Internet TV content boosts Canadian video production
Internet video and overthe-top (OTT) content providers are boosting the global video production market, especially in English-speaking Canada and the U.K., according to a study by the Boston Consulting Group.
Worldwide, the OTT market has created an additional US$25 billion in revenue for the video industry, and now accounts for five per cent of the total US$500 billion global video business.
That growth has been especially strong in English-language markets. Production spending in Canada, for example, is growing at a rate of five per cent annually. Non-English-language markets such as Sweden and Germany have experienced much more muted annual growth, with three per cent annually in Sweden and less than one per cent in Germany.
However, the OTT market's value is highly concentrated among five major companies: YouTube, Facebook, Netflix, Amazon Prime and Hulu capture 50 per cent of the sector's revenue against more than 500 competitors, including in Canada Shomi, co-owned by Rogers Communications Inc. and Shaw Communications Inc., and BCE Inc.'s CraveTV.
The increase in consumer access to international programming has not reduced the amount of Canadian content being broadcast at home — the share of domestic programming on CBC Television, conventional, pay and specialty channels held steady or increased from 2008 to 2014. The CBC's broadcasts consisted of 92 per cent domestic content in 2014, up 10 points from 82 per cent in 2011, while private conventional channels broadcast 43 per cent domestic content, up from 40 per cent over the same period.
However, despite the growth on the production side, traditional Canadian broadcasters are struggling with the shifting revenues to digital as are foreign competitors. The CBC reported total revenues of $1.1 billion in 2015, down 16.6 per cent, from the year before, and Canada's 93 private conventional channels generated total revenues of $1.76 billion, a decline of 2.6 per cent. Some have called on the Trudeau government to implement a “Netflix tax” on foreign OTT providers to level the playing field for domestic companies, although Heritage Minister Mélanie Joly told the Financial Post in June that the government has no plans to implement one.
Joly also told the Post last week, upon announcing a cross-country set of consultations on digital content, that the government intends to shift Canada's culture industry from a historic focus on growing the domestic market to pushing content abroad in an effort to obtain a greater share of the global cultural market. “We haven't branded ourselves as a creative country, and I want to make sure that is the case, which could help to create demand,” she said.
“The biggest impact of the OTT market on the television and film industries is the removal of barriers — strategic, economic, and national — to the distribution of video content,” said John Rose, a senior partner at BCG and a co-author of the report, a part of the consultancy's Future of Television series. “The demand for quality video content from consumers, and the number and variety of new services that OTT enables for meeting this need, is both increasing the market value of content and destabilizing the roles and market values of linear networks and traditional aggregators.”