A Closer Look at Digital Media Financing in Canada

Considering that Canadians represent some of the most engaged digital media users in the world, it’s only natural that Canada has long been credited for innovative development in cross-platform entertainment, game development, virtual and augmented reality, and more interactive digital media. In spite of this sector’s infancy, interactive digital media companies in Ontario alone generated CAD$1.17 billion in direct GDP to the provincial economy. These economic impacts are expected to only grow more, with digital media market revenue projected to reach a whopping CAD$7.67 billion nationally in 2022. This growth can largely be accredited to market shifts resulting from the COVID-19 pandemic, with demand for digital media remaining predominant well beyond the pandemic.

Given the fiercely competitive industry of digital media, leveraging your digital media related projects through public support initiatives is the key to maintaining an edge in the ever-expanding digital media sector. At both a national and provincial level, financial support for the digital media industry is available in the form of direct grants, tax credits, and loan guarantees. Interactive Digital Media Credits are available at a provincial level, with tax credit rates dependent on region, program, and production.

Funding Programs and Incentives for Digital Media

Canada Media Fund

The Canada Media Fund prioritizes the creation of popular and innovative Canadian content and software for both current and emerging digital platforms. Their support is divided based on two funding streams: Experimental and Convergent.

The Experimental Stream focuses on digital media content, and is in place to drive the creation of innovative, interactive content as well as leading edge software applications for digital media platforms. The Convergent Stream assists the development of television and digital media which is readily-available to watch.

There are numerous available programs under these streams to finance the different types of digital media, as well as stages involved in the development process. For instance, the Conceptualization program specifically allows eligible applicants to create and test a proof of concept in order to verify the design idea or concept assumption, or demonstrate functionality towards the Prototyping Phase and beyond.

Who Can Apply for CMF Programs?

Eligibility is dependent based on program and project, however, for many programs criteria include a company that:

1. Is for-profit, i.e. a taxable Canadian corporation
2. Is Canadian-controlled based on the purposes of sections 26 to 28 of the Investment Canada Act
3. Has its head office based in Canada
4. Is in good standing with applicable talent and industry associations and guilds

The variations between these programs in terms of restrictions and eligibility makes seeking support in application submission vital to ensure you get as much funding as possible.

Ontario Interactive Digital Media Fund (IDM)

The primary focus of the IDM is to strengthen and stimulate economic growth within the interactive digital media sector, with multiple programs targeted at varying project development stages. The IDM offsets a portion of costs directly related to concept definition and production projects. Program funding is made up of four streams, which include:

1. Concept Definition: this offers Ontario government grants to aid early-stage activities, including prototype creation, pre-production documents and concept pitches, and business planning
2. Production: supports generation of market-ready content to be released/sold to end users after production, including development of video games, mobile applications, websites and web series
3. Discoverability and Commercialization Program: this program is to further progress projects by providing funding that will elevate product visibility and financial viability for commercialization
4. Global Market Development: successful applicants can receive up to $15,000, with a cap at 50% of total activity costs.

Available funding includes a non-refundable contribution of up to 50% of eligible Ontario expenses, with participating companies requiring spending of at least twice the contribution received from the IDM Fund.

Who can apply for the IDM?

Eligible applicants can be either established or new, however, established must have either: 1) 25% of revenue or 50% of expenditures from prior two fiscal years derived from creation of screen-based content projects, or 2) 50% of company revenue from last 2 years from eligible publishing activities. Moreover, applications from all companies must also be Ontario-based, be a Canadian-owned organization (as defined in the Investment Canada act), be incorporated in Ontario or federally (or prepared to incorporate after successful application), and be in a sound financial position.

Provincial Tax Credit Programs

All provinces provide digital media productions which satisfy eligibility criteria an opportunity to access tax credits or other incentives, below is the list of the main funds:

The above summary of guidelines and funding incentives provides an overview of the available programs and their high-level requirements. These numerous options provide financial assistance for production costs through government incentive tax credits, grants and loan programs.

Getting outside help from experts in funding incentives can be key to ensuring your digital media production is maximizing funding opportunities and efficiently managing private investments. With over 25 years of experience in all facets of digital media tax credits and government funding in Canada, NorthBridge’s turnkey solutions can help you develop funding strategies at all stages of production, from ideation to distribution. Contact us today for a free government funding and digital media tax credit assessment.