Evidence of meeting #134 for Canadian Heritage in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was content.
A recording is available from Parliament.
Chief Executive Officer, OUTtv Network Inc.
Yes. It would also go to all kinds of different producers instead of two or three of the top ones in the country all the time.
Liberal
David Yurdiga Fort McMurray—Cold Lake, CPC
Thank you, Madam Chair, and thank you to the witnesses for coming in today.
When I was growing up, I waited for my show to come on. It would come on once a week and I marked it on my calendar. I didn't have a calendar, I just remembered it. Back then we didn't have calendars—not digital ones, anyway.
Everything's changing. We upgraded to cable, then to satellite, and now we stream everything. We don't have a cable package. My children don't have a cable package or satellite. It's all streaming. They have very busy lives and so forth.
The business model is changing at a rapid pace—faster than ever before. Mr. Danks, I'm glad to hear that you're trying to be global instead of just concentrating on one market, which is the Canadian market. In your opinion, is a lot of the Canadian market just trying too hard to be in the Canadian market, or are they trying to expand into the global market?
Chief Executive Officer, OUTtv Network Inc.
I can give you two answers. If you're at the international markets—in MIPCOM and such, as I was in October—there are a lot of Canadian producers. Most people would say that Canada punches above its weight, from a global perspective.
On the other hand, there wasn't anyone there from Bell Media. There was no one there from Rogers Media. I think there were a couple of people from Corus. The problem with the vertical integration of our system was that the companies that control it are mostly Internet and mobile companies—or at least they were with Shaw and Corus. Their focus is primarily within Canada. That's really been the problem. We created a production model that inverted production. You produced in order to maintain your monopoly status. The actual value of the show wasn't based on what was happening in the marketplace.
We introduced a novel concept: we actually make shows and then sell them and try and make money on the programming. I'm being a bit facetious there, but that is ultimately where the business needs to go. We work with Emily's company, and they have great international reach. They've got a lot of power and ability. We have Canadian companies that can do this, but we need more.
The CRTC are now calling broadcasters “service providers”. To be honest, I really like it because it says more about what we should be doing. We should be going out and negotiating deals across the world.
I met with the new head of Telefilm yesterday. She asked me how we get into these countries. I told her that she can do it. We can do it, but we can't put 10 producers on a plane and send them to some place to try and get a deal. We need companies that can do those deals for the producers and then bring them in and do that.
I think we've been at cross-purposes for too long. We've been trying to maintain the fiction that we're still a market that exists without the outside world. That's now over. The first thing we have to do is throw out that idea and say that's never going to work. Le's start now and say, okay, now that we know the world is global, how do we play? Canada is in an extraordinary position to take advantage of that, but the mindset shift needs to happen, and happen now.
Fort McMurray—Cold Lake, CPC
Thank you.
Emily, in your experience, are you finding that people prefer on-demand services and...the ability for Canadian content to be on that on-demand service? I know for myself, I have Netflix because it's easy access and everything else. My grandson is 10 years old and he's YouTube all the way.
How do we promote Canadian content on these platforms? As I said earlier, people are using cable less and less. The new generation doesn't want to actually wait for a show at a certain time; they want it now. How do we get into that Netflix and YouTube sort of mindset, where you're outside and all of a sudden you want to watch something, and it's on your phone? How we transition into that to try to get more Canadian content?
President, Canadian Association of Film Distributors and Exporters
I think it's a great question.
As Brad indicated, the direct-to-consumer model and the on-demand model are more and more a function of every licence that we're doing. It's very rare now that you do a deal where they aren't looking for some sort of an on-demand capacity.
I also really liked what Brad said, that free isn't a model. There needs to be proper value associated with the grant of that on-demand right. As we move forward, I think we have to be flexible about what rights we are granting, what partners we're working with.
When we talk about a level playing field, Netflix is both friend and foe. It is a client of a lot of content producers. However, we need to make sure that the value we are getting from it and the value that it's bringing into the ecosystem, which are two separate things—the licence fees it's paying for its content and any contributions it's making to the ecosystem—are equivalent with what we're asking Brad to do.
Right now, we have been a little slow to ask Netflixes and the YouTubes and the Amazons of the world to pay into the system the way that Brad has to and the way that our BDUs have to, and that's unfair. We are incentivizing foreign-owned companies to work in our sandbox, and to syphon profits out without contributing in.
Each different client will potentially have a different business model. We're interested to see how the broadcast act review and the telecom act review play into that.
There needs to be an approach that recognizes that Netflix is the same service. You may be watching Netflix and someone else may be watching OUTtv, but they're doing the same thing for the consumer. To have left them unregulated for so long has created this inconsistency and lack of equivalency between our Canadian-owned BDUs and these foreign-owned players.
The other point I would make is that we have to be ahead of these things. To do that—and I think Brad's company is a great example—success at home is important, and then we need to incentivize people to grow. We want to make sure that we don't throw the baby out with the bathwater, in terms of the regulations that have existed which have allowed companies like OUTtv to grow and thrive.
What we don't want to have is a regulatory framework whereby a Canadian-grown company hits a wall and is now disincentivized vis-à-vis its foreign-owned companies. We need to create a structure where we're protected at home, so Brad can grow and get his direct-to-consumer platform and then launch globally.
I think it's that second step where we're not seeing the same protections that we have vis-à-vis the foreign-owned companies.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Thank you, Madam Chair.
Ms. Harris, we've already met.
Mr. Danks, I'm pleased to meet you. You think outside the box. I believe that Mr. Boissonnault clearly identified a number of points regarding the fresh nature of your presentation and business approach.
Ms. Harris, you mentioned that, obviously, we can't let Netflix fail to contribute to the system. I also know that this is the government's official line. If players want to be part of the system, they must contribute to the system. That's a good thing. Let's hope that this will be done. I'm worried about the slowness of the process. I'm concerned that many players will run out of steam.
You brought up the idea of making important players contribute to Canadian content, but there were also two other points in your presentation. Can you remind me of those points, please?
President, Canadian Association of Film Distributors and Exporters
Yes, absolutely. The Netflix point was one. The other one was the film distribution policy.
Our existing film distribution framework is based on a 1988 policy, which was obviously created before the Internet was a twinkle in anyone's eye. That policy outlines that Canadian-owned companies should distribute feature films in Canada. There was one exception made: It was to the six existing Hollywood studios that had proprietary rights worldwide in content.
What we've seen to date is that structure worked until the digital companies became more prevalent. What we're seeing now is more and more erosion of foreign-owned players—Netflix being one, but other U.S. companies being others—that are directly distributing feature film in Canada, contrary to the provisions of this policy.
CAFDE feels very strongly that the requirement for Canadian-owned companies to distribute them in Canada is what's built our distribution sector. Without that protection, it's very difficult to build a vibrant Canadian film industry. Our members need the funding from a wide swath of investment to ensure we have resources to invest in Canadian feature films.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Yes, we can be reminded that in France, the equivalent to the Canada Media Fund is actually nourished by movie theatres, by the way, as a special contribution.
I want to just make sure of your presentation on the first point.
You mentioned that you're distributing 2.5 times as many films, because obviously there are more independent productions.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Do you have fewer theatres? Can you provide figures? This may be calculated based on the number of weeks of screening availability.
President, Canadian Association of Film Distributors and Exporters
Yes, right.
President, Canadian Association of Film Distributors and Exporters
No. Can you just repeat the question?
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
The question I'm asking you is if you distribute 2.5 times more feature films than the majors do, how much less access to viewers do you have?
President, Canadian Association of Film Distributors and Exporters
What we find, especially in respect of English-language Canadian productions, is that we may be able to receive exhibition space for one week or for two weeks with the theatrical exhibitors but we're up against the behemoths of the Marvel movies and the superhero success stories. It's very difficult to carve screen time out for smaller-scale Canadian theatrical features.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
If ever you have any numbers on this, even though it's a little off topic, I'm sure everyone would be interested to see, for example, that you have 2.5 more things to distribute and you actually have access to 95% less viewing time for somebody in the room.
President, Canadian Association of Film Distributors and Exporters
Yes, we're happy you raised that.
President, Canadian Association of Film Distributors and Exporters
The third point was about carving out space for feature films within the broadcast requirements for Canadian content.
President, Canadian Association of Film Distributors and Exporters
What we find currently is that the CPE or the exhibition requirements that are on Canadian broadcasters—which, I would note, are on only Canadian broadcasters, and not on foreign players—
