Video games were originally born from computer research during the 50's and 60's in universities. A stronger Canadian effort in computer research and design might produce a stronger video game market as a side effect.
The first challenge for market dominance would be the U.S during the 70's and 80's. The reason why the U.S market crashed was a glut of systems and low-quality games. If Canada went quality over quantity and built a reputation as a place where a few good games were made, they might be able to maintain a presence during the turmoil of the 80's.
To stop Japan from extending her influence from the 80's to the early 00's, Canada would have to really step up her presence, buying up developers and such. The Japanese firms were/are very good at hardware, so I would probably keep focused on the software and games, leave the hardware to them. Don't take sides in the Sega-Nintendo wars (Sega should be stomped out if Sony still enters the market like OTL, they were already falling before then), remain strong as a place for third-party developers to work.
I don't see Canada being able to maintain a presence in Japan; the firms there keep the Home Islands in an iron grip and America OTL is not really able to penetrate the markets there.
The major thing is to keep Canada as a center for technological development and not let that shift to Japan. Advances in tech tend to bleed over into video games and if Toronto got enough of a reputation as a video game stronghold, we might see shows like E3 hosted there instead of LA.
Should Canada buy up or invest in American game developers early enough they may be able to keep a presence in the U.S. But total dominance, as in worldwide, as in Japan??? I dunno about that.
Mind you... I'm basing this info on an essay I did in High School.
