OTTAWA – Broadcast distribution undertakings (BDUs) say they need greater regulatory flexibility to offer on-demand services to compete with over the top service such as Netflix, particularly if they continue to take eyeballs away from conventional distributors.
This was the one primary messages to come out of a session on over the top (OTT) services at the Canadian Media Production Association’s annual Prime Time event in Ottawa last week.
David Purdy, vice-president of video product management at Rogers Cable, insisted that OTT services will have an impact on the Canadian broadcasting system and as a result, it’s only fair that regulated distributors be given greater flexibility to compete. “If you’re not going to regulate the new platforms, then we have to provide some latitude and liberty to the existing platforms,” he argued. “What I’m asking for is the latitude to offer new types of subscriptions products that would compete with some of the over the top services.”
From a network perspective, it’s far more efficient for Rogers to deliver video on demand (VOD) through the set top box than it is over the Internet, Purdy added. But under the current regulatory regime, Rogers can only do what Netflix does – he described it as a deep library service – over the Internet.
“If I wanted to do it on the set top box, I would be in violation of probably Mpix and several other licensed Canadian services. They would complain saying Rogers doesn’t have the right with the VOD licence to do that,” he said.
Alan Sawyer, a Canadian consultant, suggested that something will have to be done if OTT services such as Netflix become a dominant distribution medium. Because foreign-owned services like Netflix don’t contribute any funding to the Canadian broadcasting system, it affects the Canada Media Fund as well as the independent production funds such the Bell Broadcast and New Media Fund, the Shaw Rocket Fund, and the Rogers Documentary Fund.
“All of these are reliant upon BDU contributions based on revenue and if foreign services are allowed to undermine that then it undermines the whole system of Canadian broadcasting and Canadian funding,” he argued.
Jacob Glick, senior policy counsel for Canada at Google, dismissed suggestions that “the regulatory scheme that applies to the broadcasting world should now be imposed on the Internet,” adding Google TV is a technology that makes the Internet available on the biggest screen in your house.
Canadian specialty broadcaster Astral Television Networks didn’t seem too concerned about the growing significance of Netflix and other over OTT services. Kevin Wright, senior VP of programming, said the company has always been at the forefront of new technologies because as a premium service, customers expect a premium service. He highlighted Astral’s launch of HD in 2000, subscription VOD in 2004 and HBO Canada in 2008.
“Our business model per se hasn’t changed,” Wright said, noting that Astral has the flexibility to provide its customers with access to what they want, when they want, where they want.
For Valerie Creighton, president and CEO of Canada Media Fund, it’s less about the distributor and more about the content.
“I don’t think people are going to care how they get their content, ultimately. I don’t think they’re going to care ultimately which broadcaster it is,” she said. “I think the worst thing we could do right now is respond through fear. Netflix and all of these other applications are definitely a signal from the market…but can we figure out a way to make sure that when a consumer goes looking for stuff they can access Canadian content really quickly and it’s in the mix?”
Looking out two years from now, Sawyer said Netflix and other over the top services may hold a more significant share of the Canadian broadcasting system but they won’t undermine it.
“There won’t be seismic changes in the two year time span. Netflix is not going to totally disrupt the system nor is Google TV, but it is going to be more significant than it is today,” he said. “Two years ago we saw the train coming. Today the train is pulling into the station. Two years from now, it will be a much bigger train and there will be more players doing it.”
“Five years time may be a different story.”
