Canadian New Media Producers' Survey 1999 Final Report

Executive Summary

September 1999
Presented by MultiMediator

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Introduction

MultiMediator Strategy Group Inc. ("MMSG") has conducted the most comprehensive survey of Canada's New Media producers since the IMAT study of 1995, which MMSG's principals helped develop. The target survey sample consisted of 522 companies from MultiMediator's Company Directory, which is the most comprehensive directory in Canada. The participating sample included 188 companies from every province and territory in Canada. The survey was conducted by telephone and covered issues like the size and age of the business, revenues, profitability, service lines, markets served, distribution, delivery media and export activity.

Findings

1. Age:  While still a young industry, the New Media production community is maturing. 90% of the businesses surveyed are less than 7 years old, but less than 6% have commenced operations in the preceding year. This is a significant change from the 1995 IMAT study that showed, at that time, that 22% of companies were less than one year old. This suggests that Canadian New Media businesses are surviving in a highly volatile and competitive market. This further suggests that there is an increasing amount of developing expertise in businesses that have endured uncertain climates and growing competition, presumably by honing their marketing skills and/or finding efficiencies in the way they conduct their operations.
2. Size:  The 1995 IMAT study found, at that time, that half of all multimedia companies surveyed had fewer than 10 employees. The Wall Report of 1998 found this to be the case in 64% of companies. In the MMSG study we found this to be true in 70% of cases. In 45% of cases in 1999, companies actually had 4 or fewer full time employees. This suggests growth is being fuelled by small companies and reflects the common practice of using independent subcontractors rather than employees to work on projects.
3. Primary Business:  85% of respondents identified themselves as "developers" and 82% identified interactive media production (broken down into Internet development, stand alone interactive media and interactive media) as their primary activity. 13% indicated that their primary business activity was in non-interactive media such as printing services.
4. Services Offered:  Interesting in light of company size is the information on the range of services offered. Of the 33 different services listed in the survey, 80% of companies offer 10 or more with 54% offering 15 or more services. This suggests a significant lack of specialization and a disinclination to form strategic alliances or other relationships with other companies that could foster increased specialization. Given that over 90% identify their markets as business-to-business or corporate, this appears to confirm the view put forward in other past reports that most of the Canadian industry is involved in fee-for-service work.
5. Accessing Funding Bodies:  Of the major new media producing provinces, being Alberta, British Columbia, Ontario, and Quebec, it is apparent that, proportionately, more companies in Quebec are accessing these kinds of funds. Over 40% of Quebec companies in our survey have accessed these kinds of funds with the other three provinces acknowledging a distant but consistent 7-10% participation.
6. Profitability:  One very noticeable difference between the IMAT 1995 study and the MMSG 1999 study is on the question of profitability. In 1995 only 53% of developers reported that they were profitable. In 1999 this has increased significantly to 82% of the MMSG sample. The extent of the profitability was also encouraging, despite concerns that may be expressed about the size of companies, their lack of specialization and the non-uniform way in which they are or are not accessing funds.
7. Export:  About 66% of companies are exporting with the large bulk of that going to the United States. Given that North America is purportedly ahead of Europe, South America and Asia in use of New Media, this raises the question of whether, by focusing on the market with the most well developed production industry, there are many revenue opportunities being overlooked.

MMSG would like to thank all those companies that chose to participate in this important survey for their time and candour.

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