Are streaming services going to leave Canada over the Online Streaming Act? The layoffs at Paramount+ certainly isn’t helping matters.
One of the talking points we’ve heard throughout the Online Streaming Act was that streaming services are all completely flush with cash. During the senate hearings, we heard one lobbyist go so far as to say that streaming platforms have ‘crashed on the Canadian couch and Bill C-11 is the notice that the rent has come due’. Obviously, you have to be completely ignorant of this debate to believe that, but it was non-stop lying that got bills like the Online Streaming Act and the Online News Act through the regulatory process over the alarm bells being rung by people who knew better.
Still, the myth persisted that every streaming platform out there is making money hand over fist. As a result, it was up to the government to extract that money from the streaming platforms and give that money back to the cultural elite and broadcasters. This because those traditional producers and broadcasters are entitled to that money no matter how much Canadian consumers have rejected them in favour of online offerings or simply making due with less in light of the affordability crisis plaguing Canadians today.
Obviously, the picture is nowhere near as simple as what the lobbyists would have you believe. There are things like video games, cord cutting, the aforementioned affordability crisis, venture capital, dividend payments, lack of investing in quality programming, a full blown technological shift, new competition, increased compensation at the executive level, and many other factors going into consumers decision making and the overall picture for how consumers, well, consume media.
One of the things I have long argued was that demanding all streaming services operating in Canada to fork over a percentage of their overall revenues isn’t going to necessarily yield the result of platforms just forking over that money and things carry on as business as usual. There are plenty of signs that tell the tale. A big sign was something that I reported last year where non-Netflix premium streaming platforms collectively lost $5 billion. One of the chief concerns is that every single one of these services are jacking up the rates, causing consumers to simply drop services one at a time and sticking only to one or two (if any at all). This is not exactly the image of platforms having their own Scrooge McDuck money vaults that the lobbyists were portraying.
This, of course, is having an impact on the decision making process for many of these streaming platforms. One of the things that is on their radars in terms of planning for the future is whether or not they want to continue offering their services in Canada. Who could blame them? If money is actually tight, being asked to fork over a percentage of revenues might be the straw that breaks the camels back for some of these platforms. This, of course, isn’t idle speculation either. In response to the Online Streaming Act, Disney, last year, has already rolled back investing in future products in Canada. In response to the CRTC call for submissions, Paramount openly questioned the financial viability of continuing to operate in Canada in light of the Online Streaming Act. Paramount, of course, is far from alone in seriously wondering if there is a future for them to operate in Canada.
The bottom line is this: once the Online Streaming Act makes its way through the CRTC consultation process, it is more than possible that the Canadian government will emerge from the consultation process, poke the platforms demanding money, and the platforms responding by putting their hands up in the air and saying, “I’m out” before leaving the country.
This wouldn’t even be the first time that one the Canadian governments hairbrained internet bills backfiring spectacularly. We need not look much further than the Online News Act, Canada’s failed link tax law, for that. When the Canadian government demanded money from Meta because publishers were posting news links on their platform, Meta, understandably, gave the Canadian government a “WTF?” look. Meta then blocked news links in Canada over the lobbyists shouting about how much Meta depends on news links and moved on with their collective lives, leaving those lobbyists screaming bloody murder in the process as their scheme pretty much collapsed overnight. This as the Canadian media sector suffered massively thanks to the greed of mainstream media outlets.
In the process of that, it really killed the credibility of the talking point that the Canadian audience is far too lucrative for platforms and that platforms would pay anything just to retain that audience. There are other audiences that these platforms can seek out. No one country, even Canada, is too valuable to lose for these platforms.
As we move forward, there are more signs that the lobbyists free money well may actually be a heck of a lot more dry than they convinced themselves it is. According to Deadline, Paramount+ is laying off 15% of their workforce:
Paramount Global has officially initiated long-planned layoffs as it looks to reduce its U.S.-based workforce by 15%.
The first of three stages of staff reductions is beginning today, with 90% of the total cuts to be completed by the end of September. George Cheeks, Chris McCarthy and Brian Robbins, the three members of the Office of the CEO, laid out details this morning in a memo to employees.
“The industry continues to evolve, and Paramount is at an inflection point where changes must be made to strengthen our business,” the co-CEOs wrote.
“We know that having to part ways with teammates whose contributions have been instrumental to our success is incredibly hard,” they added. “In partnership with our HR leaders, we are committed to providing support to employees transitioning on from Paramount and to our teams who will need to adapt to these changes.”
This is part of a much broader picture of streaming platforms struggling to get the audiences they are after. Consolidation of online streaming platforms have been happening all over the place in recent years. Even worse, it has actually led to the quality of the offerings suffering as a result. From TechDirt:
You might recall that AT&T’s $200 billion acquisition of Time Warner and DirecTV was supposed to transform the telecom giant into a modern internet video advertising superpower. Instead, after a massive amount of debt and endless bumbling, AT&T wound up laying off more than 50,000 people, closing a bunch of popular brands (like Mad Magazine), and selling what was left to Discovery.
The executives at Discovery have proven no less bumbling, and after firing more people and ruining a bunch of additional services (like HBO), the company saw its stock tank last week after having to take a $9.1 billion write down on the value of its entire TV division.
Like other mindlessly merging media monstrosities completely out of ideas (Paramount/CBS is engaged in similar cannibalization), Warner Bros Discovery is now looking to miraculously cut costs to reduce massive debt created by its pointlessly doomed merger.
At Paramount, that meant the complete erasure of both Comedy Central’s online footprint and the entire MTV News journalism archive. At Warner Bros Discovery, that most recently meant the deletion of Cartoon Network’s entire online presence (without any warning, we should add):
“Warner Bros. Discovery this week pulled the entire contents of cartoonnetwork.com offline — redirecting visitors to a landing page on Max, its subscription-streaming service, encouraging fans to sign up to watch their favorite Cartoon Network shows. The shuttering of the site appears to have happened Thursday, Aug. 8.”
Reading all of this, you can’t help but be perplexed that this is the infinite money ATM that the Canadian broadcast lobbyists were hoping to draw from. Canadian traditional media types were not only hoping to score a massive payday from the above mess to solve all of their financial problems, but also hoping to score additional cash to make up for the failings of the Online News Act on top of it all. While some lobbyists love to describe the Online Streaming Act as just one piece of the puzzle, let’s not kid ourselves: this is their “Plan B” to try and salvage the situation and it’s already looking like it’s going to crash and burn just as hard as the Online News Act.
Of course, this all presents some serious risks to Canadian consumers on top of it all. If you are subscribed to any number of these platforms, you may, at some point in the future, find your service officially cut as platforms laugh off the demands of the Online Streaming Act. That will invariable lead to fewer consumer choices in Canada. What’s more, the few streaming platforms that choose to grit their teeth and bare with it with all of these additional fees are much more likely to pass the additional costs onto consumers afterwards. After all, Google has already announced that this is what they will do in response to the Digital Services Tax for Canadian consumers. There’s little reason to believe platforms that choose to stay in Canada won’t do the same in response to the Online Streaming Act.
Probably the only good news in all of this is the fact that the CRTC is still holding their hearings on the Online Streaming Act. At the moment, they are anticipating hearings that revolve around closed captioning and described video on streaming services. Compared to other particularly nasty aspects to the Online Streaming Act, those elements are comparatively tame. There’s numerous other aspects that the CRTC needs to consult on. As the CRTC itself has noted, their delayed timeline currently shows that this will carry on until late 2025. So, this process is going to be going on for a while yet. So, it’s not as though you’re going to be receiving your Disney+ notice saying services are being discontinued tomorrow. Still, it’s easy to see things going from bad to worse at this point in time.
