Kate Bulkley, Media Analyst.

Canada rises to Netflix challenge

By Kate Bulkley

Broadcast News

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For Broadcast October 12, 2017

The country’s relationship with the SVoD service is an example to us all, says Kate Bulkley

In Canada, learning to live with the Netflix phenomenon and massive digital disruption has become an interesting balancing act that is an example for the rest of the world.

Is the streaming service friend or foe? Well, probably a bit of both, if the country’s experiences are anything to go by.

The ‘friend’ part of Netflix was in evidence when the company agreed to open its first non-US production centre in Canada. The heritage arm of the Canadian government claims it is “the first country in the world to get money from Netflix”.

Critics, meanwhile, see Netflix’s pledge to spend at least C$500m (about US$400m) making film and TV in Canada over five years as a drop in the proverbial ocean. Netflix’s total global spend on content next year alone will be $7bn (£5.3bn).

“We know that Netflix will be increasing its budgets and we want to make sure we have a piece of the pie,” says heritage minister Mélanie Joly.

But like many countries, including the UK, Canada does not make Netflix pay a sales tax on its in-country streaming services.

Joly has said the Organisation for Economic Co-operation and Development (OECD) is discussing how to get money into the system without such taxes.

One way to do that is to demand that Netflix – and the likes of Facebook and Amazon – commits to producing in-country.

Another is a long overdue updating of the Broadcasting Act (last amended in 1991) and changes to how Canada’s PSB Canadian Broadcasting Corporation (CBC) funds itself.

Maybe CBC could drop all advertising in favour of more state funds and paid-for services – including, perhaps, a Netflix-like SVoD platform?

”Canada is Netflix’s oldest non-US market. Today, 47% of Canadians have a Netfl ix account and watch a whopping 9.5 hours a week”

Netflix has already been very aggressive in acquiring Canadian content. At this year’s LA Screenings, the streaming service set out to buy the current seasons of the country’s top 10 shows. It got some, but not all.

The SVoD service has also co-produced a number of series ‘up North’. Anne, a CBCNetflix co-pro adaptation of Anne of Green Gables, premiered in March and reached 4.5 million viewers during its Canadian broadcast run. Netflix owns the global rights outside of Canada.

The country is Netflix’s oldest non-US market. Today, 47% of Canadians have a Netflix account and watch a whopping 9.5 hours a week, according to research from media consultant MTM.

Cord-cutting – turning off your cable or telco pay-TV subscription – has not been as severe as in the US market, but digital consumption, particularly on mobile devices, is growing rapidly.

Seeing the writing on the wall in 2014, CBC flipped its news model – producing TV first, radio second, web third and mobile last – on its head. Today, 73% of CBC’s digital news is consumed on mobile devices, says the broadcaster.

“Every decision we make today is through the lens of how this advances creating the digital CBC that will eventually replace the linear CBC,” says Heather Conway, executive vice-president of English services.

The broadcaster’s relationship with Netflix is complex, too, given that it is a partner as well as a competitor.

On the new Netflix Canadian production hub, Conways says: “Our position has been that anyone who benefits from being in the Canadian system should be asked to contribute.”

The old joke about Canada is that it’s the place next door to where the real party is going on. But could it be that this time, those wily Canucks have created the kind of party that lots of other counties want to host?

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