4.3 Innovation in Digital Media – Technology, Services and Content

Infrastructure innovation

Extending broadband access and digital services to Canadians will undoubtedly be a major part of any national digital strategy. Complementary to the increased access is the need for innovation in digital media, so that new services and new content forms can evolve from the current traditional forms. The cultivation of innovation will also be extremely important to Canadian content and Canadian economic development in view of the expected high growth of digital media. There are many opportunities for Canadian firms and their research partners to become part of that growth – in digital media infrastructure, broadband wireless solutions, and new business models to monetize content on digital platforms.

Infrastructure innovation

The Canada 3.0 conference cited earlier positioned the promise of digital media as a major opportunity for the media as well as other industries. There are new product, system, and service opportunities from the continuous development of infrastructure or platforms to serve digital media applications. The Canada 3.0 conference’s co-lead - Open Text’s Tom Jenkins – recently related how the digital media sector is globally one of the fastest-growing in the knowledge economy; it is expected to grow to USD $2.2 trillion globally over the next five years. ²⁹

There are some regional organizations quite actively promoting this type of innovation. Examples include the Ottawa’s OCRI and Waterloo’s Communitech. Both promote their regions as hubs for the commercialization of innovation, and create economic prosperity by removing growth barriers for technology companies. The result is Waterloo is being recognized as a world-leading centre for digital innovation.

High-speed mobile wireless innovation

Advancing technology, changes in market structure, and regulation/spectrum decisions have combined to lay the foundation for rapid innovation in the mobile world. In the case of the Canadian wireless market, it is likely that the new wireless operators who purchased spectrum in the 2008 Industry Canada auction will introduce new wireless products and services as a means of differentiating themselves from incumbents. Broadband wireless applications and services that take increasing advantage of the newer Smartphone devices (e.g. iPhone, Blackberry, etc.) and transmission speeds are expected to become key growth drivers in the mobile wireless field over the next decade. Expanding the wireless market in Canada is one means of increasing the likelihood of innovation in wireless business models, applications and products.

Incentives for technological innovation

Infrastructure innovation, including the high speed mobile area, requires a sophisticated high tech sector, a skilled workforce, and access to risk financing. The background is that overall Canada’s R&D performance has lagged other countries over decades of tracking investment in R&D for a number of structural reasons. However, federal policy has supported Canadian technological development as much as most countries through R&D tax credits, subsidies in specific high tech industries like defense and aerospace, through direct participation in R&D through NRC, etc. and via the funding of research at Canadian universities.

The communications sector has been a bright spot in Canadian R&D and innovation. Canadian telecom equipment supplier firms (e.g. Nortel, Newbridge, JDS/Uniphase, etc.), component manufacturers (ATI/AMD), infrastructure developers (Open Text), and device manufacturers (RIM) have been world leaders in innovation. The recent decline and sell off of Nortel - still the leader in R&D spending and patent-holding in the high tech sector, shows that the sector is as vulnerable as those in the old economy to mismanagement, fraud and economic downturns.

While government financial incentive programs cannot work without sound management they are indispensable to attract risk capital and investment in innovation. Innovation in digital media and wireless technology are essential to a vibrant Canadian digital sector, and as such a national digital strategy should ensure that companies have access to a competitive set of incentives in the future.

Service and content business model innovation

As discussed in the case of cultural industries above, innovation in digital media extends beyond infrastructure, hardware, and systems solutions in digital communications. Digital media is a disruptive technology for content industries as well. Such disruption leads to potential innovation in business models, so that innovation can be expected in the content development, production, marketing, and distribution as well.

Content production lends itself to innovation by using new tools and technologies, so that the innovation is often one of new business models to monetize content assets on digital platforms. But the creation of interactive content by itself may not be sufficient. Innovation in packaging, marketing, and distributing content on-line is also key to the development of new revenue streams based on digital platforms. Thus, the national digital strategy should take into account innovation that is business-model driven as well as the more classic technological innovation.