The opportunities made available to Canadian companies are numerous on a global level, but the competition is intensifying. To benefit from this global market race, industry players are increasingly betting on talents and strong brands.
This article presents an excerpt from our Trends Report: 2017 Mid-Year Update.
“As the entertainment and media industry becomes more and more technology-intensive, and with audiences consuming huge amounts of content via mobile devices and social media, Canada’s creative players may discover there’s a big advantage to be gained from having quick, streamlined access to first-rate global tech talent.”
- Lorraine P. D’Alessio, Immigration Lawyer, 2016
It’s a well-known secret: Canadian creativity has been highly exportable since decades. In recent years, take the formidable success experienced by director Denis Villeneuve in Hollywood or yet the recent adaptation of Margaret Atwood’s celebrated novel The Handmaid’s Tale by Hulu, an American subscription-based VOD service.
However, in a world where content and technology are increasingly intertwined, what happens to our technological talents?
It is a pressing issue and it is essential to develop and retain the brightest technologists to enable Canada to develop its competitive advantage. The Canadian government intends to act, as demonstrated in its 2017 budget and by the launch of Canada’s Global Skills Strategy.
Reversing the Tech Brain Drain in Canada
Steve Lohr of the New York Times remarked that Canadian researchers laid the foundations of today’s AI boom long before Google and Amazon got in the game, but that Canada lost many of its best to Silicon Valley. In fact, Google and Amazon continue to chase after Canada’s AI talent to this day.
Recent initiatives by the Canadian government and other organizations like the Vector Institute, Launch Academy and the ICTC may help reverse the brain drain. The goal now is to fill the skill gaps that, as reported by KPMG in its 2017 Global Technology Innovation Hubs study, continue to hamper the adoption of disruptive technologies in Canada.
Those technologies are crucial to the Canadian media sector, as our Trends Reports have long asserted: they are fundamentally transforming the way content is created, produced, marketed, discovered and consumed.
This global hunt for the best technological talents combines with the mad dash to acquire the most highly renowned works and brands on the planet. Landmark intellectual property (IP) is at the heart of the catalogue development strategies of many of the entertainment industry’s largest players.
In the video game sector, Nintendo’s case is emblematic. The Japanese giant’s famous Mario Bros. brand is constantly being reborn with every advancement in technology and continues to reap a great deal of success.
Even more revealing is the case of Sega, another celebrated Japanese studio. In its Road to 2020 strategic plan, Sega announces that it intends to revive its mythical brands and develop new ones as well as to acquire external brands that have global reach.
The acquisition and exploitation of landmark brands is also a strategy put forward by giants such as Time Warner (which owns DC Entertainment) and Disney (which acquired Marvel in 2009 and Lucas Entertainment in 2012).
Thanks to its acquisitions of emblematic brands such as Captain America and Star Wars, Disney reached the top of the box office in 2016. Like Sega, Disney is betting on a diverse portfolio of new ventures and tried-and-tested brands
Canadian companies are keeping in step. Several of them are gaining traction on the global entertainment IP market, namely through acquisitions.
DHX already owns the Teletubbies (purchased in 2013) as well as the cultish Canadian property Degrassi (acquired with the purchase of Epitome Pictures in 2014) and it continues to see big. In May 2017, the Canadian giant announced that it was acquiring the entertainment division of US-based Iconix Brand Group, thereby adding the venerable Peanuts and Strawberry Shortcake brands to its catalogue.
Another Canadian giant, eOne, continues for its part to make it big on international markets with its Peppa Pig brand, acquired in 2015 in the aftermath of the purchase of 70% of the shares in British animation studio Astley Baker Davies. That same year, eOne acquired 51% of Mark Gordon Co., a major producer of Hollywood films and successful television series including Grey’s Anatomy and Criminal Minds. eOne also completed in 2016 its acquisition of the Secret Location content studio, a world-renowned Canadian crown jewel in the virtual and augmented reality sector.
Has the boom in Chinese investment already come to an end?
Our previous Trends Report highlighted how China was increasingly becoming a key co-production and investment partner for media and entertainment. The Chinese government’s recent crackdown on overseas investment, however, and the rising tide of protectionism in the US have many wondering whether or not Chinese financing will indeed continue to flow.
That uncertainty has been fuelled by several recent events, including the commercial flop of the Hollywood-China co-production The Great Wall and the collapse of major billion-dollar deals involving Paramount, Dick Clark Productions, Wanda and Shanghai Film Group.
Is Chinese investment drying up for good? Most likely not. Commenting on the government’s new outward investment restrictions, entrepreneur Hagai Tal points out: “The message the Chinese government is sending isn’t exactly ‘no’ so much as ‘not so fast,’ and the expectation, at least in the Chinese business community, is that the clamp-down at the end of last year will begin to loosen sometime this summer.”
Case in point: China’s Wanda signalled earlier this year that it would be setting aside $5 to $10 billion US annually for overseas investments, focusing in particular on entertainment and sports.
Canada is certainly positioning itself to take advantage of opportunities in the Chinese market. New co-production and export agreements have been signed recently, an especially promising collaborative route given that China is looking to boost its own creative industry: new Canada-China co-production treaty (2016), Memorandum of Understanding between the Alberta Media Production Industries Association and Guangdong Province (2017). And in January 2017, Heritage Minister Mélanie Joly travelled to Beijing and Shanghai to reinforce cultural trade relationships between the two countries.
Canadian content companies have been making significant inroads into the Chinese market. The latest example: the recently revamped Teletubbies brand, for which DHX has secured deals with major Chinese online platforms and a Hong Kong-based brand facilitator.