The Canadian Radio-television and Telecommunications Commission is warning that the emergence of large well-financed OTT conglomerates could bypass all or part of the traditional Canadian broadcasting system.
The CRTC’s report is a thinly veiled warning as to the growing influence of Netflix across the 49th parallel even though the OTT service has had to transmit at lower data rates to escape caps applied at a network level. In particular CRTC voices concern that the growing popularity of non-Canadian shows delivered from OTT sources could interrupt broadcasters fundamental objectives regarding the ‘presentation of Canadian programming’.
At a minimal level, the CRTC says that OTT risks raising foreign programming costs for Canadian broadcasters and/or drawing a certain percentage of viewers, advertising and subscription revenue away from regulated players.
Yet the CRTC also proposes a “doomsday” scenario where US studios and broadcasters bypass Canadian broadcasters altogether and access Canadians directly.
It believes that there are a number of feasible ways in which this scenario could be realised. For example, it says that studios could choose to withhold online rights to TV programming from Canadian broadcasters in favour of OTT distribution; they could choose to withhold TV programming from Canadian broadcasters completely in favour of affiliated OTT plays; non-Canadian OTT providers operating in Canada could outbid domestic broadcasters for online rights to improve their competitive position, and ultimately ‘starve’ Canadian players of viewers and revenues.
The CRTC concludes with the stark warning that whatever scenario takes place, as TV viewing moves more on-demand and more online, the business opportunity for non-Canadian OTT providers can only grow with it, and the threats to domestic broadcasters only increase.
It remarks that there have already been indications of an aggressive and material OTT player in the Canadian marketplace which will have an impact on prices and scope of rights secured by Canadian broadcasters across the conventional, specialty and pay-TV industries.