Google and Netflix will be participating in the CRTC’s Let’s Talk TV: A Conversation with Canadians public hearing which begins on September 8. They will be presenting the interventions they filed as part of this extensive consultation (which we described in a recent blog post). The CRTC will also be hearing from The Walt Disney Company. According to the first version of the agenda, Amazon—which did not file an intervention—was to take part in the hearing, but its name has been removed from the agenda revised on August 7.
Three American giants—including three major web players—will therefore be discussing the future of Canadian television with the CRTC this coming fall.
The CRTC launched Let’s Talk TV almost a year ago to hear what the public has to say about its proposed changes to the television system. The discussion should therefore involve changes but—in fact—Google, Netflix and Disney will be defending a certain status quo. They want to see maintained measures and decisions that, based on their analysis, enable them to contribute to the goals of the Canadian Broadcasting Act in a way that benefits both the system and consumers.
Google and Netflix will be appearing before the CRTC to defend their respective interventions. According to these two giants, there is no need to regulate over-the-top services seeing as it has already been demonstrated that they meet the public’s needs and that market forces encourage the creation of quality Canadian content.
For its part, Disney pleads in its intervention in favour of maintaining simultaneous substitution, i.e., the rule that obliges broadcasters to temporarily replace the signal of an American television channel with the signal of a Canadian channel whenever the same show is broadcast in the same timeframe.
GOOGLE AND NETFLIX CONGRATULATE THE CRTC
Both American corporations will be heard after the authors of a study that they jointly commissioned and filed along with their interventions. The study was conducted by the Lemay-Yates Associates (LYA) consulting firm and is titled The Evolution of TV and New Media in Canada.
Representatives of Lemay-Yates Associates will be attending the hearing to present the study. After examining the evolution of technologies, video viewing practices and existing Canadian regulations, the study concludes that the CRTC was right to not regulate the broadcasting activities of new media companies and recommends that this approach be maintained:
We believe that CRTC “got it right” in not regulating new media activities over the years and that this approach has fulfilled the objectives of the Canadian Broadcasting Act. Extending the current framework to new media would likely have negative impact on innovation in online content in Canada, potentially stifling the emerging activities of various organizations and initiatives, whether they are active in media now or not.
In Google’s and Netflix’s opinion, in doing so, the CRTC encouraged innovation and the development of extensive online Canadian content that both American entities contributed to broadcasting in Canada and throughout the world.
That being said, neither Google nor Netflix really quantify this Canadian content in their respective interventions. This omission is rather surprising given both are masters of the algorithm.
Netflix points out that its video libraries contain a material proportion of Canadian content. It cannot quantify this content among other reasons because the information used to determine if a title represents Canadian content under the Canadian Program Certification System is not systematically available when a title is part of a package and because it is difficult to determine the specific percentage of Canadian content in video libraries that are constantly evolving as a function of whether subscribers renew their rights (or not) depending on their interests. (Those algorithms are justly used to determine the rates.)
For its part, Google points out that more than one billion members of its online video community use hundreds of millions of fixed and mobile devices to watch close to six billion hours of video content each month on its YouTube platform. Also, they upload 100 hours of video content to YouTube each and every minute.
It would therefore appear that Canadian content manages to carve itself a place in this statistical universe of mind-boggling proportions: according to Google, each month Canadians upload more content to YouTube than all of Canada’s major national television networks broadcast in 10 years.
YouTube and Netflix are based on very different business models, and each model proposes a very different experience to its subscribers. In this regard, the simple fact that both co-commissioned an analysis of the evolution of television and new media in Canada is already interesting in itself.
DISNEY: BEWARE OF THE “NORTH AMERICANIZATION” OF THE RIGHTS MARKET
Disney states the following: “It is crucial that, at minimum, simultaneous substitution be maintained and in addition, should be enhanced with non-simultaneous substitution, in order to preserve the integrity of program rights acquired by Canadian broadcasters.” It’s both crucial and fundamental for Canada’s television system to enable Canadian broadcasters to provide content of the highest possible quality along with the guarantee that the system will continue to sustain jobs, Canadian programming and a Canadian viewpoint.
Disney sustains that if Canadian broadcasters are no longer able to protect the integrity of the program rights they have acquired for the Canadian market because of the abolishment of the simultaneous substitution rule, this will inevitably encourage the North Americanization of program rights that are priced for amortization across a significantly larger audience base than the Canadian market. The costs would become prohibitive.
It may be surprising to see a foreign entity defend a rule that protects Canadian broadcasters, but it’s important to know that this rule contributed to the development in Canada of a foreign programming market estimated at $1.5 billion in 2012: $1.14 billion in foreign programming purchases by private Canadian broadcasters and $355 million paid by Canadian distributors in affiliation payments to U.S. cable and satellite services (like CNN, A&E, TLC).1
The Let’s Talk TV hearing will be held in Gatineau over a two-week period starting on September 8. It will be interesting to see if the opening appearance of these two global giants—that threaten the future of Canada’s system according to certain stakeholders—will set the tone for the discussions that will follow.