Thank you very much for the opportunity to appear. I'm delighted to be here.
By way of background, I'm a professor of research at the University of Toronto. For the past 10 years, I've been studying industrial clusters and economic development in Canada and the role of research and creativity in promoting the growth of Canadian cities. My expertise is in the development of digital media and digital media clusters as they contribute to regional economic development.
I tend to see digital media as an integrated set of activities that produce digital text, audio, and interactive computer graphic material that may be accessed through the Internet, films, and related communication channels.
It is important to note that where we have concentrations of digital media strength and firms in the country, it is usually where there is a preceding base of firms concentrated in related industries. These are the creative industries, such as film, television, and broadcasting. Sound recording often goes together with publishing, because the skills sets required to feed one industry draw very heavily upon the other industries. I'd be happy to go into that in more detail.
We also see, though, that the process of digitization is impacting all the creative industries and all the electronics industries, publishing in particular. In some work we did about a year ago in interviewing magazine publishers and book publishers in Ontario, everyone made a point of saying that they knew that their industries and their businesses were going to be strongly impacted by the process of digitization. It wasn't exactly clear how it was going to fall out and how it was going to impact them, but they were all trying to prepare for it.
The other thing about interactive digital media is that they tend to be very highly concentrated. In the work we did for the Ontario Ministry of Culture about a year or a year and a half ago, there was an overwhelming concentration in and around the greater Toronto region. There's some concentration in the Ottawa area. Some is spread out in southern Ontario through the Kitchener-Waterloo-Cambridge-Guelph area, down to London, and there is a small concentration in the Niagara Peninsula.
But it is hugely concentrated in the Toronto region. From related work that some of my colleagues have done, we know that there's a huge concentration, of course, in Montreal and Vancouver. Overall, nationally, those three large cities have the greatest concentration of digital media firms. We need to recognize the importance of those cities for this industry.
The other thing about the firms in this industry is that they tend to be quite small. There are some large firms in related industries that have established related activities in new media or digital media, but the majority of firms tend to be quite small. They tend to operate very much the same way firms in the television industry do; that is, they create teams on a project-by-project basis. That means that they draw very heavily upon a very deep labour market of people with strong skill sets, such as those represented by my colleagues to the right.
But the conditions of work in these industries are not always the greatest. They tend to be contract jobs. They tend to be project-based. In general, digital-media-cluster wages tend to be smaller than they are in related high technology industries. If you compare firms in these industries with ICT firms, you'll see a notable difference.
The importance of clustering is quite significant in these and other industries that we've studied in Canada. The advantages of clustering, in this particular industry, are first and foremost related to the labour market. There's a mutual reinforcing effect between the concentration of firms and the growth of a dense labour market.
The firms draw in labour and create a labour supply. Related educational institutions develop new training and education programs geared to the firms in the regional economy. That generates, in firms on the outside, more interest in coming in. The presence of a cluster of firms also facilitates specialization. Firms can concentrate on specific areas of strength, knowing that there are related firms in the regional economy they can work with and cooperate with. It also helps create branding and marketing for the firms in the region.
In the case of Ontario right now, the provincial Ministry of Economic Development and Trade is clearly recognizing this as an area of great strength. Both the industry ministry and the Ministry of Culture, and also the Ontario Media Development Corporation, are all focusing on digital media industries as an area of strength, and concentrating a number of policy tools that can go to support this. I'd be happy to go into those in more depth.
Also, as I said, once you have this concentration, you tend to get a response from local educational and post-secondary institution gearing programs. In the Toronto area and southwestern Ontario, which I know best, there's a tremendous concentration of strength. Sheridan College has long been known for its digital animation program, but in addition, Seneca College has an animation arts centre and has recently installed a state-of-the-art motion-capture facility. The University of Ontario Institute of Technology in Oshawa is offering degree programs in this and related fields.
The University of Toronto, in the last two years, has conducted university-wide surveys of all of the research activities going on in the university, with the intention of coordinating and mobilizing them more effectively. Also, there was a proposal several years ago to link this into the MaRS facility in downtown Toronto. That got put on hold when phase two of MaRS was suspended.
Most recently, Kitchener-Waterloo has taken tremendous initiatives in this area through the local high technology association, Communitech. They've obtained two significant grants, one from the federal Networks of Centres of Excellence commercialization program and the second from a provincial program. They're creating something in downtown Kitchener called the Digital Media and Mobile Accelerator hub.
It's a joint initiative of Communitech, the Centre for Digital Media, and the new Stratford Institute, which the University of Waterloo has established in Stratford, Ontario. They're partnering with some of the leading firms in the region: Open Text, Christie Digital, RIM, Agfa HealthCare, and COM DEV. The goal is to create a facility that ties in the creative artistic capabilities concentrated in Stratford and that part of southwestern Ontario with the more high technology display kinds of capabilities that some of the other firms in the Waterloo region have.
The bottom line is that linkages in this sector, in this industry, are hugely important, linkages in two dimensions: one between related firms within digital media itself and the other within the broader cross-section of other creative industries. Those linkages are hugely important, as are linkages with a broad base of supporting infrastructures within the regional economy.
If you're considering policy or policy recommendations, it's vitally important that policy be geared to the local level, to what's going on at the local level, and recognize and work to support capabilities at the local and regional levels. It's also hugely important from a federal point of view that you take into account what the provinces are already doing. Quebec, Ontario, and British Columbia in particular have a huge set of policies in place to support and promote the growth of digital media.
It is critical to help these small firms gain access to international markets. Very rarely will any of these firms survive and prosper on sales in the Canadian market alone, so federal programs and provincial support programs that help firms sell programs through Telefilm, through interrelated federal programs, and through EDC and related provincial activities are hugely important to help these firms sell into international markets.
My final plea is for greater efforts to try to achieve policy alignment across all three levels of government in support of these firms.