Unregulated Digital Distributers Caution Canadian Broadcast System
“Nobody watches just television anymore,” reads front page of the Bell Fund website, an independent production fund that supports the development of new media projects in Canada. A prevailing truth in today’s industry, it seems, as new technologies and emerging distribution channels are increasingly being considered more standard than they are new/emerging.
By Dan Fricker for the Huffington Post Canada
The Bell Fund encourages the development of non-linear, multi-platform projects — original screen-based content (video games, podcasts, mobisodes and the like) designed specifically for digital networks to complement traditional TV. Last year, convergent digital media (the umbrella term for the above) yielded $35-million in Canadian production volume alone. It’s a small segment of the wider industry, sure, but a sign that online audience engagement is becoming as important to content producers as ‘just television,’ if not more. But while our industry model is focused on funding the creation of new, digital content in an effort to stay innovative, the evolution of content distribution channels is allowing new competition to bypass funding regulations, posing a potential threat to the entire system itself.
The Bell Fund, which receives annual contributions from broadcaster Bell TV, among others, has supported projects across all demos: from rich, interactive gaming experiences for kids, to linear webisodes for adults and lifestyle social media programming for tweens in between. In 2012, the Bell Fund alone invested nearly $13-million in 150 digital media-related projects. Meanwhile, its sister not-for-profit org the Canada Media Fund promotes similar innovation — content creation/distribution across multiple platforms — delivering more than $360-million in annual funding.
Most of the funding for television projects in Canada, both digital and traditional broadcast alike, comes from taxpayers and broadcasters. The CRTC (Canada’s TV regulator), along with other industry orgs, fund an array of both federal and provincial initiatives (a slew of tax credits, to start) in an effort to contribute to the creation of Canadian content. Most notably, Canada’s Broadcasting Act requires television services (Bell, Rogers, Shaw, etc.) to contribute a percentage of their earnings towards Canadian programming (5 per cent of their gross annual revenues). In 2012, these companies put close to $900-million back into the system, with a current projection that spending will surpass $3-billion by the end of 2013. Our producers are leading in online innovation because they’ve been awarded a flexibility to innovate.
So what happens when a content delivery platform lives exclusively online — a digital provider that circumvents the traditional broadcast system altogether, as well as its subsequent membership fees? Enter Netflix, a video on demand service that’s doubled in subscribers in the past year alone (now serving 30 million in the US and an estimated 2 million in Canada). They’re the current leader in the internet television phenomenon and a clear threat the Canadian system, considering we spend so much time online. According tocomScore, Canadians have the second highest online engagement rates in the world, consuming an average of 25 hours of video per month. Low-cost Netflix then, is relatively well-positioned to swoop in and collect Canadian viewers. Further, they’re web-based — with no tangible national borders — therefore conveniently exempt from the CRTC’s regulations and any ensuing financial contribution requirements towards Canadian programming. “The competition in digital is, more or less, border-less” says Neil McEneaney, Interim Executive Vice-President of CBC’s English Services, “and many of those competitors have access to vast content resources and deep pockets.”
So while our self-funded Canadian market model, held up largely by revenues from the traditional broadcast system, is industry-leading so far as convergent digital media content, what happens if our traditional broadcasters start losing revenue to foreign online channels? If Netflix and its counterparts are delivering content to Canadians, should they not be subject to the same rules & regs as our domestic broadcasters, and be required to subsidize homegrown productions? Or does the Canadian funding system need to look past simply creating innovative digital media content, and focus instead on alternative distribution channels able to compete in today’s market?
The CBC is reporting higher growth numbers in some of their online productions than on traditional TV (Mr. D). “Conventional broadcast is still dominant, by far,” said McEneaney of CBC, “but we’re preparing for an audience-choice-driven content distribution model looking down the road.” Regardless of the platform, according to McEneaney, as Canadians we have an inherent edge — we’re all tremendous storytellers. And after all, the story really is all that matters.