IF YOU THOUGHT THE “usage-based billing” debate was loud, just wait until the “regulate Netflix” debate.
(Both of those arguments are inextricably linked, of course, but we’ll tackle that part another time.)
In talking to many regulatory folks over the past number of days, it seems a virtual certainty that the CRTC will hold some sort of proceeding to look at the non-Canadian, unregulated video sector, otherwise known as over-the-top video (OTT). This rapidly growing segment (in terms of usage) encompasses Netflix, AppleTV, GoogleTV, Hulu, whatever video portal or digital locker service Amazon might bring to Canada, YouTube, movies rented via Facebook and so on.
While many of those U.S.-based services deliver content to millions of Canadians now, none have to contribute financially to the making of Canadian content like the traditional industry players must, which on a basic business level, isn’t fair. Plus, Canadians armed with some electronics and a broadband connection can bypass the lucrative cable/satellite/telco TV subscription television model, further eroding the business and the traditional Canadian culture industry.
The pressure is now on from the Canadian broadcasting industry – and even the last parliament’s Heritage Committee urged a hearing into OTT. Heck, regulating Netflix (because let’s be honest, the all-you-can-eat-for-$7.99 Netflix is the primary worry right now) is part of the NDP’s campaign platform.
During its Prime Time conference in February, the Canadian Media Production Association organized a closed door meeting for 35 leaders in Canadian broadcasting and carrier companies. A party to that meeting told me that many in the room seemed “scared shitless” of what havoc Netflix and other OTT services might be able to wreak with their Canadian TV business models.
Indeed, if Netflix buys up the exclusive Canadian rights to vast quantities of American programming (something it has no ability to do yet), premium movie services like TMN and Movie Central would seem to be at earliest risk, as then would the rest of the Canadian broadcasters who still use the ad sales on American programming to help pay for everything else.
“The objective, from an industry point of view is that we maintain a level playing field within the system, a system that is a very positive and strong element in terms of our Canadian culture, identity and the Canadian economy,” said Astral Media’s chairman of the board, André Bureau, who is also a former CRTC chair, during Astral’s quarterly conference call with analysts last week. “We are trying to make sure we see the Regulator looking at it from the same point of view.”
From that February 18th CMPA meeting, an executive working group (led by former CTV and Bell executive Alain Gourd) has formed and it sent a letter to the CRTC on April 1 backing the Standing Committee on Canadian Heritage’s stance that the CRTC: “examine the growing emergence of non-Canadian broadcast players in the new digital realm and initiate a public consultation process to determine whether and how such non-Canadian companies should support Canadian cultural programming,” as we reported back in March.
Oddly without using the word “Netflix, the letter described how “a foreign over-the-top service operating in Canada” has begun to acquire exclusive original programming, including for our market – and that means the CRTC “should initiate the public consultation recommended by the standing committee.”
So the ball is in the Commission’s court now and many expect a new proceeding to be called – perhaps to re-examine the CRTC’s 1999 New Media Exemption Order, which was most recently revised and reconfirmed in 2009.
However, the more I dive personally into what can be done with a web connection and various surprisingly easy to install gadgets, one wonders how on earth the Commission can come up with anything that can remotely address the challenges presented by the onslaught of development in electronic media exhibition and consumption worldwide.
Can Canadian content requirements be applied to Netflix? What about YouTube, Ustream and Google? Apple, Amazon.com and Facebook? Those companies would almost certainly balk at paying any sort of Cancon fee, and perhaps just decide Canada isn’t worth the hassle and close off any video offerings here altogether.
Zappos, for example, the successful U.S. online shoe retailer, recently pulled out of Canada, citing fees and confusing rules. The Canadian market wasn’t worth it for Zappos. Will it be the same way in the digital media world if we try to apply yesterdays regulations to today’s media?
The only way to really try to figure out if OTT will work for my family was to dive right in and buy, so in the O’Brien house, there are now three devices, for example, that will deliver Netflix, YouTube, MLB.com and all sorts of other content right to my televisions: A Wii, an Apple TV box and a Boxee. There are two TVs, plus a couple of laptops, two BlackBerrys, two iPod Touches and an iPad. Video content can be gathered and viewed by all of this stuff. It’s dizzying.
Should some of that gear or some of those services be taxed to divert some money to Canadian content? And if so, which ones? And what rate? And who collects? And why would a U.S. service digitally shipping video here pay at all? I’m not sure it can be done, and that doesn’t even contemplate the public relations storm that will surely rain down upon everyone if the industry succeeds at making the likes of Netflix more expensive.
It seems we’re approaching a point where digital, ubiquitous, instant, global content delivery now means our Canadian-made shows will have to sink or swim on their merits as a business, competing actively, globally, where the home-town funding props we’ve become accustomed to become unsustainable.
But what if, with all the shackles off, that’s a good thing? What if it led to better Cancon, more Cancon, since in a highly competitive market, prime, exclusive content will be what keeps viewers’ attention, whatever device or app they use?
CAN IT BE A GOOD THING? ARE WE OFF OUR ROCKER? LET US KNOW IN THE COMMENTS SECTION BELOW, OR CONFIDENTIALLY AT editorial@cartt.ca.
