Canadian Heritage Committee on April 29th, 2010

[The Chair, Conservative, Gary Schellenberger]

Go ahead, Madame Lavallée.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

This week, we received documents from witnesses intending to come and make a presentation before us. I understood nothing of the document in French. I was unable to understand the presentation because, as you can see, there is just text, and the text really makes no sense whatsoever.

I finally got an idea. I consulted the English version and I realized that the text was accompanied by images. You know how strict I am and to what extent I hold to the principle that the clerk's office must ensure that the documents are distributed in both French and English. If they are not available in both official languages, then they are not distributed. You know, last week, I talked to you about the audiovisual presentation, and there was consensus. If the presentation is in English only, it will not be shown to us. It needs to be translated and available in both official languages for us to be able to present it here.

In the same way, I am truly disappointed that these documents, that are absolutely incomprehensible in French, Mr. Chairman, have been distributed. I am on the very verge of believing that this is a case of disregard for the French language, and that it is a second class version. Mr. Chairman, I am asking that this type of translation no longer be distributed, but since it is a done deal, could an attempt be made to correct the French version? It could perhaps be redone, in order for it to be comprehensible. I am asking that you take to heart the need to distribute here documents in both official languages. I am expressly requesting this. I am asking you to ensure that all documents, be they in written form, electronic or in any other format, be provided in both official languages.

Thank you, Mr. Chairman.

[The Chair, Conservative, Gary Schellenberger]

Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

I would like to ensure that this never happens again in the future. Is there a mechanism for the approval of translated documents? For example, does the clerk, an analyst or someone else in your shop look at the documents to ensure that the committee... We would not have to redo this every time. These documents should be approved by someone who is charged with doing so before they are sent to us in both languages.

[The Chair, Conservative, Gary Schellenberger]

I'm going to go to Mr. Galipeau and Mr. Del Mastro.

Just in case people haven't realized it, the clerk has said it is his job to do that. He will ensure that those things are done.

Go ahead, Mr. Galipeau.

[Royal Galipeau, Conservative, Ottawa—Orléans, ON]

Mr. Chairman, I believe enough has been said. I take note of everything the opposition members have said. I have nothing to add, but this is not the first time this has happened, and I hope that this problem will not reoccur.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Go ahead, Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

The first thing I'd say is that I appreciate the clerk's diligence on this matter. I have had a moment to review the document that I believe the member is speaking of, which is for the presentation at 12 o'clock for this group.

Is this the one you're speaking of? Okay.

The content appears to be the same; the presentation of the content is somewhat different. I think that this witness has tried to accommodate the committee and I think we should acknowledge that. We should endeavour to make things exactly the same whenever we can. This is an instance in which the presenter has tried and made a good attempt.

I give you my word, Madame Lavallée, that if someone comes forward with a similar document in French, I will do my best to work with it. But I appreciate your concerns on the matter, and I appreciate the clerk's diligence in this matter.

[The Chair, Conservative, Gary Schellenberger]

Next is Mr. Pomerleau, and then Mr. Martin. Can we keep them close? We have witnesses here and we have to deal with them.

[Roger Pomerleau, Bloc, Drummond, QC]

Mr. Chairman, we must remember that, as we move forward, a greater and greater number of presentations will be made using new media, like what we have before us. I believe that the rule we have thus far enforced with regard to paper documents should fully apply in order that French and English be treated on an equal footing in all presentations made other than verbally. I believe we should take this into account.

[The Chair, Conservative, Gary Schellenberger]

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

I just want to add briefly on behalf of the NDP that we've had this debate in other committees, where documents like this that have visuals as well as printing are reproduced, and I have seen translators only translate the text and not make an effort to reproduce the visuals. We didn't tolerate it. We wouldn't tolerate it at other committees.

The argument that came up was an old United States debate, in civil rights, about separate and equal, Brown versus the school division in the old civil rights movement. Just having separate and equal schools for them wasn't the same as having the same education and the same school and integration.

The same applies here. Those two documents are not of equal weight, and they should be equal in terms of the graphics and the language so that the reader can enjoy the full impact of the document and not just get the text.

[The Chair, Conservative, Gary Schellenberger]

Thank you for everyone's intervention. I'm sure the clerk has heard you clearly. I've heard you clearly. We will endeavour to make sure that all documentation is done correctly.

With that, I'm going to open the meeting and welcome everyone to meeting eleven of the Standing Committee on Canadian Heritage. Our orders of the day, pursuant to Standing Order 108(2), are for a study on emerging and digital media, the opportunities and challenges.

Our first set of witnesses, from the National Film Board of Canada, are Tom Perlmutter, Deborah Drisdell, and Claude Joli-Coeur; and from the Canadian Interactive Alliance, Ian Kelso.

If I've butchered up some of those names, I apologize. People have trouble with my name too sometimes.

If we can keep our presentations to around 10 minutes or less, we would be very appreciative. Thank you.

Mr. Perlmutter, please.

[Tom Perlmutter, Government Film Commissioner and Chair, National Film Board]

Thank you.

Good morning, Mr. Chairman, and members of the committee.

You'll notice how neatly I got around avoiding saying your surname there.

I am very pleased to appear before you again on behalf of the National Film Board. I'm Tom Perlmutter. I'm the government film commissioner and chair of the NFB. With me today are Claude Joli-Coeur, the assistant film commissioner, and Deborah Drisdell, who's the director general of accessibility and digital enterprises.

The NFB is a federal cultural agency, established in 1939, to produce and distribute original audiovisual works that are creatively innovative and can contribute to Canadians' understanding of the issues facing our country and raise awareness of Canadian viewpoints around the world.

Over a 70-year period the NFB has become Canada's best known cinematic brand. Last year, on the occasion of our 70^th anniversary we were fêted in China, Brazil, Japan, France, England and Ireland among many other countries. In the past week alone, I have received requests for partnerships from Malaysia, Korea, Singapore and Colombia. The value of the NFB brand for Canada is immeasurable.

Today, in a rich and diverse audiovisual world, the NFB remains distinct as a creative laboratory, a leader in exploring terrain that cannot be undertaken by the private sector, a voice for under-represented Canadians, a prime means to assure the vitality of a francophone culture, and not least, one of Canada's leading pioneers in the digital realm. The latter is playing a crucial role in many of the international requests for partnerships that I mentioned above.

The digital revolution is seismic. Today we're focusing on its impact on the cultural industries, but it's important to bear in mind that the reach of this revolution is much broader. It touches everything, how we organize our lives personally, socially, economically, politically, and culturally. It's a revolution, which in its impact and consequences is as profound, if not more so, than the Industrial Revolution of the late 18th and 19th centuries.

Consider that worldwide, over 1 billion users are now connected to the Internet, close to 20% of the planet, 20% of all human beings connected across borders, across languages, across cultures. And that number grows daily. The impact of mobile will be even more profound because of its ability to penetrate where land lines and electricity are not widely available. I travelled through some remote parts of Africa last summer, and was astonished by the extent to which cell towers proliferated where there was little else in the way of infrastructure.

In Canada, we are among the most avid users of digital technology. According to the ComScore 2009 report, the digital media universe in Canada has grown 11% over the past three years. On average, there are more than 24.5 million Canadians online each month. Canada is the country with the highest Internet penetration rate. In March of this year, Ipsos reported that for the first time ever in their tracking research — we have made a fundamental step in this area — the weekly Internet usage of online Canadians has moved ahead of the number of hours spent watching television.

Crucially, Canadians are also the greatest consumers of video on line. Total videos streamed grew 123% in 2009 versus a year earlier — a monthly average of 263 videos per viewer.

Time spent watching online videos surged even more dramatically, with a 169% increase. By the end of 2009, the average unique viewer was spending 20.6 hours per month watching video. While YouTube accounted for the largest share, at 30%, significant growth also occurred among long tail sites--such as our own NFB.ca--which held a 55% share.

The impact has been disruptive on Canadian cultural industries, which have been structured on the basis of a protected universe with high barriers to entry, enforceable regulation for areas such as content quotas, and clear ways to monetize content. All of that is increasingly subject to the corrosive effects of digital technology, and the freedom it allows users to disregard national frontiers or established ways of delivering and consuming content.

We are only in the early days of this revolution. Google is just over 10 years old. YouTube celebrated its fifth anniversary last week. Twitter was launched in March 2006. Facebook extended beyond its original college circuit only four years ago. Today, one in two Canadians has a Facebook page. That's in four years.

The point is that the digital world is in constant transformation and we have no way of predicting what the world will look like in five years and who the new conquerors of the digital space will be. It may be players who do not exist, they could be Canadian. Who knows? They could be some of the extraordinary companies that are members of the Canadian Interactive Alliance of creative talent represented by your next witness — a former colleague and friend. Given the range of talent and smarts in Canada, one of the questions we need to ask is why have not any of the big players emerged from Canada and what can we do to ameliorate the picture for the future.

We hear a lot about technology driving change. It is not technology in a vacuum. There are scores of examples of technologies that had the potential to create change and fell flat. Telidon was a pre-Internet Canadian innovation of the eighties. It went nowhere.

The current wave of digital technology is so potent because it strikes at two core needs in audiences, in consumers, and in citizens: firstly, the need to exert greater control over our own lives; and secondly, the irrepressible urge to express ourselves and to be players, not just observers.

This, I think, is one of the great engines of the ongoing growth and strength of social networks, which today account for over 40% of Canadian Internet usage.

Here's the thing: social networking now also includes significant cultural marketing, consumption, and creation, another opportunity for Canada's cultural industries. For example, the whole of NFB's national screening room is embedded within Facebook, allowing users to engage with our videos and continue with their social networking activities.

But as much as the consumers want to seize control, the purveyors of that technology want to seize it back. The recent controversy over Facebook and privacy is exactly about the issue. Who owns controls and has the right to exploit the information that I, as an individual, put on the net? It's critical to note that the information I, or any other Canadian, uploads is not on some neutral, transparent system. I insert it within a pre-existing framework. It may be Facebook, or Twitter, or Google's YouTube, or Murdoch's MySpace. As Canadians, we may in fact log in to YouTube.ca or Facebook.ca, but the fundamental fact is that the information is always potentially controlled by authors, and often is.

We are unique in the world that our engagement as Canadians is almost overwhelmingly with non-Canadian sites--that is, with American sites. There is no Canadian-owned and -operated company in the top 10 web destinations. That may have changed recently with CTV's online catch-up television, but that would be for American television offerings.

This is in contrast to the case in the U.K., Australia, France, Italy, and many other countries. One of our leading digital executives operating in the private sector notes that Canadians are “drawers of electricity and hewers of bandwidth”. We are in danger of replicating the situation that currently exists in broadcasting, where great sums of money flow south to buy programming and Canadian content is the poor stepchild.

Let me be clear: none of this is leading to an argument for walled gardens or restricting choices for consumers. It is about looking level-headedly and with clear eyes at the problem and finding the innovative solutions that will leverage Canadian creativity and output into the digital sphere.

Even as we recognize that change is upon us, I fear that many of the discussions I am hearing are still anchored within the terminology of a traditional media universe. The justification has been that television remains dominant in the marketplace in terms of viewers and revenue generation. There is the concession that we need to take account of digital media, but only to the extent that we can deliver the old wine in the new bottles and collect on both the wine and the bottles.

On the first issue, even as television holds steady—or may even show some small increase in audiences—Internet use has grown even more, and most spectacularly in the under-18 category, our audience of the future.

On the second issue, it is true that television retains the lion's share of dollars, but we are seeing the shift of ad dollars into the online world. There's no equivalent there to broadcast's simultaneous substitution, so 60% of online ad revenue currently goes south. That means that none of that 60% is available to develop a Canadian content industry, and over the next few years that loss of revenue will be a major hit to the ways in which we finance cultural production.

On the third issue of what kind of content will dominate, there's certainly a lot of traditional media viewing on the net, but there is no assurance that it will continue to be the dominant form in five or ten years.

PricewaterhouseCoopers, in their most recent global media survey, concedes that television remains dominant but adds that all the momentum is with online and mobile. Much of our industry's response to the shifting sands has been essentially to tuck our heads into those sands.

We are working on an assumption of incremental, manageable change, and yet something very different may be happening. Instead of incremental change, we may be pushing to a tipping point when—bang—everything becomes undone with enormous rapidity.

Now, I cannot say with certainty that this will be the case, but whether it is a longer or shorter transition, we need to figure out how to prepare for that eventuality. Yet our discourse tends to be how to protect the horse and buggy trade while the gas piston engines are being knocked up in the woodsheds.

What are some of the things that might push us to that tipping point? Let me point to a couple of examples. There is a centre of competitive gravity that is shifting east. I returned from MIP, the world's largest television marketplace, last week. The dominating presence of Asia, with large delegations from China, Korea, and Singapore, was inescapable. They weren't just talking about traditional media. They were focusing on digital.

Singapore, for example, is throwing an incredible amount of resources into the media sector, and into digital specifically. They're offering a reach of three billion people within a five-hour radius of Singapore. There are 5,600 media companies there—1,000 of them foreign, including many of the Asian headquarters for global brands such as Discovery and National Geographic. It's a test bed centre for digital innovation and stereoscopic production. They are phasing in an optic fibre network to every home, offering speeds of one gigabit per second. Singapore is out to conquer the world.

You may say that it is a different audience and a different kind of population, but consider this. Last month Statistics Canada released their projections of the diversity of the Canadian population. Our country is in the process of major transformation. The large urban centres will be composed of what, today, we call visible minorities—Toronto and Vancouver at 60%; Calgary and Ottawa at 35%; Montreal, Edmonton, and Winnipeg pushing towards 30%. It is not uniform and it is not across the country, but these urban centres tend to be the drivers of our cultural and media industries. Very little of that diversity is reflected in our traditional media. If I'm a Chinese Canadian, I may want to connect with the world in a different way because I want to see a world that reflects more of who I am. Digital provides me with options that currently traditional does not.

Secondly, as we move to higher-end digital infrastructure, change becomes qualitative. Connection speeds of one gigabyte per second alter the universe. It is a tipping point. That's the kind of technological change that happened between Web 1.0 and Web 2.0, and that triggered the current wave of disruption. The changes to come are potentially more dramatic.

Coming from the point of view of content creation, and given the NFB's drive to innovate, I can tell you that we're on the threshold of something quite radical. This isn't simply about platforms. We are witnessing the birth of a new art form that will be immensely transformational—more powerful than the movement to television was in the 1950s.

Incidentally, our intention at the NFB is to be at the forefront in these new forms of creation, not simply for Canada, but for the world. I'm happy to note, for example, that today we're currently up for five Webby nominations. The Webbys are the Oscars of the digital world.

I think the example of the NFB and how we have embraced the digital challenge could serve as an inspiration for Canadians and provide a sense that there are remarkable opportunities for Canadians to innovate in this area. I will touch on this briefly, but it is more developed in an annex which we have submitted with this presentation and provided to the Clerk.

Since the launch of NFB's national screening room at the beginning of last year, we've had over five million views of NFB films. In October we launched our iPhone application, which quickly became both a critical and popular success. iTunes called it one of the ten best applications of the year. In less than half a year, we've had 700,000 views of films on the iPhone. We are ready to launch on the iPad when it comes to Canada.

ONF.ca was the first platform in North America for viewing works in French by francophone creators. The stakes here are high because the net is so dominated by English, at 80%. We need to ensure

... and we will do so, that the vitality of the francophone culture will allow the full expression of this francophone creativity.

We've made the films available for free by streaming. We'll continue to do that. It is a public policy decision, and, paradoxically, a sound commercial decision.

We are reconnecting and reinvigorating our relationship with Canadians, but we are about to move into a second phase, which will see us testing various models for generating revenues: commercial deals with partners such as YouTube and other syndicated sites, online transactions, micropayments, and a range of other possibilities.

I have no doubt that as the models evolve, economic solutions will be found. In the interim, however, for Canada and the cultural industries, there are a number of critical issues. It’s clear we need to ramp up our infrastructure both in online and mobile. We need massive investment in training. Our own experience has shown that it is not simply possible to transfer linear production models to digital productions. It involves radically different ways of organizing budgeting, work processes, and workflows, and it requires additional and different technical skills, the artisanal basis that is fundamental to any art form based on technology.

We need to look at copyright legislation and balance the interests of creators of intellectual property and consumers and citizens.

We need to understand what the barriers to investment are and why Canadian success stories often do not evolve into the global success of a Facebook or Twitter—because we had that potential. Look at the example of Flickr, developed in Canada in 2004. A year later it was bought by Yahoo, and all the content was migrated from Canadian servers to U.S. ones. We need to look at how to ensure that the great wealth of existing content generated by the public and private sectors, often with public subsidies, can be digitized and made available to Canadians.

We shouldn't be taking a piecemeal approach to this. We need to do two things.

One is that we need to devise a national digital strategy that is more long term in its thinking. Many jurisdictions have done exactly that, such as Britain with Digital Britain, and France with France numérique, as well as New Zealand and Australia, to name a few. The process would bring together many diverse sectors: technological innovation, finance, cultural industries, communications industries, and so on.

As government film commissioner, I have taken the initiative in this area of calling for a national digital strategy well over a year ago. Since then, I have assembled a broad-based group of people from the private and public sectors to brainstorm ideas. I am heartened to have read, in the very words spoken by our minister before the committee, that The Honourable Tony Clement will soon be leading a consultative process for such a strategy and we look forward to enriching it with the work of our group.

But we also need a transitional strategy. How do we ensure that we can capitalize on our traditional media industries and their strengths, not cannibalize their revenue base, and build rapidly the new digital businesses of the future? What Minister Moore has done with the Canada Media Fund is a step in the right direction.

As one final point, we talk about the digital revolution mainly in terms of an economic strategy and global competitiveness, but there is a larger story. As much as it is said that digital democratizes media, it is also a solvent, dissolving social cohesiveness. It facilitates the formation of communities of interest as much as communities. The paradox of the virtual world is the isolation of connection. In moving forward, we need to understand that there is something large and crucial at stake here. It has to do with nation-building. If we park that at the door, we do ourselves and our country an enormous disservice.

Canadians have a yearning to connect beyond their individual interests. We saw that in the phenomenal outpouring of pride during the Vancouver Olympics. It tapped into a deeply felt need. I think we saw it a little bit also last night, and I certainly see it here, with Monsieur Galipeau's sweater, that kind of pride of victory. If we recognize this, then digital can also become a powerful tool to create social cohesiveness. This has to do with ensuring the public space in an online world.

One of the most interesting things for us at the NFB has been the comments of audiences, across all age groups, about NFB.ca. For the first time, they had in one place, easily accessible and at their convenience, a unique view of our country, crossing time, geography, and language and ethnic barriers. They came and saw something that we often forget: the immeasurable beauty and wonder of our country. Our audiences watched, understood, and took it to heart; and I’ll tell you, their hearts swelled with pride. We know this because they haven’t been shy about telling the world.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Okay.

I have to say that in a one-hour presentation, that was almost half the time.

I apologize for our shortness--we were a little late getting started--but we do have to go forward.

When we ask for a ten-minute presentation, it would be nice if we could stay close to that. I can go a little over and whatever, but.... I didn't want to interject, because I knew what was going on.

I would ask our next presenter to keep it as close as possible to, or even less than, ten minutes. We're only going to have one round for questioning, and I think the people here have some questions that need to be answered.

Mr. Kelso, go ahead, please.

[Ian Kelso, President and Chief Executive Officer, Interactive Ontario, Canadian Interactive Alliance]

Merci beaucoup pour l'opportunité de présenter aujourd'hui. Je regrette de ne pas le présenter en français aussi.

I certainly agree with many of the things that my esteemed colleague has presented here and the grand vision, a very poetic one, for the future of Canadian media. I'd like to give you a little bit of an understanding of the interactive media industry, which is made up of the people who are creating the content and services on the new and emerging platforms.

I wear two hats. My volunteer job is president of the Canadian Interactive Alliance, or Alliance interactive canadienne, which represents the seven existing regional trade organizations that represent interactive digital media companies in Canada. My full-time job is president and CEO of Interactive Ontario, which is one of those member trade organizations. Together we represent over 1,000 companies across Canada in our membership. Our members span from very large multi-platform media companies to one- and two-person shops. The majority of our members are those small independent companies that are led by new visions for innovative approaches to content.

We've done a little bit of work in defining our industry. We think it's important to focus on what differentiates interactivity from maybe the traditional linear media. I'd like to give you a definition that we've come up with--namely, digital content and environments with which users can actively participate, or that facilitates collaborative participation among multiple users, for the purposes of entertainment, information, or education, and is commonly delivered via the Internet, global networks, game consoles, or media storage devices.

In terms of the composition of our industry, we do a research project, which is the only comprehensive measurement of the interactive media industry in Canada, called the Canadian interactive industry profile. Our industry is not yet covered comprehensively by Statistics Canada. The NAICS and NAPS codes have not yet been assigned. I know that the process is under way.

In our last study, in 2008, we determined that the industry comprises about 3,000 companies across Canada and employs over 50,000 Canadians. That is specifically directly to interactive media companies that identified as primarily that. There are, of course, many more Canadians working in interactive media as part of their employment in other industries such as broadcasting, advertising, and even financial services.

In terms of the industry itself, speaking regionally, Quebec is the most mature industry. It has the oldest companies, on average, followed by B.C. and then Ontario. Coming from Ontario, we're not used to being number three. It's kind of an interesting place to be. We're very aggressively trying to catch up.

Why focus on interactive media separately from traditional media? I think we need to do that. We need to focus on it because computers and networks for the first time enable users to participate in electronic cultural experiences in a unique and meaningful way. Interactivity is a new mode of creative expression, perhaps as important as the invention of montage was to the birth of cinema. It's what established cinema as more than simply the combination of photography and theatre.

The production processes for interactive media synthesize creativity and technology, requiring an integrated approach to product, company, and sector development. Interactive media by the nature of distribution platforms is both national and international at the same time. The interactive media industry is now one of the largest cultural sectors in Canada, yet it receives the least government support at the federal level.

I think it's also important for us to look at interactive media as part of the greater cultural industry's ecosystem. Certainly the new and emergent forms of media draw heavily from traditional media skills, competencies, and formats. Interactive media producers are recognizing a lot these days the need to better deliver compelling narrative and emotional experiences. There are tremendous opportunities for content creators to work across platforms to deliver comprehensive, multi-dimensional end-user experiences.

We believe we need to build more opportunities and incentives for collaboration among industry, cultural, and technological sectors. We think the Canada Media Fund is an excellent first step.

Canada is an emerging global leader in the creation of interactive media content and services. According to the Entertainment Software Association of Canada, who I think will be presenting here next week, their recent study has shown that Canada is now the third-largest creator of video game content in the world, employing over 14,000 Canadians in high-paying knowledge-economy jobs.

Our games industry is also growing by about 30% per year. A lot of that is comprised of large multinational firms. I'm sure we'll get into a bit of a discussion about that later. But we have a very strong momentum, and we're gaining a very strong reputation internationally as a great creative place to create video game content.

We believe that with a strategy to secure access to capital and the ability to attract the best talent, Canada can cement its place as a world-leading centre for the production of interactive media content, services, and technologies.

You asked about successes. There are many, and the NFB is certainly one that we are very proud of.

Tom made mention of the fact that we don't have many big Canadian companies that have made a big splash, but there have been a few. Many of them have been acquired, but I'd like to run through a couple. Distinctive Software Inc., in Burnaby, B.C., in 1991 was bought by Electronic Arts and it now makes Canada the largest electronic arts game studio in the world.

Xenophile Media of Toronto has won an international and a prime-time Emmy Award for their work with alternate reality games in conjunction with television.

We mentioned Flickr earlier, which was founded by Stewart Butterfield and Caterina Fake, from Vancouver. It was actually an investment by Telefilm Canada's new media fund. Although it was not specifically in Flickr, it was in a game they were developing. As was mentioned, it was sold to Yahoo for over $30 million.

Club Penguin, which was also created in Kelowna, B.C., was bought by Disney for $700 million in 2007. When Disney bought it only two years after it was launched in Canada, it already had 12 million accounts and 700,000 paying users, generating $40 million a year in revenue.

And in 2008, BioWare, a computer games company founded by two doctors in Edmonton, was bought by Electronic Arts for $860 million.

I think there are lessons from all of this. In the creation of interactive media, it's sometimes impossible to determine, as with Flickr, whether the greater IP value is in the content or the enabling technologies, and the enabling technologies are crucial toward the delivery of the content and the cultural experience. Our biggest successes are usually right now acquired by foreign companies that have the capital to invest in stealing the product or the service. But those foreign acquisitions are not always necessarily bad things, because the increased capital does give us a lot more footprint in terms of jobs. We tend to retain the jobs here, and we tend to retain the creative talent in this country. The founders of those companies tend to go on and create more companies here in Canada as well. As in the case of Paul Lee of Electronic Arts venture funding, they understand the industry. What's happened in San Francisco, I believe, is that virtuous cycle of having founders who build companies and then exit and start new companies and fund new companies.

How am I doing for time?

[The Chair, Conservative, Gary Schellenberger]

You have about two minutes.

[Ian Kelso]

What policies can be adopted to help Canadians and Canadian cultural industries benefit? I think we need to look at convergence in some of our legislation. It's time to look at the Broadcasting Act and the Telecommunications Act, and look at the realities on the ground.

We need to look at making sure that our immigration policy allows us to continue our history of attracting the best and the brightest and the most talented people from around the world.

We have to take a “think different” approach, just as Apple did in 1997, when they were kind of foundering and Steve Jobs came back to run the company. They adopted a brand strategy and an overall product strategy to think differently about how they would go from being a small player to being a dominant player. And they started creating very unique devices. They were very innovative, starting with the iMac, going to the iPod, to the iPhone, and the iPad. They've seen their market share grow and they're now vying with Microsoft in terms of size, so they've taken a very innovative growth strategy.

There are a number of things we would like the government to look at committing to in the coming years: recognizing interactive media as distinct and yet part of a greater whole, which I think is very crucial; fostering the creation of new tools for financing; significantly enhancing the experimental stream of the Canada Media Fund on a year-over-year basis; providing incentives to more private sector capital investment in domestic interactive media industry; examining the introduction of a federal interactive digital media tax credit, along the lines of the film and television tax credit; supporting an ongoing effort to grow the quality and scope of research into interactive media and its impacts; supporting international marketing efforts in the development of a Canadian brand, since it's very crucial that our companies are able to get out to international markets; and supporting programs that incent the collaboration among all cultural industries and cross-platform with the interactive media industry.

I'll end there. Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Questions and answers are going to be five minutes, and we'll have one round.

Mr. Rodriguez, you are our first questioner, please.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you very much, Mr. Chairman.

Thanks to all of you for being here.

Mr. Perlmutter, you talked a lot about the future and the challenges. What you said was extremely interesting. I am also anxious to read your document, because I know that it will be translated and redistributed. There was a lot of content in it.

Talk to me a little bit about the NFB. Over the years, this organization has suffered certain cuts. How is the NFB faring today? Are you in good shape?

[Tom Perlmutter]

Clearly, we are a little tight financially, because we were not granted an increase and our funding is not indexed. Consequently, we have been in a de-growth pattern since the major cutbacks of 1996. However, since my appointment to my position three years ago, my aim has not been to complain about what I did not have, but rather to determine what could be done. Ian mentioned the example of Apple. It is somewhat of an inspiration. We are asking ourselves what we might accomplish with the resources at our disposal and how we could really make the digital shift. It is not a technological shift, for me. The technology is there for creators to use in order to transform people's perception of the world. If the NFB was a strong organization in the past, for example, during the era of Michel Brault, Pierre Perrault and the others, it is thanks to technological change. It is thanks to light-weight cameras and synchronized sound that cinema vérité arrived on the scene, at a time when it was not part of established filmmaking.

This is what we are in the process of doing now. We are reviewing everything, and I am certain that we will then seek to obtain the necessary funding.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

If you had the necessary funding, what would your priorities be? What would you do?

[Tom Perlmutter]

Certain things are priorities. I made brief mention of the digitization of the collection. This is a major challenge, not just for the NFB, but for many countries. With the resources at our disposal, we have a strategic plan for automated digitizing. Three weeks ago, we attended a major conference on these issues, one organized by the National Association of Broadcasters in the United States. We are clearly seen as being leaders in this field. Unfortunately, with the resources presently available to us, with our operational funds, this is going to take 20 years if no technological changes are made. We must transfer what we do every five or ten years, so it is not simple.

Allow me to underscore the fact that it is not simply a matter of conservation, because as soon as a work is digitized, it becomes a financial asset.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Very well.

As you mentioned, I believe, and as we all know, fewer and fewer people spend time sitting in front of a linear conventional television. More and more of us watch videos on demand, we go on the Internet. In this context, that changes so quickly, with new platforms, new distribution technologies, how can we go about ensuring a Canadian content presence?

[Tom Perlmutter]

We must finance Canadian content, but not simply the way we do it now. I believe that Ian, once again, spoke very appropriately about another way of looking at content. We are at the very beginnings of a new way of creating, and this will become more and more important. In a system where regulations will be more and more strict, what will we be able to do? How will we be able to deal with this emergence of new types of talent, of creators and of companies like those that Ian mentioned?