CBS, one of the major U.S. networks, announced yesterday that it plans to take its All Access video streaming service global starting with the Canadian market next year. The move will increase consumer choice and once Hulu follows suit (which it eventually will), all the major U.S. broadcasters will be streaming directly to Canadians. Assuming broadcasters such as CBS begin to retain the video streaming rights to their own shows, this means that the Canadian broadcast licensing model that relies heavily on exclusive rights to U.S. programming and simultaneous substitution will rapidly come to an end. While the industry has been focused on the fighting the recent CRTC decision banning simsub from the Super Bowl, U.S. broadcasters are independently eroding the value of simsub, ultimately leaving Canadian broadcasters to bid on less attractive, “non-exclusive” rights.
Bell has long-term licensing arrangements with CBS, but as new shows emerge they may be available to Canadians directly from CBS via its online video service. As more Canadians cut the cord and rely on the Internet for their video content, the value of the simsubbed broadcast will continue to decline with lost exclusivity and shrinking audiences.
None of this should come as a surprise. In 2011, I wrote the following in a piece that noted the growing importance of U.S. direct streaming:
While the use of the Internet to by-pass Canadian broadcasters is still relatively rare – most U.S. programs bundle the broadcast and Internet rights together – the decision to stream the games directly into the Canadian market could soon become the norm. The key determinant will obviously be money. Once U.S. rights holders conclude that it is more profitable to retain the Internet rights so that they can stream their programs online to a global audience and capture the advertising or subscription revenues that come with it, Canadian broadcasters may find that they can only license broadcast rights with the U.S. rights holders competing directly with them via the Internet.
The piece continued by arguing that this would be good news for Canadian content creators:
Canadian broadcasting has therefore involved a trade-off that allows private broadcasters to benefit from cheap, profitable U.S. programming in return for meeting their Canadian content obligations. The Internet is on the verge of disrupting this model by rendering the U.S. programs far less profitable for Canadian broadcasters, since acquiring broadcast-only rights means missing out on the fastest growing piece of advertising pie.
While this sounds like bad news for the creation of Canadian content, it might actually be its savior. Creator groups will likely focus on pressuring the foreign based video streamers to contribute to the creation of Canadian content, but Canadian broadcasters may become the bigger champions as they gradually recognize that owning the full suite of broadcast and Internet rights are essential to commercial success. If those rights cannot be obtained through conventional licensing models from U.S. rights holders, the broadcasters may begin to create their own Canadian content in earnest.
Creator groups have indeed been focused on contribution regimes (most notably with demands for a Netflix tax), but the real benefits will come from market pressures on Canadian broadcasters to create their own content for global licensing alongside streaming services that voluntarily invest in Canadian productions. If that sounds familiar, it is because that is precisely the model supported by former CRTC Chair Jean-Pierre Blais and Canadian Heritage Minister Melanie Joly.