The convergent stream of the Canadian Media Fund helped bring shows like CBC's Being Erica, starring Erin Karpluk, online. (CBC)

The revamped Canada Media Fund, which pumps tax dollars into Canadian film, television and digital media production, is winding up its first year with a sharp increase in demand for money.

The $350-million fund was designed to support projects that bring television programs to the Internet and has attracted far more requests for cash than its predecessor program.

"We had 85 per cent more applications processed than in the last year of the (Canadian Television Fund)," said Valerie Creighton, president of the media fund, which phased out the Canadian Television Fund on Apr. 1, 2010.

The Canada Media Fund is divided into two areas — including its convergent stream, which has helped bring shows like CBC's Being Erica and the CTV comedy Dan For Mayor online.

The second part is the experimental stream, which is research-and-development oriented. It funds the creation of application software that distributes content.

"The demand we had on the experimental stream was way beyond what we anticipated. I think in total there were 460 applications. That's double the program that we normally ran at the old CTF."

But Creighton and TV producers both say there is still work to be done to address funding shortfalls that have arisen as independent producers meet digital content demands.

Heritage Minister James Moore ordered the streamlining of the old Canadian Television Fund and Canadian New Media Fund in March 2009 to speed Canadian producers' entry into the digital age.

Under the new fund, innovation is required and content has to be aimed at more than one platform, meaning television content must be available at least online.

Industry in transition

Creighton said the change was needed as broadcasters and producers adapt to changes in the way people get their entertainment, through new methods such as the Internet and mobile devices, as well as conventional TV.

"The whole industry is in the middle of this transition and nobody really knows what precise models work really well, where the revenue streams are."

That means traditional TV producers and broadcasters are sitting down with the digital media community and figuring out how to co-operate.

"It's kind of like blind dates," she said. "You're not sure what you're going to get into."

But she said the applications for funding indicate that something's clicking.

"That's an indication of the creativity within the community, the need for the support, and just where the whole industry is headed. We view that very positively."

The Canadian Television Fund's final annual report in 2009-10 said it backed 931 projects, including 476 production and 352 development projects. Development funding reached a high of $9.8 million.

The media fund, which has a $350-million budget, is in the process of reviewing its first year now.

But TV producers say there's still work to be done to address increased costs associated with creating multi-platform content and rights to inventory.

Norm Bolen, president of the Canadian Media Production Association, says he gives the new fund "a lot of positive marks," saying it embraces the encouragement of innovation.

"They did it in a wise way," he said. "They didn't overreach."

Online content still a challenge

But Bolen said independent producers have also found funding rules to be challenging because requirements to produce digital content can result in a 40-per-cent shortfall in funds for them.

"That puts producers in an awkward spot because this online content that they're creating is generally for the exploitation by the broadcasters," he explained. "The producers have nothing but costs associated with this content."

Bolen agreed that producers had to be motivated to create online content, saying they operate in a "risk-adverse environment" because of a lack of venture capital.

He said they usually prefer to wait until they see how new products fly in the United States "and step a little more carefully into the breach."

Creighton said the fund now has about 50 per cent more demand than it can fund.

While there's significant interest Canadian content both domestically and abroad, she said, one of the challenges ahead is positioning it in the digital mix.

It doesn't hurt when the Canadian filmmaking industry gets a boost like it did from Paul Giamatti, who delivered a tribute to his northern hosts upon winning a Golden Globe best actor award recently for his star turn in Montreal-based Barney's Version, based on Mordecai Richler's novel.

"You can't buy that kind of advertising," Creighton said.