Canada has become a top producer of online TV shows, including a winner of an International Digital Emmy Award. But such shows are headed for a downturn as the sector struggles to find the audiences and financing it needs to survive, predicts the head of a fund that supports them.

Andra Sheffer, executive director of the Independent Production Fund, said four years ago only three or four such web-only series existed in the world.

'Very few are making money at this point.'—Andra Sheffer, Independent Production Fund

"Since then, I would say there are three or four being made every day anywhere in North America," she said.

In Canada, one of the better-known series is Guidestones, about two journalism students trying to solve a murder, which won this year's International Digital Emmy for a fiction series. Another is Out With Dad, about a teenage girl coming out as a lesbian, which has been translated into eight languages and is seen around the world.

Jason Leaver, who created the first two seasons of Out with Dad with just a few thousand dollars and volunteer labour, including his own time, says over 16 million people have now watched the show. He believes that makes it the most-watched web series ever made in Canada.

"I'm very proud of that," he said.

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Out With Dad, about a teenage girl coming out as a lesbian, has been translated into eight languages and watched by over 16 million people. (Out With Dad)

Sheffer says Canada is the second-biggest producer of web-based TV series in the world, after the U.S. That's partly because of funding available from the Independent Production Fund (IPF), she said, which launched an experimental pilot program in 2010 to finance drama series for the web. The IPF, which was established to support dramatic TV series created by Canadian independent producers for Canadian private broadcasters, offers grants of $150,000 to successful web series applicants.

But she expects the explosion in web series to wane soon.

"Very few are making money at this point," she said.

Jay Ferguson, producer of Guidestones, said despite the show's Emmy award, he wonders how he can make his creation survive.

"There's hardly any money out there," he said. "It's the wild west. There's continual frustration in terms of how to finance it, where it's going to go, how to get audiences to watch it."

Links with traditional broadcasters

Guidestones has been supported by a grant and some corporate sponsors, and recently reached an online deal with CTV.

But it's not the only online show that's forging stronger links with traditional TV broadcasters.

Leaver is now trying to create the third season of Out With Dad with some funding from a broadcaster in France that airs the episodes — not just online, but also on TV — and from viewer donations.

So far, there is enough money to shoot the new season, but not enough to edit it.

The kids' show Ruby Skype PI has some money from a traditional broadcaster, CBC, which is slated to put the Canadian-made web series on air in early 2014. The deal helped fund the series and has brought in new viewers.

Those who have found web series say there are advantages to the format, which typically involves episodes around five minutes long, over that of traditional TV.

"It's little snippets," said Anna Hourahine, who watches a few kids' web shows with her children. "You can just get caught up really quickly and it's not a huge time commitment."

Even with an audience, though, Sheffer said web-based shows won't be able to survive without advertising or other money.

She predicts web shows will start to become more commercialized.

"There'll probably be more corporate sponsorships of these projects — product placement," she said.

Meanwhile, web shows have already come a long way in a short time.

Ferguson recalled what it was like to receive an Emmy for his show in Cannes, France this past April.

"Like, we're walking the red carpet — it's crazy," he said.  "We just made this little web thing."

With files from Lorenda Reddekopp