The submissions include the usual fear mongering about services like Netflix. The winner so far comes from the Stingray Digital Group, which warns:
Just as Napster wreaked havoc on the record label industry in the early 2000’s and played a major role in the collapse of the music retail industry, so too will the new breed of OTT music services materially disrupt licensed Canadian music services and the Canadian broadcasting system if the status quo is left unchecked.
Other submissions contains lots of rhetoric about the dangers of an unregulated over-the-top services market, but no actual evidence of real harm.
While evidence is hard to find in the submissions, the fear of competition comes out loud and clear. Interestingly, the fear isn’t the competition for the over-the-top market (for which there are no barriers for Canadian providers) nor lost subscribers to the new entrants. Rather, the competitive fear comes from the expectation that the costs of licensing foreign (ie. Hollywood) content will increase with more competitors vying for the same rights. SOCAN says “the acquisition of North American rights reduces the supply of content available to broadcasters who serve the Canadian market. Reduced supply will drive up the costs of foreign content.” Corus says the effect of Netflix “is to drive up the costs of content,” while Astral worries about “an even more ferocious battle and a significant increase in the cost of rights, as well as a splitting of content among many services.”
As I wrote earlier this week, competition in the Canadian broadcast sector may hold the key to the regulatory challenges since increased costs on foreign content may be a good thing from a public policy perspective. Years of coddling Canadian broadcasters with policies such as simultaneous substitution (based on the premise that highly profitable U.S. programming would subsidize Canadian content) have failed, leading to a market committed to creating Canadian content for regulatory purposes but which seems less interested in whether it actually gets watched. It is true that competition for foreign rights may increase the cost of acquiring those rights for the Canadian market. Rather than viewing that as a threat, however, it is better seen as an opportunity as it helps narrow the profitability gap that currently exists between creating homegrown content and licensing foreign content, making the creation of Canadian content a more attractive proposition.