Addressing The Question: Why So Many Digital Signage Companies In Canada?
July 5, 2012 by Dave Haynes
Countless times now, in chats with American business contacts/friends, I have been asked why there is such a disproportionately high number of Canadian companies involved in digital signage – particularly on the software side.
I’ve always answered that the key reason is we’re not very bright.
But I’ve been kidding there.
There’s probably a bunch of reasons – simple ones like long, cold winters that don’t offer distractions like Florida beaches and Arizona hiking trails in January.
But I think it also has to do with government grants and tax credits, good universities and colleges, and familiarity. When you see something, it’s easy to get the idea that it looks promising and could be done differently and/or better.
Though Canada is 10% of the business size of the US, consider all the companies up here who were or are in the digital signage software space:
- Adflow Networks
- Capital Networks
- Fred Systems>Mercury>3M
- ComQi (R&D all done up here)
- X20 Media
- M’Pact Media
- iGotcha Media
- Rise Vision
- Signs of Change
- ADitude Media
I am forgetting some, and there are many small shops that are or were in the business at some point.
I sent around a note and got a couple of great responses from contacts:
Bil Trainor, founder of Capital Networks:
Government regulation. Yes, that’s right. Necessity was indeed the mother of invention.
In the early 70’s as I recall, the Canada’s Department of Communications encouraged NAPLPS (note: old school text and image transmission via modem). And that is how it all began … and it led to many more activities. British Telecom was up to some early tricks as well.
In the mid 70’s Canadian cable companies wanted to get into advertising but the Broadcasters lobbied against it and were successful in convincing the CRTC that the cable companies would take significant revenues away from them. The resourceful cable folks pressed on and were allowed to do “alpha/numeric” versions of Photo Ad channels that featured Real Estate, TV Listings, Automotive and general classified advertising channels.
Numerous companies rose to the challenge of providing the PC based technology to create and sustain these services.
Digimation Inc., founded by Jonathan White in 1982 was one such firm and has recently merged with Capital Networks. Other Canadian firms such as Nexus Display Systems, ISI and Teledac are long gone, but were helpful providers in their day.
In the US, meantime, first CACS then NuMedia under the leadership of Tom Wheeler and Arthur Esch were later joined by several other US-based Photo Ad Channel suppliers. Scala ported from Amiga hardware, I think, in the late 80’s. There were others, as well.
As I said before I do give some credit to the long, cold winter nights.
Jeff Collard, long time President of Omnivex
When it comes to comparing the seemingly lopsided numbers of Canadian companies, when compared to the US, “it is a case of having the right foundation to build on.”
Education System: Canada consistently ranks higher on education from Grade 1 up and our investment in education per capita is higher.
Labor Cost: Canada has an expensive labor market, so we focus on industries where we can add higher value like software.
Work ethic: Canadians are hardworking, honest people with a lot more entrepreneurial spirit than they are given credit for. They are willing to toil for a long time to build a solid business. It is pretty tough to make a quick buck and get out in Canada. You are in for the long run, and in software, that is an advantage because these products take time to evolve.
Death and Taxes: Canadian health care costs are less of a burden on employers and taxes although high are pretty straight forward. SRED (research tax credits) is one of the few place where we are buried in paperwork, and often the administration costs make those programs unattractive.
Courts: The USA is a litigious place, and you can’t do anything without someone threatening to sue you. U.S. patent trolls are choking innovation and preventing companies from developing new products.
A couple of areas where the US has an advantage over Canada is access to capital and labour flexibility. Canadian banks are not friendly to small business. We have to carry significantly greater debt and collateral obligations.
It is also very expensive for Canadian companies to hire or fire employees, and people in Canada are less likely to move to a new city for a job. So it is very difficult to adjust labour costs in response to market conditions.
Really great insights. I had completely forgotten about the old Telidon, but now remember seeing a demo in a government office back in 1980 or something. Even drawing a simple image on a screen took a bunch of time, but it seemed pretty cool in the pre-PC days. I’d also forgotten about the old photo/ad channels.
There’s a lot of Canadian companies listed there. Any other thoughts out there to add to this?