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Ontario has Across-the-Board Strength in all Cultural Industries

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While the general term ‘Creative Cluster' encompasses the broader creative and supporting industries, this framework focuses on the six cultural industries in Ontario, including film and television production, music, book publishing, magazine publishing, interactive digital media and commercial theatre. These six cultural industries are a subset of the ‘content production cluster' in Figure 1.

Companies in these six cultural industries develop, produce and market products whose value resides in their intellectual property (IP) rights. Although cultural industries have historically operated in silos, convergence and interaction has been growing, as new digital platforms act as common denominators for both the production and delivery of cultural products.

Unique among many world jurisdictions in the entertainment industry, Ontario's Creative Cluster blends together a legacy of excellence and expertise across all cultural industries.

The music industry in Ontario is currently undergoing a period of transformation. As traditional sources of revenue decline (i.e. physical record sales) new sources are beginning to emerge. The music industry, which has perhaps the longest history of digital distribution, is beginning to harness digital media (Internet and mobile) as a viable means of generating income. In this context, the music industry in Ontario is looking to licensing, live performances, merchandizing and other revenue streams to account for gaps in revenue.

Although not as dramatically as the music industry, Ontario's book publishing industry is undergoing significant changes as it adopts digital technologies. Traditional markets and business models continue to generate the lion's share of revenues (and are slowly growing), but online and digital technologies are retooling all elements of the book publishing value chain. Coping with changes that require substantial investment (including recruiting new skill sets) is proving difficult for Ontario publishers who are constantly struggling for financial resources. If Ontario publishers can successfully emerge from this transition, they will remain one of the most competitive English-language book publishing industries in the world.

The interactive digital media (IDM) industry in Ontario is characterized by near constant change, primarily towards “lighter” platforms (i.e. mobile and other handheld devices) and the emerging middleware market (e.g. physics engines for videogames, or software “porting” tools). The 2008 Canadian Interactive Industry Profile identified between 950 and 1,050 IDM companies in Ontario, directly employing more than 16,000 people and generating between $1.3 billion and $1.5 billion in gross annual revenue. Video game design and development is the key driver of Ontario's IDM revenues, with 39.2% of the province's share coming from this sector. The broader Entertainment/Arts category of IDM activities (including video games as well as the creation of cross-platform entertainment products) amounts to 45.5% of total IDM activity. 9.6% of revenues come from work in simulations and interactive training, with a further 8% coming directly from software design and development.

Ontario's film and TV production industry has been fairly stable over the past few years, with gains in domestic production occurring at a faster rate than the growth of foreign service production. While film and TV production volumes vary from year to year, they tend to be cyclical. In recent years, variances have occurred against a backdrop of significant changes in the broadcasting industry overall, as well as in the market for certain genres of production, such as scripted drama. Ontario has been actively engaged in maintaining the competitiveness of this industry through enhancements to our film and television tax credit environment.

Ontario's magazine publishing industry is one of the most stable elements of the Creative Cluster. It has a large domestic market share and a relatively strong financial balance sheet. This success is due in part to the ability of this sector to leverage a highly skilled workforce to meet the needs of many diverse niche markets. That said, with more content moving online, previously inaccessible foreign publications are becoming available to Canadian readers, intensifying the level of competition facing Ontario magazine publishers. Low levels of profitability are also hampering the efforts of Ontario publishers to adapt to the changing digital landscape.

Most theatres in Ontario are not-for-profit playhouses although they depend substantially on the commercial revenues from ticket sales. Meanwhile, roughly 80% of the industry's revenue base comes from larger commercial theatres like Mirvish Productions and Dancap Productions.10 The industry is centred in Toronto, Niagara-on-the-Lake and Stratford; these locations rely in large part upon cultural tourism to support audiences. The sector is, therefore, sensitive to fluctuations in tourism (e.g. resulting from a high Canadian dollar or a slumping U.S. economy). Despite this challenge, Toronto theatres have grown in terms of revenues since 2006.11