February 15, 2017 1 week 3 days ago

Why there are no shortage of Cancon opportunities in our OTT world

OTTAWA – After securing a global Netflix streaming deal for its new original show, Wow! Unlimited Media’s CEO Michael Hirsh says opportunities abound for Canadian content.

Wow! Unlimited Media (formerly Rainmaker) scored its big win earlier this month when it announced that Netflix would stream Castlevania, the first proprietary production from its subsidiary Frederator Studios. The program, a mature-rated animation project, is written by best-selling author and comic book legend Warren Ellis.

The original Netflix series, which is to debut in 2017, is a dark medieval fantasy that follows the last surviving member of the disgraced Belmont clan, trying to save Eastern Europe from extinction at the hand of Vlad Tepes Dracula himself. The first season will be four-30 minute episodes, dubbed Part 1. The second season, Part 2, is expected to be eight 30-minute episodes.

It should perhaps come as little surprise that a Canadian animation studio has made such an announcement – especially one helmed by the Nelvana co-founder. Domestically made animation programming is popular around the world with the country being among the top exporters. Hirsh sat down with Cartt.ca at the Canadian Media Producers Association’s (CMPA) annual Prime Time show to talk about the state and future of the domestic television industry.

In our interview earlier this month, he said there have never been better opportunities for Canadian made TV programming. For example, digital platforms are allowing producers to make content that viewers want to see, ungoverned by traditional Canadian content constructs, creating a more direct relationship with the viewer, with no broadcaster in between.

“You’re now, in a sense, producing directly for your audience and having to be smart about how you get that audience to know you’re doing it, how they find it, how they discover it,” said Hirsh.

There are challenges though for Canadian programming. It needs to appeal to a global audience so producers can maximize value. As well, digital platforms such as Netflix, Amazon and others are disrupting the conventional local market, leaving producers wanting to try and grow internationally, while still milking the cash cow back home.

Hirsh said that streaming services only open up more opportunities. The unlimited shelf space for programming is one which brings value to library content but then also makes for a competitive environment because there are more buyers.

“Why is there is a problem in exporting shows? Why is there is a problem in the marketplace? There is none. There’s only good news and only opportunities for expansion.” – Michael Hirsh, Wow!

“We’re dealing with unlimited shelf space. Why is there is a problem in exporting shows? Why is there is a problem in the marketplace? There is none. There’s only good news and only opportunities for expansion,” he argued.

Wow! is a prime example of a Canadian company expanding into the U.S. market and leveraging new platforms. The firm has distribution deal with AT&T and its streaming service VRV, (pronounced verve). VRV is a subscription video on demand service that has a range of streams, with each priced individually or in a bundle. Wow!’s Cartoon Hangover will be one of the feeds and it’s priced at $3 per month.

Hirsh acknowledged that sounded a lot like TV channel packaging, but said the big difference is the price and the intended audience. VRV targets the cord-nevers with content that appeals to them, available on their schedule.

Even though Canada has made great strides over the last few decades in developing, making and exporting TV programming, there is still a funding gap. Many have suggested this gap could be topped up by making foreign streaming services pay into the Canadian system or have ISP customers pay a monthly fee.

Hirsh said current funding mechanisms such as the TV distributor funds, the Canada Media Fund and various tax credits have done a good job of encouraging the production of homegrown programs, but there just isn’t enough capital to fund more Canadian programming. Other countries are increasing their TV production subsidies and so too should Canada.

“If you don’t have these subsidies, there is no television producing country that excels without subsidies other than the united states where their domestic market is big enough.” – Hirsh

“If you don’t have these subsidies, there is no television producing country that excels without subsidies other than the united states where their domestic market is big enough,” he explained. “Nobody has that market.”

One immediate step the federal government could take to bolster Canadian programming in the digital sphere is to recognize domestically owned streaming networks for TV production tax credit purposes. Current programs can only avail themselves of tax credits when they secure a distribution deal with a Canadian broadcaster.

“I’d like to see that expanded to include Canadian-owned streaming services. So we’ve got Frederator now, it’s a Canadian company and we’re going to be dramatically growing it and I’d like to see us being able to trigger tax credits by being on [it],” said Hirsh.

He noted that now is the time for the federal and provincial governments to up their financial support for Canadian programming.

“I think there’s never been a better moment for the Canadian government and provincial governments to double down and support the industry because we have a chance to be the next Hollywood,” he said.

Only time will tell what those support mechanisms will look like. Could the Department of Finance change the tax code, forcing Netflix and other foreign streaming services to pay taxes on their monthly subscription rates? Or will ISPs have to levy a fee on their customers to support the development of online Canadian content?

Those are likely to remain unanswered until Budget 2017 or Minister of Canadian Heritage Melanie Joly’s culture report are released.