Here I sit at some ungodly hour, poring over the 1,500-or-so pieces of information that comprise Playback’s 18th Annual Report on Independent Production, trying to make some sense out of the current state of production in Canada. Although I’m bleary-eyed, a few things seem clear.

First – and what should provide relief to all – this year’s report is not a bad-news story, as has been the case in the four previous years. While last year’s survey showed the most dramatic decline, with Canadian production and development spending dropping 18% in 2004 – and that was coming off dips of 8% and 7% in the two previous cycles – this year’s report shows that production in 2005 remained basically flat. So, although production and development are down 32% from the peak in 2000 (to $1.24 billion from $1.83 billion), it seems that, at least for now, the bleeding has stopped.

There are several reasons for the stability the industry experienced in 2005. Some of it has to do with public funding. Producers in many provinces benefited from increased tax credits, while the feds maintained their $100-million annual commitment to the CTF.

But these foundations are not necessarily solid. The elevated tax credits – for both domestic and foreign projects – were never intended as a permanent solution. In fact, late last year, B.C. thought aloud that perhaps the credits were not worth their cost. Meanwhile, there’s a new sheriff on Parliament Hill, and no one is quite clear about future funding for the likes of the CTF, Telefilm Canada and the CBC. As is the mantra of Telefilm executive director Wayne Clarkson, ‘No new money!’

So, it’s up to producers themselves to sink or swim.

It’s a big world, and for most companies looking to flourish, they must look beyond the Canadian market for partners and audiences.

For example, one of the biggest movers and shakers on the latest indie production chart is Vancouver’s Insight Film Studios, resting in seventh spot among prodcos with $45 million in spending in 2005, up 24% over the previous year, when it was under the Shavick Insight Studios banner. Insight’s model, which it is applying in 2006, consists of producing or coproing a large number of modestly budgeted MOWs and feature films, with partners including L.A.’s Regent Entertainment. Some of their projects include internationally sellable names like Sharon Stone; some will air on channels on both sides of the border, including CHUM and cable station Here!TV; some will air only on Lifetime in the U.S.

Other prodcos are looking farther afield. Toronto’s Barna-Alper Productions, number 10 at $37.2 million, recently announced a partnership with South Africa’s Blue Ice Group Capital, which is bringing an unspecified but substantial amount of cash to the table. Barna is now looking to increase its number of South African copros and diversify into new areas of activity, including reality TV and feature films, to complement its stable of TV drama and documentary projects.

This diversification is key, because you never know which way the wind will blow. In fact, shortly after Barna announced this new direction, CBC canceled the series Da Vinci’s City Hall, which it copro’d.

The international appetite for different types of programming is constantly in flux, and prodcos must react accordingly. That certainly happened in 2005. The report indicates that comedy/variety and magazine/lifestyle/reality production soared last year, while live-action children’s and documentary programming took a nosedive, quite possibly due to market oversupply.

And more change is coming. Nobody knows exactly how broadband distribution will redefine the programming landscape, but the more forward-looking companies are actively experimenting.

This is especially true of prodcos and broadcasters that make cartoons and live-action shows for kids. Corus Entertainment, which owns animation powerhouse Nelvana, recently announced a deal with partners including NBC Universal to create a multi-platform children’s network that includes extensive VOD capabilities. Elsewhere, Family Channel recently debuted an episode of the new live-action kids series Life with Derek online, while CCI Entertainment has opened CCI Digital to explore new media opportunities and is selling some content as VOD material without traditional broadcast deals.

Why are these particular companies leading the charge, when there is presently little money to be made from these platforms?

It’s because their target audience will grow to accept these alternate distribution methods as second nature, so best to help establish behavioral patterns while they’re young.

And those prodcos and broadcasters with a more adult focus to their programming should take note – these kids will be their audience soon enough, and you sure wouldn’t want to be left behind.