The Canadian Radio-television and Telecommunications Commission just ruined the summer-vacation plans of every major U.S. streaming service operating in Canada. And good on them. Mostly.
On Tuesday, the CRTC announced that any foreign streamer with revenues of more than $25-million inside this country – including Netflix NFLX-Q, Amazon’s Prime Video AMZN-Q and Disney+ DIS-N – will have to contribute five per cent of their annual revenues to support the Canadian screen sector. And they have to do so starting Sept. 1, with no appeals process. Have a fun three months!
The measures are part of the Online Streaming Act, or Bill C-11, which was passed last spring and has been in the works for years in an attempt to compel foreign tech giants – which pay little tax in a jurisdiction they profit in – to support the domestic industry in ways that traditional domestic broadcasters already do.
The CRTC’s latest move wasn’t exactly unexpected. The base-revenue contribution scheme has been an essential element of C-11 back since the legislation was known as C-10 and shepherded by then heritage minister Steven Guilbeault (the law is now on its third Heritage Minister, Pascale St-Onge).
But combined with the typically glacial pace of action inside the CRTC and reports last month that the commission would still be conducting consultations on C-11 well into 2026, it seemed that any concrete measures were a ways off, giving the streamers that much more time to lobby their cases. And now, suddenly everything is happening all at once, all too soon and all too unfairly.
Or that’s the talking point the streamers would like Canadian audiences to hear, as the major U.S. players immediately hit the consumer-choice panic button Tuesday.
In a statement, Prime Video said that the decision imposed an “onerous and inflexible financial levy,” and that it was “concerned by the negative impact it will have on Canadian consumers.”
Wendy Noss, president of the Motion Picture Association of Canada, which represents the major studios including Netflix and Disney, called the decision “discriminatory” and said that “it will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here and around the world.”
The veiled threats are twofold: Streamers will either raise their Canadian subscription prices to offset the new measures, or they will pull up stakes altogether and leave the country. Both outcomes are ridiculous in their own ways, and underline a bullying mentality that requires a united defensive front if Canadian culture has any hope of not being swallowed whole by the twin forces of Hollywood and Silicon Valley.
First, when your company makes billions of dollars (Netflix’s 2023 revenue was US$33.72-billion, a 6.67-per-cent increase from the year before), you should have enough cash on hand to pay for long-expected levies without passing the cost onto the consumer. It’s not as if streamers needed C-11 as an excuse to raise prices, either – they’ve been doing so across the world for months now.
Second, does anyone sincerely believe that a gigantic player like Amazon or Netflix would sacrifice their entire Canadian market share for, essentially, spite? Similar measures to C-11 have already been adopted in France, Denmark, Portugal, Spain and Switzerland, and streamers have stayed put. It is the cost of doing business globally.
The day before the CRTC measures were unveiled, MPA Canada cannily shared a new report from KPMG that highlighted the many billions of dollars that foreign studios and streamers already spend annually on productions in Canada. Why, the argument goes, wasn’t that taken into consideration by the CRTC?
Well, mostly because that money mostly flows toward foreign production (location and service), or what are called FLS projects – movies and series that are filmed here with Canadian crews, but financed with U.S. dollars and led by Hollywood-based creatives.
The productions are ensuring boom times for local crews, but not doing much to develop the careers of Canadian writers, directors and performers. All the rights and eventual revenues flow back into U.S. coffers rather than being reinvested into Canada’s creative economy, turning our film and television scene into a mere outsourced arm of American industry.
The purpose of C-11 is to both level the playing field and ensure the sustainability of Canadian culture – to put resources toward our own artists, telling our own stories. The major studios, mostly, aren’t here to support Canadian culture – they are here to take advantage of Canada’s generous tax breaks (and our excellent crews, an industry cultivated in part by those tax breaks). Even with C-11, the math still works out in their favour.
Some audiences – notably those on the “defund-the-CBC” spectrum – might scoff at the notion that the government should compel foreign companies to subsidize Canadian culture. But because of this country’s unique proximity to Hollywood, we’re the only English-speaking market in the world that threatens to have our culture wiped out entirely by indifference. Regulation might not be pretty, but it is necessary if we want to support artists working within our own borders and entertaining our own communities.
This doesn’t mean that the CRTC’s new measures are perfect, or even close.
They are being implemented before the commission has even decided upon an updated definition of what, exactly, “Canadian content” is. Meaning that the streamers’ revenue is being funnelled into a CanCon system that hasn’t ironed out what is or is not contemporary CanCon.
Meanwhile, of the five per cent of revenues that streamers must now start contributing to the Canadian system, 1.5 per cent will be directed to a fund for independent local news – a puzzling spillover of the Online News Act (Bill C-18) into C-11. Netflix has no desire to compete with regional journalism, and shouldn’t be compelled to pay into a sector that it has no activity in.
And while there is precious little detail yet as to how the Canada Media Fund – which develops, finances and supports screen-based productions – will use its new streaming-based revenue, someone inside the CanCon machine needs to prioritize marketing and promotion of films and series. A large part of why Canadian audiences don’t watch Canadian productions is because they simply don’t know that they exist.
Finally, it is hard to place too much confidence in Canadian Heritage, given the way C-18 has rolled out. The fact that you won’t be able to share this column on Facebook or Instagram, for instance, speaks volumes.
The U.S. streamers might spend the rest of the summer stewing. But any Canadian who values the power and importance of genuine Canadian culture should crank up the A/C and chill.