Earlier this week, Canadian Heritage Minister Steven Guilbeault tweeted that he plans to work with Innovation, Science and Industry Minister Navdeep Bains to amend Canadian law to ensure web giants offer more Canadian content, contribute to its creation, promote it, and make it easier to find. The tweet was consistent with the government’s platform and mandate letters that have been pointing to increased Netflix regulation for many months. While there is much to be said about the specifics of each of these regulatory issues – the wisdom of government regulating the Netflix recommendation algorithm, the false “level playing field” arguments, the impact on the company’s 6.5 million Canadian customers among them – it is important to go back to how this debate started with the claims that only regulation would ensure support for film and television production in Canada.
Notwithstanding the fear mongering, the actual data tells a far different story. Netflix broke down Canadian subscriber data earlier this week in a securities filing in the U.S., disclosing that it generated $835 million in 2018 and $668 million in 2017 in Canada (it has generated $780 million during the first nine months of 2019). The 2017-2018 period is relevant because the company has previously indicated what it spent on film and television production in Canada during much of that period. In September of this year, the company reported that it had spent more than $500 million on film and television production in Canada in the two years since its 2017 agreement with Canadian Heritage.
The numbers speak for themselves: the company has apparently spent roughly one-third of its Canadian revenues on film and television production in Canada over the past two years. For all the talk about the company siphoning revenues out of Canada, Netflix has proven to be a major cultural investor in Canada, doing so without any regulatory mandate or requirement.
The new data is particularly noteworthy since it contradicts a recent report from the CRTC that exaggerated actual Netflix revenues. As Carleton professor Dwayne Winseck noted, the CRTC recently estimated Netflix Canadian revenues at $1.6 billion, or double its actual amount. The CRTC, led by chair Ian Scott, has emerged as a vocal proponent of Netflix regulation, apparently relying on bad data to support its cause. To his credit, Winseck’s own study expressed doubt about the CRTC numbers, which he rightly viewed as inflated.
Other cultural groups will undoubtedly still take issue with the Netflix spending, arguing that $500 million on film and television production in Canada is not the same as $500 million on Canadian productions. Leaving aside the reality that meeting Cancon requirements often do little to guarantee truly Canadian stories (for example, co-productions with other countries qualify as Canadian even though they may have limited Canadian involvement), the rules largely preclude Netflix productions from qualifying as Canadian since the producer is not Canadian. That means that Netflix-backed films such as the Quebec film Jusqu’au Déclin – shot in Canada with Canadian talent – does not qualify as Cancon. The same is true for the Netflix productions such as Trailer Park Boys and Degrassi, quintessentially Canadian shows that do not qualify as Cancon when Netflix is the sole producer. In fact, with the CBC indicating that it no longer wants to work with Netflix, the ability for Netflix to make Cancon certified productions has become even more difficult.
As the government looks to address Internet-based streaming services, lobby groups will undoubtedly continue to seek more regulation. But the government should see this for what it is: self-interested demands for hand-outs, not policies that speak to film and television production in Canada (which is booming) nor the best interests of millions of Canadian consumers who prefer freedom of choice to government regulation when it comes to their cultural consumption.