Tech reshapes entertainment

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Entertainment is a big part of what people do, and have always done… The market is ready-made, and there is a constant demand for more convenient products, more access to content, and better control and search tools.

By Robert Janelle
From SCAN's Print Edition

After the telecom bubble burst in 2000, many Ottawans had an unshakeable fear that “Silicon Valley North” would never be the same again. And they were right. The local tech industry is not what it was before the collapse. It is more diversified, having artfully applied tech knowhow to new markets. One such is the glamorous world of entertainment. Local tech product is already helping to reshape the entertainment industry, altering how content is created and delivered, making products for play at work, education at home, work at school, and any combination thereof. And all the hot action and interplay has produced the capital’s shiny and new, if still relatively unknown, entertainment technology cluster. “When the tech bubble burst, the heavy fallout happened in the larger companies in the telecommunications space, but this resulted in a greater variety of local tech companies,” says Peter Fillmore, VP marketing and sales at Avoca Semiconductor (avocasemi.com), which designs voice-enabled user interfaces for electronic products. “The tech people that left the bigger telecom providers created new companies and boosted the ranks of the smaller companies.”

The tech crash started companies in a new direction. Lean, hungry new outfits more than ever began looking for fresh market openings. They no longer had the fight, or the backing, for a “hit or miss” approach that once allowed tinkering with pet technology that would, just a few years earlier, unfailingly lure insatiable venture capitalists.

“Technology used for the entertainment market is clearly market driven,” says Mr. Fillmore. “Intel was technology driven. No one said they wanted a desktop computer, but the advances in microcircuits in the ’70s drove the new PC market for many years. In contrast, entertainment is a big part of what people do, and have always done… The market is ready-made, and there is a constant demand for more convenient products, more access to content, and better control and search tools. We are demanding new advances in digital entertainment for the home and on the move.”

The market for digital home entertainment products is well-established and growing rapidly. According to the Parks Associates report, High-end Entertainment Systems: Analysis and Forecasts (Feb. 2008), “Total US revenues for installed home theaters and multi-room audio systems will grow from $6 billion in 2007 to more than $11 billion by 2012.” And “the number of new installations is expected to grow 67% over the same period, from 166,000 per year in 2007 to 277,000 by 2012.” The market for mobile devices is enjoying similar growth. Mobile Media and Entertainment in the US: forecasts 2007-2012 (Analysys Ltd., March 2008), predicts that the mobile media and entertainment market is set to more than double in five years, increasing from US$3.1 billion to US$6.6 billion.

Mr. Fillmore is currently looking at ways to bring Ottawa’s entertainment technology producers and content providers together, to stimulate collaborative endeavour and form a collective vision of what lays ahead. “There is so much information about trends, investors, user expectations and market niches. Companies need to meet and share what they know,” he says.

Understanding of the market is evolving, taking companies from one niche to another as they learn the lay of the land. A case in point is GridIron Software (gridironsoftware.com), whose new product, Flow, won “Best in Show” at Macworld 2008 in San Francisco. Flow is a digital content management solution that simplifies the design process for users working on graphic design, web and video projects. The company originally provided grid-computing capability for desktop computer networks, before changing tack and tailoring products to graphics designers using computer-intense Adobe AfterEffects software.

IPeak Networks (ipeaknetworks.com), maker of network acceleration solution IP4000, followed a similar migratory route. The company originally focused on enhancing networks for the enterprise market but soon set sights on the consumer market where the demand for real-time video streaming is huge. Matthew Williams, IPeak’s president, sees a market full of opportunities unexploited by local entrepreneurs. “Ottawa companies start within their comfort zone, and we need to expand that comfort zone,” he says. “We need a better understanding of the consumer side of the market, for one thing.”

Marc-Antoine Benglia, president and CEO of Axentra Corporation (axentra.com), got his “comfort zone” experience on the consumer side of the market while working for local tech icon Corel (corel.com). Axentra, which makes a home server platform for displaying and sharing content such as personal photos, videos and music, was established at a time when pure digital entertainment solutions were few and far between and consumers eagerly snapped up new products as soon as they hit the market.

“Original equipment manufacturers (OEMs) today want a business case, and consumers just want simplicity, not ‘prototypes.’ They aren’t willing to buy brand new stuff,” says Mr. Benglia, who believes Ottawa is as good a place as any for a company to make a stand in today’s tough, mature market for “digital lifestyle” products. “Ottawa has a great pool of experienced R&D talent to pull from, to develop cutting-edge technologies that enable the digital lifestyle and allow people to access content,” he says.

“3D animation was practically invented in Canada. Films such as Finding Nemo and Shrek both used Canadian software tools,” notes John Seck, president and CEO of BlackCherry Digital Media (blackcherrydm.com), which is using a double-barreled business model to supply the entertainment industry with both animation and software tools for animation. “[BlackCherry] is extending the existing tools for animation,” says Mr. Seck, adding that his is primarily a “creative” company. “Then we will have both software tools and animation films to take to market.”

Local expertise in developing and applying technology to the entertainment market is still evolving. Yet local expertise in TV, film and animation production has been around for decades. The Ottawa International Animation Festival was established in 1975, and well before that maverick producer Budge Crawley was relentlessly building a studio in Hintonburg that would rival the National Film Board, then headquartered in Ottawa, in film output.

Despite a history of local success stories, the path to market has not always been an easy one for Ottawa’s entertainment tech companies. Ron Glibbery, VP of marketing at Kleer Semiconductor (kleer.com), points out that although the company’s wireless technology was developed at Carleton University, it was an “outside” venture capitalist who helped define the company’s market. With the VC’s guidance, Kleer focused on producing a chip that provides the raw technology for transporting high-quality digital stereo audio over a wireless link. Sold by OEMs in a wide array of consumer electronics, Kleer’s product fits with the pyramid approach espoused by Ottawa tech doyen Denny Doyle in his book Making Technology Happen. To wit: find a technology with lots of market applications…

And sometimes the path to market needs a little guidance from those unsung heroes, retailers. “We absolutely need retailers who are willing to put a new product on their valuable shelf space, allowing the local tech company to get experience with customer reactions and close orders from early buyers,” says Mr. Fillmore. “Then, when we approach a larger US sales outlet, we have the credibility of saying this product has been sold in our local market, and you can sell it and make money with it.” Avoca is now introducing its product through Stittsville retailer Signature Audio/V Video.

According to Mr. Fillmore, we currently have the critical mass of companies in Ottawa to form a cluster, one that can produce content and make the products to deliver it to a global market. His idea for a name: Entertainment Technology Cluster or ET Cluster. An idea worth entertaining.

James Bowen, PhD, PMP, CMC is an Ottawa technology entrepreneur and adjunct professor at uOttawa’s Telfer School of Management. If you have ideas for future market or technology focused articles, send them to jbowen@ces.on.ca

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