May 29, 2015
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I’m very grateful for this invitation to share the CRTC’s perspectives on issues that are shaping the future of the television industry.
At the CRTC, we are well aware of—and sensitive to—the situation Canadian Francophone producers are in. I will focus on some of the issues that are of particular concern to you.
But I’d like to start by providing an overview of the television industry as a whole and the prospects for the future of Canadian production—prospects that are real, regardless of your cultural background or location on the planet.
As you know, significant changes are occurring in the world of communication, and in particular, television broadcasting. You experience this reality every day. You operate in a universe where television content has never been more abundant—and all of this is supported by technology that continues to amaze us every season. Gone are the days when the world of television was governed by a fixed programming schedule. Today, viewers decide what content they will watch, and their content choices are increasing exponentially. You have to adapt to this new universe.
And you aren’t the only ones who have to change. The system—including the regulatory framework—must also be updated, so that you have the tools and opportunities to promote your work and fully showcase your talent. This is one of the CRTC’s key missions. Remember that viewers are already on board with these technological advances. Their viewing habits reflect this fact.
And this was the impetus behind Let’s Talk TV. Over the last two years, we’ve had a nation-wide conversation about the future of television in Canada. We’ve received over 13,000 comments. Canadians—as well as producers and broadcasters—shared their thoughts on what the industry will look like in the years to come.
I’m pleased to say that members of official language minority communities (OLMCs) also made significant contributions to Let’s Talk TV. It’s also very important to point out that the CRTC-OLMC discussion group, which we created in 2007, is largely responsible for a number of regulatory advances for Francophones outsides Quebec.
This discussion group is a forum for communication and collaboration between the CRTC and Canada’s 27 OLMCs. It’s also a forum that allows the CRTC to find ways to maximize the participation of OLMCs in its public processes—and not just Let’s Talk TV—so that their situation is taken into account in the CRTC’s analyses and discussions.
So, Let’s Talk TV has allowed us to update our regulatory framework. In fact, we’ve just finished publishing our decisions.
The premise of these decisions is quite clear. The television content produced by Canadians can compete with the best in the world, but the industry can’t have its hands tied. The industry must operate in an environment that allows it to reach its full potential. We want to support and guide creators and producers, and create conditions that help them export their products.We also want viewers to take advantage of the wide variety of content choices available to them.
These changes are therefore designed to promote openness, innovation and quality. They are being implemented in a measured and responsible manner, taking into account the realities of the market and the industry.
We’re eliminating the obstacles that have impeded TV broadcasters and producers and embracing new approaches. It’s becoming increasingly difficult to restrict viewers in their content choices. The measures we’re implementing create an environment in which viewers choose the content produced by our creators because it’s first rate. And as luck would have it, this content is made by Canadians.
We are therefore in a situation that is, in fact, a great opportunity for you—a situation that will help you embrace the future. You must seize this opportunity.
Canadian TV productions are funded by various public and private sources. The industry currently operates with financial support of over $4 billion per year.
However, public broadcasters no longer have the financial means they had in the past, and we can all see the impacts this has had on the production sector. The truth is that there are substantial pressures on public funds, including health, infrastructure and social programming requirements. We have to face the facts and stop living in the past: the financial support we used to receive for public broadcasters is now a thing of the past.
It is also true that many Canadian companies have invested significant amounts of money to develop and provide Canadian content. They also take advantage of the public funds at their disposal. For example, between 2010 and 2014, the Canada Media Fund alone contributed over $1.4 billion to 1,923 television shows and 335 software applications and digital media content products, for a total investment of $4.8 billion in Canadian content production.
Private funding complements these investments, and this type of packaging will define the financial future of the production sector, including the production of content for new platforms.
We can’t ignore the fact that, in Canada, production is largely funded through tax dollars. Producers’ investments represent only 1.4% of production budgets in Canada. In addition, productions are individually funded on a project-by-project basis. The result is that investments in production infrastructure are limited. This is equally true for Francophone producers outside Quebec.
Let’s Talk TV: creating conditions for success
While preparing for this consultation with Canadians, our backdrop was this new television viewing environment. In the past, broadcasters used to dictate content and viewing schedules, but now the tables have turned. The viewers are in the driver’s seat.
And to win over today’s viewers, one key element is necessary—quality. This is where broadcasters compete for the hearts and minds of viewers.
In addition to removing obstacles to the creation of original content, we are requiring all broadcasters to invest money in shows created by Canadians, because we want creators and distributors to choose quality over quantity.
I said before that the future does not lie in a world of protection but rather in a universe of innovation. In this age of content and platform abundance, quotas are a solution to a problem of the past. Today’s reality is that quality is the key success factor.
I know that this issue of quotas has been debated at length. However, French-language broadcasters generally exceed quotas, because they are well aware that Francophone audiences are captivated by Canadian-produced content. It should also be noted that the quota reductions do not apply to channels, such as TV5/Unis and RDI, that benefit from mandatory distribution on basic packages. These channels will therefore continue to offer as much Canadian-produced content as before.
Eliminating genre protection
With regard to genre protection, we’ve done away with the rules that limit specialty channels to broadcasting only certain types of content.
One of the key objectives of this decision is to give those who desire it greater flexibility in the choice of content. We must take this opportunity to learn about audiences’ tastes and specific needs and provide them with the content they want to watch.
The decision will also help break programming monopolies. Genre protection has indirectly protected competition from established brands and services that are largely held by vertically integrated companies.
Terms of trade
I realize, of course, that some of the Commission’s decisions were not universally welcomed by all producers. I’m thinking specifically of the decision on terms of trade agreements.
Because the Canadian Media Production Association is seeking leave to appeal this aspect of our decision, I’m not in a position to say much about it today. But I’ll remind you of our rationale for the decision.
As you know, terms of trade agreements between broadcasters and producers clarify digital rights. In 2006, the CRTC was asked to develop guidelines that outline acceptable terms of trade. The goal was to provide stability and clarity on certain digital rights to all concerned.
The Commission didn’t stipulate whatshould be in the agreements. It only required that the major ownership groups negotiate such agreements before renewing their licences.
It’s an understatement to say that the world has changed dramatically since 2006.
Not only has viewer interest in your productions grown since then, but digital rights and other rights issues have also largely been clarified. Most licensees now have negotiated terms of trade agreements.
Consequently, in the CRTC’s view, it’s no longer necessary for it to intervene in this relationship. Broadcasters and producers now have the clarity and experience they need to negotiate future agreements by themselves.
But that doesn’t mean we’re sitting on the sidelines. In fact, we’re leading by example.
We have recommended that the government remove the requirement for producers to sign a broadcasting agreement with a traditional broadcaster in order to obtain financial support. That way, they are not tied to you and you are not tied to them. We have also recommended that other funding agencies follow suit.
We’ve also encouraged governments to remove the barriers that currently keep Canadian producers from creating online productions.
The other important thing to recognize is that the shift away from protectionism to promotion comes with a greater reliance on expenditure requirements.
An increased number of local TV stations and specialty channels must now reinvest a portion of their revenues in the creation of Canadian-made content.
We will require all broadcasters to financially invest in Canadian programs because we want broadcasters and distributors to focus on quality rather than quantity.
Investments to create better content bring more value to the TV system. In turn, this generates more money to re-invest in content made by Canadians. It is this virtuous cycle that must be initiated and maintained.
We sincerely hope that governments and partner organizations will consider more flexible and forward-looking approaches to the production and funding of Canadian programs. With this in mind, the CRTC is launching two pilot projects aimed at redefining Canadian productions.
We’re broadening the definition of “made by Canada” to include drama and comedy series with budgets of at least $2 million an hour, as well as series based on best-selling novels by Canadian authors. At first glance, I admit that both pilot projects seem to be directed primarily at English-language productions.
But we’re not done yet. The cultural interests of Francophone communities are important to us and we’re ready to receive ideas for pilot projects developed by Francophone producers. We would welcome with open arms proposals other than those outlined in the decision. So, I invite you in all seriousness to share with us any ideas you have for projects that are in keeping with our philophy of openness, and which would benefit the industry and help shape the future of the industry.
Television broadcasting is one of our cultural assets, and its economic and social value is undeniable. As such, it’s one of the key drivers for both cultural and economical development.
The CRTC takes its responsibility to ensure the protection and development of OLCMs very seriously.
To be heard, OLMCs need TV and radio more than ever before, and, to a certain extent, they rely on Crown-operated TV and radio to survive. In 2013, we renewed CBC/Société Radio-Canada’s television licences for five years.
And we imposed new requirements on them, including a balanced schedule, specific levels of programming reflecting OLMCs, independent productions produced in OLMCs, specific levels of local programming in the markets that serve OLMCs, the reflection of OLMCs in information programming and consultations with OLMCs.
And I can assure you that we didn’t forget OLMCs in our recent decisions following the Let’s Talk TV consultation. The CRTC is making changes to ensure that OLMCs have access to channels that meet their needs:
- First, by March 2016, Canadians will be able to subscribe to an entry-level TV service that costs no more than $25 per month. The entry-level TV service will include all local and regional TV stations; public interest channels, such as the Cable Public Affairs Channel; and education channels. The French-language channels included in the current packages will all be retained.
- Then, by March 2016, Canadians will be able to subscribe to various channels on a pick-and-pay basis or in small packages, for reasonable prices. They’ll be able to create TV packages based on their needs. Viewers will be able to select the English-language or French-language channels they want in addition to the affordable entry-level package.
- Moreover, further to Let’s Talk TV, satellite companies will be required to offer 1 French-language channel for every 10 English-language channels, as cable distributors are currently required to do.
- Lastly, in the provinces and territories where there are no educational channels in the minority language, cable and satellite companies will be able to distribute channels from other provinces. The goal is to give Canadians in OLMCs access to educational channels in their language, including programs for children and youth.
The market has become global
So, I have touched on the new framework that will positively impact the choice of Francophone TV content outside Quebec. And that’s the so-called “traditional” space in which you work. But I have no doubt that many of you have already begun exploring digital opportunities, which is undoubtedly the most powerful factor in the current media transformation.
We have to look at the market like Netflix and Amazon do: as a global market of audiences who are only looking for quality original content whether it is from Canada, Belgium or the Republic of Senagal. For those who want a slice of digital space, the market is wide open to your ideas and projects. Tou.tv, illico.tv and NFB.ca are forerunners. Now it’s your turn!
Now, our heads is not buried in sand. We know that discovering and promoting TV products at the international level are major challenges. And the challenge is the same for all facets of Canadian TV production–Anglophone and Francophone. However, this doesn’t change the fact that this market is taking shape before our eyes.
Believe me, we are the first to endorse the idea that we have to export Canadian expertise in the cultural sector just as much as we do in the natural resources or in the industrial sectors. This applies to all forms of media expression, including dramas, comedies and documentaries.
The CRTC is doing its part to modernize the TV regulatory framework. However, we are not responsible for some elements of the framework. To this end, we have made recommendations to other agencies and departments to enable the production sector to capitalize on export opportunities. For example, we’ve recommended that the various government agencies develop strategies to support international co-productions and international distribution.
But despite this major digital turning point that defines the future, let’s keep in mind that television will not disappear. In 2013, Canadians still watched, on average, 28 hours of TV a week.
For all the disruptive impacts of digital innovations, but these same disruptors also offer solutions to all that disrupts.
It’s no secret that the 500-channel universe has led to audience fragmentation. Traditional measurement systems are unable to capture reliable viewer data.
Knowing who is watching what is of crucial importance since this measurement can be monetized, which means revenues—revenues that can be reinvested in Canadian programs, including programs of national interest.
When we do not have precise market-share data, we are leaving money on the table.
At the CRTC, we understand that the future success of the broadcasting sector will depend on the industry’s ability to use technology to tailor content to the diverse needs and tastes of Canadians. We also know that tools such as a set-top box data are key to the sector’s ability to compete with data-rich digital platforms.
This approach would consist in measuring the viewing levels of the broadcasters that show your content, such as TFO and TV5 Unis. The data would be accurate enough to also provide interesting statistics on the demographics of your audience.
Given that such a system would enable all distributors and broadcasters to have access to the data, the industry could be in a better position to provide Canadian viewers with the information they need to make informed choices. The fragmentation of audiences and the multiplication of platforms and windows should not inspire apprehension.
So, we ordered the industry to set up a working group to explore a set-top box measurement system in Canada. The working group is tasked with proposing technical standards, privacy protections and a governance structure, as well as determining how costs will be shared.
Of course, making great programs and measuring their viewership is only half the battle. Making sure viewers can find these works in the first place is equally important. The Commission recognizes that discoverability of content will be crucial in the future media landscape.
For Canadian-made programming to succeed, it must be widely available, visible on multiple platforms and easily found.
The study carried out by the documentary production sector confirmed as much, but the findings can also relate to other television production sectors. Learning from Documentary Audiences: A Market Research Study found that while 60% of respondents said having access to Canadian documentaries is important to them, only 7% reported they could find them easily. That’s a 53% gap, and we desperately need to bridge that gap.
The study also revealed that, if more tools for discovery and promotion were available, respondents would increase their viewing of documentaries. This means that content creators will need to find new ways to bring their programming to viewers.
The CRTC will host a Discoverability Summit to generate new thinking about tools and methods to connect viewers with the content they are looking for and want.
For example, algorithms–such as those used by online retailers to recommend goods to consumers–may be among the tools used to connect viewers with the content they’re seeking.
In the same way that big data is now being mined to target sales of laundry detergent, the likes of Netflix, Crave and Shomi as well as Illico.tv, NFB.ca and Tou.tv are also finding innovative ways to capitalize on viewers’ shifting tastes, and we have to follow suit.
The Discoverability Summit will convene innovators and thought leaders from across the public and private sectors, from Canada and abroad:
- People who employ cutting-edge techniques to underwrite the costs of production in a media-disrupted world of abundant choice.
- People who understand that the roadmap to the future will not be found looking in the regulator’s rear-view mirror.
- People who recognize that you can resist change, or you can embrace it, but you cannot stop it. If you’re not moving forward, you are falling behind. There is no standing still.
The Discoverability Summit will not be a regulatory exercise, but rather a way to give free range for innovative ideas.
There is no secret behind why the broadcasting system has experienced so many changes in recent years. New technologies, new platforms and new devices are emerging thanks to broadband. It goes without saying that the telecommunications world is becoming increasingly interconnected with the broadcasting world.
You are all familiar with Maslow’s Hierarchy of Needs. At the top of the pyramid, there is the need for self-actualization, then esteem, belonging, safety and physiological needs are at the bottom. But, today, I would say that our primary need, our basic foundation, is WiFi. All joking aside, connectivity is now at the core of our economy—and our culture. But, in order to achieve its mission, it must be available, reliable, safe and affordable.
And this is where the CRTC comes in. Our role is to establish conditions to ensure that Canadians have access to a world-class communication system. Service providers must offer basic telecommunications services. Our current policy is to ensure that Canadians across the country have at least access to low-speed Internet. But it is obvious that the needs of Canadians have changed dramatically.
It is in this perspective that we recently launched a consultation process to review the basic services that Canadians need to participate actively in the digital economy.
We will be carrying out a thorough review of telecom services, including the role of the CRTC to ensure that Canadians have access to a world-class communication system. We address every angle of the issue: What download and upload speeds do consumers need? What financial mechanisms do we need to provide modern telecom services? What is the status of broadband? Is it a basic service?
These issues have significant impacts on your sector. It is about connecting households, and thereby, your clientele. I encourage you to share your opinions and take advantage of the many opportunities to share your ideas. The process is currently underway, and you have until June 30 to provide feedback.
A second phase will be taking place in the fall, and we will be conducting an additional public hearing on the issues identified. The CRTC will also be holding a public consultation in spring 2016.
In the midst of all this, a central idea remains. There is a huge area in which you can carve a place for yourself with innovative projects and forward-thinking concepts. But to succeed, we have to do a “180.” This can include major changes, but it is crucial that we do so, not only to remain relevant, but also to stay in business in the coming years. The CRTC is putting in place the conditions and climate to allow you to assert yourself in this new environment—because this is our role we know you have the talent to succeed.
This is true for all sectors of our economy. For example, the wood industry has to reinvent itself and go well beyond exporting softwood lumber. The aeronautical and biomedical sectors, and even the taxi industry, are faced with global trends that are threatening supply management. The time to make changes is at the beginning of the curve, not at the end. This is where we stand in television production. The train is leaving the station, and we either have to get on or stay on the platform. It’s a turning point.
You have the skills and abilities to defend yourself on every stage. We often say that change brings opportunity, but we have to be prepared to seize it. I know it’s a steep curve, but it must be done. And the moment to do it is now.
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