the funding available per client� Stimulates wealth creation through technological innovation by providing technology advice,assistance and services to SMEs to help them build their innovation capacity.

� Canadian-controlled privatecorporation (CCPC) can earn aninvestment tax credit (ITC) of 35%up to the first $2 mil of qualifiedexpenditures for SR&ED carried outin Canada, and 20% on any excessamount

Think Canada!Ms. Aslin UnlusoyTrade Commissioner, ICT Digital Media, Investment, Wind EnergyTel: 01 234 4061 E-mail: aslin.unlusoy@international.gc.ca

Mr. John SullivanTrade Commissioner, ICT Wireless & Software, Life Sciences, Agri-foodTel: 01 234 4019 E-mail: john.sullivan@international.gc.ca