Should Canada legally force Netflix to produce CanCon?

A government panel will report on whether streaming services will be required to make Canadian programming, but Netflix is pushing back


Canadians looking for homegrown content on Netflix aren’t starved for selection. The streamer partnered with CBC to produce Anne With An E and Alias Grace, licensed out shows like Workin’ Moms, Kim’s Convenience and Schitt’s Creek, and even have a few CanCon films like Denis Villeneuve’s Incendies and Michael Dowse’s Goon in its library.

But if there were a competition between streamers as to who showcases the most CanCon, CBC’s Gem and Crave would win, naturally.

Gem is all CanCon, served up free for Canadians from our public broadcaster (unless they want to stream commercial-free for a small fee). Meanwhile, subscribers with the full package from Crave (including Movies + HBO + Starz) have access to at least four times the Canadian content compared to Netflix, and not just the popular television shows (Cardinal, Letterkenny) and classic films (Away From Her, Dead Ringers, Fubar).

Crave’s movie library boasts recent micro-budgeted debuts like Kathleen Hepburn’s Never Steady Never Still, Daniel Warth’s Dim The Fluorescents, Ashley McKenzie’s Werewolf, Zoe Hopkins’s Kayak To Klemtu, Sophie Dupuis’s Chien De Garde, Joyce Wong’s Wexford Plaza, Molly McGlynn’s Mary Goes Round and so much more.

Bell Media’s online service makes for a stellar hub for strong new Canadian voices who pretty much never have their work screened at local multiplexes. But there’s fear in the Canadian film and TV industries that the opportunities for the next generation to tell their stories will dry up in a new streaming landscape.

And the only way to prevent that scenario is to introduce legislation for streamers to ensure a substantial long-term commitment to CanCon.

The Doomsday Scenario

You could generously attribute the Canadian content on Crave to a sense of national identity in a local company. Truthfully, the content is practically legislated. The Canadian Radio-television and Telecommunications Commission (CRTC) demands that broadcasters dedicate 30 per cent of their gross revenues to local programming (which includes sports, news, dramas and children’s shows) while also contributing to the Canadian Media Fund (CMF).

marygoesround_05.jpg

Molly McGlynn’s Mary Goes Round is among the CanCon selections available on Crave. 

Because the CRTC doesn’t regulate the internet, streaming services like Netflix don’t have to comply with these rules. Neither does Crave’s online service really, which only boasts an extensive CanCon library because those films and TV shows are already produced or licensed by its parent company’s cable services.

But cord cutting is shrinking revenues from cable companies, and so withers the contributions into the CMF and investments in local programming. In a doomsday scenario where everyone cancels their cable in favour of streaming services, who besides the taxpayer-backed CBC would fund and program Canadian content?

Not even Crave’s online service would be under any obligation to do so. And we know how much inclination there is to light up a screen with Canadian content when there’s no legislation dictating such programming: just check the listings at your local Cineplex.

ACTRA president David Sparrow is one of several industry leaders who spoke to NOW about the urgency of the current situation. According to him, our culture is at stake.

“It is our responsibility to ensure that future Canadians will have a Canada to brag about that we will have Canadian content still on our screens in the coming years,” the union leader says. “That we will have a culture that is being projected around the world and is still drawing in tourists and immigrants and corporate headquarters and all kinds of businesses that are supported through the advertising of our culture to the world.

“The best way to advertise that culture is personally through film, television, music and the arts. That’s what tells our story. We can’t allow for a simple change of technology – the way that content is delivered to us – to dictate whether there will be a Canadian culture to celebrate in the future.”

The review panel

The concerns aren’t limited to Netflix’s presence in Canada (there are so many more entities here), but that company’s dominant position in the marketplace does position it as a flag-bearer for a rapidly changing industry and the motivation for why our key funding mechanisms for local content need a complete overhaul.

Last year the federal government formed the Broadcasting and Telecommunications Legislative Review Panel, which released an initial report in June summing up the concerns and arguments from interested parties on how to update the Broadcasting Act and Telecommunications Act to deal with the shift in consumption, where content is broadcast online.

Among the recommendations made to the review panel was the idea that internet service providers (ISPs) should also contribute to the CMF.

“Canadians watch more and more of their content on their phones or on their laptops through their ISP connections,” Canadian Media Producers Association president Reynolds Mastin tells NOW. He suggests that Bell, Rogers and Shaw should allocate funds to the CMF from their internet service revenues as the cable TV side of their business shrinks.

According to the review panel’s report, ISPs have argued in turn that such a strategy would pass that cost onto the consumer. That would conflict with another goal set out for the review panel, which is making affordable high-speed internet available to all Canadians.

The report also sums up feelings about whether the rules applied to Canadian broadcasters – the mechanisms that fund Canadian productions – should apply not just to Netflix but also Amazon Prime, upcoming streaming services from Disney, NBC and perhaps even YouTube and Facebook Watch.

“Everybody who is a player in the system should be integrated into the system,” says Dave Forget, the Directors Guild of Canada’s national executive director. He shares that sentiment with Sparrow and Mastin. They all agree streaming services like Netflix and Amazon Prime should, in some shape or form, pay taxes and contribute to the CMF as Bell Media, Rogers and Shaw do.

“Its an un-level playing field at present,” says Sparrow, pointing to the approximately $750 million Netflix earned from Canadian subscriptions in 2017 alone. “All of that money just flew across the border with no taxes attached and went to a multi-billion dollar company in the States.”

While Netflix has welcomed the idea of charging local taxes like HST, a cost they will merely collect from Canadian consumers, Sparrow points out that foreign streamers should also be paying corporate taxes. But more importantly, they should also be committed to funding and programming Canadian content.

As far as Netflix is concerned, they already do.

The Netflix Deal

Netflix recently unveiled partnerships with imagineNATIVE, the Indigenous Screen Office and Wapikoni Mobile to support talent development programs similar to the initiative announced with Inside Out LGBT Film Festival. Yet such development programs, as welcome and exciting as they are, don’t include any commissioned projects for queer or Indigenous filmmakers.

Instead, they are part of Netflix’s September 2017 deal with former heritage minister Mélanie Joly. Over the next five years, Netflix committed $25 million to talent development in Canada alongside another $500 million allocated towards… well, what, exactly?

Umbrella_Academy.jpg

Netflix’s The Umbrella Academy was shot in Toronto.

How Netflix allocates that larger figure remains a mystery. The terms remain strictly confidential, though we know it includes foreign service production spending, where U.S. shows like The Umbrella Academy are shot in Canada with our crews, and licensing, where Canadian shows like CBC’s Kim’s Convenience are shown on Netflix.

As for creating Canadian content, Netflix has commissioned one project: a Quebecois thriller by director Patrice Laliberté starring Marc-André Grondin.

Joly’s Netflix deal was announced like a win for Canada, but skeptics point out that the streamer probably would have invested at least $500 million on productions anyways.

“They don’t do that out of their own largesse,” says Sparrow, who points out that when the deal was announced, Netflix would have covered most of its entire $100 million annual budget in Canada with the Vancouver-shot series Altered Carbon. “They do that because it makes financial sense for them to do so.”

The Canadian dollar and incentivized tax credits are appealing not just for Netflix but every Hollywood studio shooting movies (Dark Phoenix) and TV shows (Star Trek: Discovery) around the country.

Netflix is considered a terrific partner for local actors and crews, especially filmmakers looking for creative freedom and TV creators who would much rather have their work amplified across the globe commercial-free. The streamer is already on track to exceed its $500 million commitment, and has signed multi-year leases in Toronto and Vancouver for dedicated studio spaces.

The fear in the industry is that all that production spending can evaporate after that five-year commitment. If the Canadian dollar rises or the tax incentives disappear, what’s keeping Netflix and other studios in Canada?

“When those metrics change, then Netflix will go to some other country,” says Sparrow, who stresses the need to balance foreign service productions with a local industry creating Canadian content, if only to keep our studio spaces filled and actors and crews at work.

Sparrow points out that productions totalled $9 billion in Canada last year: 53 per cent was foreign service production and $1.8 billion was spent in Ontario, with almost half dedicated to local content. However, in BC, 85 per cent of the $3.6 billion spent was foreign service.

“Should foreign service providers ever decide to go elsewhere, there’s still an industry in Ontario,” says Sparrow, suggesting that BC would be screwed. “We don’t have all our eggs in one basket.”

Mastin compares Canada’s role as a foreign-service production hub to being a manufacturing plant, where all the economic benefit travels south of the border. That’s another reason he cites for securing investment in local productions.

“That creates a virtuous cycle,” says Mastin. “When you make a great Canadian show and it’s a success with Canadian audiences, you can then export it to other markets around the world, and then you take those revenues and reinvest them to develop the next great Canadian show.”

Netflix claps back

In Netflix’s own submission to the review panel, the streamer responded to numerous recommendations made by other parties. Some claims are predictable: productions, driven by quotas instead of market, suck.

There have been calls for more “discoverability” of Canadian content – engineering the algorithms so that local productions can be promoted rather than buried on platforms. Netflix argues such manipulation would be “fundamentally anti-consumer” since, they say, the algorithm works purely on the audience’s taste. Given how many times a Netflix in-house Marvel series has been promoted into my feed (even though I’ve never watched a superhero title on the service), I’m not sure that logic computes.

What does make sense is Netflix’s call-out about how selective this measure to legislate online services really is. Where is the protection for Canadian news media (you know, like us)? Thanks to the internet in general and Google’s algorithm especially, foreign media, whether it’s the New York Times, BBC or the Guardian, are in direct competition with local news when it comes to content. In its submission to the review panel, Netflix essentially said, “What up with that?”

As for calls for Netflix to contribute to the CMF, the streamer argued that would be unfair since they would essentially be subsidizing content for their competitors. Unless they are partnered with a Canadian broadcaster, Netflix has no access to CMF funds. In fact, in the current system, there is no way for Netflix to even produce a show that is certified CanCon.

A case in point is Travelers, the sci-fi show originally created as a co-production between Showcase and Netflix. Showcase dropped out after two seasons and Netflix continued, but the show lost its CanCon status in the third season, despite an all-Canadian cast and crew.

For Netflix and every other streamer to fairly contribute to the CMF, the system would also have to be overhauled so that they can also be beneficiaries.

Michaela Kurimsky and Karena Evans in Firecrackers

Jasmin Mozzafari’s Firecrackers will debut on Crave in October.

The future

“Where are our shows that are cool and taking risks and pushing the boundaries,” asks Jasmin Mozaffari, lamenting the lack of premium television in Canada, the kind HBO and Netflix make.

The Canadian Screen Award-winning filmmaker, whose hard-hitting debut Firecrackers drops on Crave in October, is all for Netflix contributing to the CMF while also tapping into its resources to make certified CanCon that would shake up what’s being made today.

“There’s way more restrictions when you’re creating content for Canadian broadcasters,” says Mozaffari, whose work tends to be more provocative and political – not exactly safe for a TV station beholden to ad revenues. “I’ve been told that if I want to create a procedural or a kids show, there’s room for me. But if I fall outside of that, there aren’t many options.”

While the streaming model has paved the way for far more adventurous and risky television, the effect has yet to trickle down into Canadian productions, where the budgets still come from broadcast. That’s why Mozaffari, along with so many other Canadian filmmakers, are all for re-routing some of the money Canadians spend on streaming services back into Canadian productions. The landscape is changing, and we need to change with it.

But change can’t come fast enough. The final report from the government’s review panel isn’t due out until January – after the federal election. And it will be up to the government at that time to act on the recommendations and legislate changes, a process that can take years.

In the meantime, Mozaffari, like so many other Canadian talents, may entertain making her show down south.

“It just feels like we’re stuck.”

Representatives from Netflix and Bell Media chose not to provide comment for this story.

@justsayrad

Leave your opinion for the editor...We read everything!

Your email address will not be published. Required fields are marked *