CRTC Unveils Policy Proposals for Digital Platforms in Canada

CRTC, the Canadian media regulatory authority, wants streaming platforms operating in Canada to do a better job of supporting the local content industry.

“New and innovative approaches are required to support content made by Canadians and ensure they can seize the many opportunities made possible by the digital era,” CRTC said in launching its comprehensive report, Harnessing Change: The Future of Programming Distribution in Canada. “The evidence is not clear as to whether online viewing represents a shift or is part of an overall increase in viewing across all platforms, but it is clear that traditional TV viewing is in decline,” the report notes. “This change is not happening as quickly as some suggest and not evenly across the English- and French-language markets, but it is definitely happening. Both subscription and viewing to traditional TV is in decline. By one measure, Netflix is now the highest-rated video service in select adult demographics (aged 25-54, 18-34) and for kids (aged 2-11).”

With these shifts, the report continues, “Subscriber and advertising revenue declines are likely to result in the loss of various types of domestic content in French, English, Indigenous and other languages, particularly in the case of content that is already less profitable or more costly to create. The economics of financing Canadian content mean that a declining traditional system may be unable to support production, promotion or discoverability. Canadian culture, ideas and values may be less visible as a result.”

The current legislative and regulatory approach, CRTC explains, which is exclusively focused on TV and radio services, is becoming “less effective. As consumption of these services declines, so too does revenue. This will impact the production of high-quality content, including news and information provided by these services, as well as the associated creative and knowledge-based employment. Canadian content creators will continue to call for ever-greater government and regulatory intervention to make up for these declines, potentially placing increasing burdens on broadcasters, which will further reduce their ability to compete with new online players.”

Deregulation would make it easier for traditional players to adapt and compete, but could result in Canadians losing the diversity of content they currently have, including “at-risk programming that is less profitable to produce.” Meanwhile, making the digital platforms subject to the same regulations as TV and radio “is unlikely to maximize benefits for Canadians,” and would present “significant challenges” in implementation. “The current legislative and regulatory scheme is too rigid to encompass the new media environment,” the report says. “Applying the existing rules could hamper innovation, limit choice for Canadians, create inequitable regulatory burdens and present practical challenges to implement. More importantly, is this really the optimal approach?”

Among the policy options set forth in the report is replacing “prescriptive licensing with comprehensive and binding service agreements for all video and audio services offered in Canada and drawing revenue from Canadians.” The report continues, “New legislation should not be based on the traditional method of licensing, but could adopt a more innovative and nimble approach with a view to reducing the regulatory burden on traditional players and more fully engaging new players, while still maintaining obligations essential to the future of the system.”

The agreements could come with some key incentives, such as tax credits for Canadian productions or employing individual Canadians in key positions. The agreements would be based on companies committing to contribute to the production and promotion of content by and for Canadians.

Another option is a restructured funding strategy. “A longer-term funding strategy should also better reflect the realities of the marketplace. To do so, it should fund online-only or online-first content as well as potential future innovations, place a greater emphasis on supporting the promotion and discoverability of content and be based on equitable contributions from all the industry sectors that benefit directly by providing access to audio and video content.”

CRTC also suggests the development of national strategies to enable the export of Canadian content.

Ian Scott, chairperson and CEO of the CRTC, commented, “Canadians have access to a wide range of content on multiple online platforms, as well as through traditional radio and television services. While this evolution is a good thing, it has an impact on the traditional model that was designed to provide support for programming made by and for Canadians. At the government’s request, we have looked at how our stories can continue to be told and our broadcasting system can remain vibrant. Our digital-first report identifies possible options for a future where high-quality Canadian content continues to be produced, promoted and discovered.”