Smaller Streaming Services Threaten to Pull Out of Canada Over Bill C-11

One of the fears brought up by Bill C-11 opponents is the implications for smaller streaming services. Those fears may be coming true.

Bill C-11, now called the Online Streaming Act, is continuing to make headlines for reasons that the bills supporters don’t like. Throughout the debates when this was still legislation, some of the concerns raised revolved around what happens with more “niche” products. Services like Tubi, Crunchyroll, Roku, and Britbox would also be impacted with heavy regulations thanks to this legislation. A number of people living in Canada like to use such services because it allows them to watch programming of their choice despite not being in the country where these products come from. It’s basically an added cultural connection.

Such concerns were not only raised with lawmakers, but were specifically brought up during the senate hearings. In the end, although it was an interesting topic to discuss for lawmakers from time to time, nothing was really done about it and these problems remained in the bill all the way through royal assent. So, these issues were never addressed in the governments haste to make this law.

Of course, like so many other problems out there, a problem like this doesn’t just magically go away on its own just because you chose to ignore it. Now, we are seeing that this is exactly what is happening. Numerous streaming services have submitted comments to the CRTC consultation about the Online Streaming Act saying that if they are not exempt, they would consider, among other things, pull services from Canada or drop investments in Canada. From Michael Geist:

In addition to seeking exceptions, some services are warning the CRTC that the regulatory framework may cause them to stop streaming into Canada altogether. For example, PBS has called for exception for non-profit broadcasters and warned that its stations could stop streaming services into Canada:

CRTC regulation could also inadvertently cause PBS member stations to have to withdraw online streaming offerings from Canada if making them available becomes unduly burdensome on stations’ very limited resources, thereby hindering the stations’ ability to provide their educational public service to their local communities.

Leading U.S. Broadcaster AMC has warned the Commission that a low threshold for exemption – which would have the effect of regulating more services – would make it more likely that its smaller niche services could withdraw from the Canadian market:

Imposing administrative and potential financial burdens on smaller or emerging players that are seeking to compete in the Canadian market will discourage those players from entering or remaining in the market, thereby choking innovation, lessening competition, and reducing consumer choice. AMC currently offers a diverse array of distinct online services to Canadians, including ALLWAYSBLK, a service that offers programming that primarily stars and is produced by the Black community. AMC is proud to contribute these diverse voices to the Canadian broadcasting landscape, in line with the policy objectives of the Broadcasting Act; however, such services ultimately generate relatively modest Canadian revenue. Establishing a threshold which aggregates the revenues associated with these distinct services for the purposes of imposing regulatory obligations on each service (regardless of size) would ultimately undermine the business case for offering such services in Canada and may lead online undertakings to withdraw smaller niche services from the Canadian market.

There are similar warnings from Roku, which warns about reduced Canadian investment for its Roku Channel:

Developing TRC in Canada will continue to demand a significant amount of investment in the years to come. It will also require that Roku refine and experiment with TRC’s accessible and consumer friendly business model. Roku is participating in these consultations to emphasize to the Commission that imposing substantial new administrative burdens on still-nascent services could have the perverse effect of dissuading investment in Canada.

And even from Crunchyroll, the Japanese anime streaming services that noted it participated in the process to raise its concerns about the ability for small players to operate in Canada given the regulatory requirement:

An appropriate threshold should ensure that larger players contribute in a way that is commensurate to the place they occupy and the role they play in the Canadian broadcasting system, while ensuring that smaller players can continue to operate without facing a significant burden that could jeopardize their presence in the market

The response will no doubt cause Canadians to consider using a VPN if they haven’t already. It’s looking like many streaming services might just pull up stakes and leave the country altogether. While some supporters of the Online Streaming Act might say that this is no big deal because most are not even the biggest, the problem is that this also scares further investment out of Canada. How badly do you want to set up shop in Canada when Canada is basically regulating your presence to death? Other countries immediately become more attractive.

At any rate, this is yet another instance where critics are right about this newly minted law. In terms of accurate predictions, this debate is extremely lopsided for the critics of the bill/law up to this point.

Drew Wilson on Twitter: @icecube85 and Facebook.

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