When you're out in the middle of the ocean, changing course by even one or two degrees now can radically alter where you end up at the end of your journey. What steps can we take today that, by 2025, will make all of Canada happy we did?
The digital industries sector today
Digital transformation is changing the way we work, play, share, shop and even the way we may choose to experience our world. As the digital economy becomes imperative for productivity and growth, Canada's digital innovators will underpin our future prosperity. Today's digital industries include a combination of information and communication technology (ICT), digital and interactive media, and content industries as well as manufacturers and service companies that use creativity, talent and digital skills to capture, transmit and display data and information electronically in ever evolving innovative ways. While it does not capture the full breadth of the digital industries including parts of the creative industries, the best framework currently available to benchmark growth is the ICT sector.
At A Glance
Digital industries are significant contributors to Canada's economy
- ICT accounted for $42.7B in GDP (2.5% of Canada's total) in 2016Footnote1
- Video game industry generated $3.7B in GDP in 2017 GDP.Footnote2
- In 2017, 27% ($4.6B) of Canada's R&D spending occurred in the ICT sectorFootnote3
- ICT employment increased 2.6% in 2016, outpacing the overall economyFootnote4
- Number of ICT firms grew 3% from 2015 to 2016Footnote5
Growth varies across the sector
- Canada's annual $1.5B data software service market is expected to double by 2020Footnote6
- The number of active video game studios increased by 21% from 2015 to 2017Footnote7
- The number of video game employees increased 6% from 2015 to 2017Footnote8
- Canadian spending on Augmented, Virtual and Mixed Reality (AR/VR/MR) technologies will reach $9B by 2020Footnote9
Small firms dominate the space
- 85% of Canadian ICT firms employ fewer than 10 peopleFootnote10
- Large firms make up only 0.2% of the sector while accounting for more than 34% of employment
- 78% of video game companies have 25 or fewer employeesFootnote11
Canada has many strengths
- Strong clusters and start-up capacity, as well as a culturally diverse and creative society
- World-leading research institutions and globally recognized talent
- High innovation potential in data analytics, artificial intelligence, next-generation cybersecurity and mixed reality
- World leader in video games and animation and at the forefront of immersive reality experiences (AR/VR)
- Leadership in blockchain and quantum computing
Canada faces some challenges
- Investments in ICT (2.14% of GDP in 2015) are below OECD average and U.S. spendingFootnote12
- By 2020, more than 1/3 of the desired core skill sets for most occupations will be comprised of skills that are not yet considered crucial to the jobFootnote13
- Canada's domestic market for digital solutions is small, offering limited growth opportunity to firms that cannot break into global markets
- Global shortage of highly digitally skilled, consumer-facing and C-suite talent affects Canada
- Ability to use data is competitively essential but Canadian organizations face barriers related to data ownership, access, talent, infrastructure, governance, privacy, security and ethics
Priority themes
Canada has many of the ingredients of a world-leading digitally driven and inclusive society. Seizing that opportunity demands focused action, a global mindset and dedication to fostering digital industries, recognizing that every industry will soon be digital. With this in mind, the Digital Industries Economic Strategy Table has identified industry leadership and public-private collaboration as the foundation for meaningful impact in the following interrelated priority themes:
- Increasing domestic uptake of digital innovation
Increasing domestic uptake of digital innovation may be the single most important element to improving productivity. Industry research estimates a 1% increase in digital technology adoption could generate $2.5 billion for Canada.Footnote14 At the same time, increased technology uptake will enable sustainable, inclusive growth, creating high-value jobs and making Canadian companies more globally competitive. - Promoting the value of data by leveraging intellectual property (IP)
Data are the fundamental "natural resource" of the digital economy. Data are at the heart of the innovation economy and will be critical as Canada builds on its fundamental research advantages in artificial intelligence. Digital technologies transform data into insights that allow companies to be more innovative with products and services and compete more effectively in the global market. Marketplace frameworks that leverage and promote Canada's data and IP assets at home and abroad will boost innovation and wealth creation in the global economy. International borders are porous; companies need to pay close attention to the strategic importance of data and IP as well as be confident they will reap returns on their investments in data tools and analytics. - Fostering the growth of homegrown digital companies
Canada lags behind its trading partners in the creation of large digital technology firms and in having a community of successful high-growth firms. As a result, Canada lacks deep technology ecosystems to best support accelerated innovation and firm growth. Currently, ICT workers earn 58% more than the economy-wide averageFootnote15, placing the scale-up imperative squarely with the high-value jobs created by technology firms and the associated multipliers for Canada's inclusive growth. - Growing the digital talent base
Canada is ranked first in the G7 in the share of science, technology, engineering and math (STEM) PhD graduatesFootnote16, yet fewer than half of Canadian high school graduates have senior credits in STEM, suggesting Canada has tremendous potential to expand the talent base. According to the World Economic Forum, creativity is one of the top three skills workers will need - digital solutions require both technical and creative skills. Education in STEM fields is required for 70% of Canada's high-value jobs.Footnote17 Therefore, key actions to build Canada's talent base include growing the number of students in science, technology, engineering, arts and math (STEAM); increasing participation by groups underrepresented in the technology workforce; encouraging continuous workplace learning; and addressing the challenges in attracting global talent and building our C-Suite capacity.