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:

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.”

Reason #1

Education System: Canada consistently ranks higher on education from Grade 1 up and our investment in education per capita is higher.

Reason #2

Labor Cost: Canada has an expensive labor market, so we focus on industries where we can add higher value like software.

Reason #3

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.

Reason #4

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.

Reason 5

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?

  1. Bob Rushby says:

    Great article, Dave. It’s something I’ve pondered about often.
    What’s surprised me over and over again is that government isn’t aware of the scale of Canada’s digital signage presence. Every time I mention it to provincial or federal officials (I do it every chance I get and I rhyme off most of the company names you did) they (a) seem surprised and (b) go back to talking about how important gaming software is. Net net Government hasn’t grasped the situation yet. Your article might just help — I hope so.

    I’ve also wondered why our digital out of home content capability hasn’t kept up. I think it’s because schools still focus on broadcast content and web design.

    We do have a shining example of signage excellence, though –Arsenal Media in Montreal. The good news is Arsenal is working closely with Conestoga College so maybe, just maybe, we’ll soon see more content specialists creating a thriving digital out of home content industry here, too. Pixels Everywhere.

  2. Lyle Bunn says:

    Happy Canada Day (and 4th July) Dave.. 2 other reasons.

    1. ’80’s and early ’90’s public and private sector investment partnerships in post-production software such as Alias Research, Discreet Logic, SoftImage, etc (even including Inscriber, from which Harris Infocaster evolved in Waterloo) and an early 90’s focus on developing educational software and game development capabilities, fitting with some other media capabilities (as mentioned by Bill Trainor – don’t forget “UBI” by cable operators in the Quebec market), all served as industry drivers.

  3. Lyle Bunn says:

    The second reason that the world knows about Canadian DS technology and supply capabilities is because the end user market in the country is tougher to sell.. Each vertical market (banking, retail, oil/gas, etc. – even coffee shops!) is dominated by just a few firms. They are happy to try something, at little or no cost to them, which makes them good Alpha/Beta test sites, but they generally, reluctantly “move as a whole” staying close to their competitor’s innovations when deployment really happens.. Canadian firms do not leave the country (because they are “locked” into the tax system through R&D credits), so they take their capabilities, which enable competitive advantage, to those who will value them.

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