June 7, 2015
Jean-Pierre Blais, Chairman
Canadian Radio-television and Telecommunications Commission
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Good afternoon. It is my distinct pleasure to be here today.
Before I begin, I would like to acknowledge that we meet today on the traditional territory of the Treaty 7 First Nations, including the Stoney and Siksika First Nations. I thank them and pay tribute to their Elders.
The Banff World Media Festival is an event I circle on my calendar every year. I know of no other that brings together as many leaders from across the world media landscape: producers, creators, distributors, broadcasters, publishers, advertisers, bloggers, software providers. The list goes on. It’s therefore a perfect opportunity for me to connect with an audience much broader than radio people or TV people or telecom people. It’s an opportunity to connect with media people from around the world.
You of course remember the Back to the Future movies. I referred to the original movie a number of times when I spoke to the Western Association of Broadcasters the other day. I used it as a tool to bring the audience back to June 2013, when, at this very festival, I spoke about the outcomes the CRTC wanted to achieve through the Let’s Talk TV conversation.
That speech was the first part of a two-part presentation. It was the first Back to the Future where Doc Brown and Marty McFly travelled back in time to the 1950s to change the future. Today is the second part. It’s Back to the Future II, where we travel into the future and apply what we’ve learned to today’s challenges. Unfortunately, the meat of my remarks will focus on change in the media industries. I didn’t bring back Biff Tannen’s sports almanac to make any of us rich, nor did I drive the CRTC’s DeLorean to the hotel. That would be an irresponsible use of the public’s money since our DeLorean is a gas guzzler.
I’ll take my cue from the second Back to the Future film by opening this speech with a quick recap of the speech I gave a couple of days ago. I used it to give a bit of a regulatory update. Perhaps you’ve seen that the CRTC has been in the news a fair bit lately. Over the course of the first three months of the year, we rolled out a number of important decisions that, together, lay the framework for a new television system.
The new television age
Content is abundant in today’s television age. It’s available from countless sources, on countless devices, at any time of the day or night. Now more than ever, viewers control and customize their television experiences. Choice is the reality of this age. But that reality is not without challenges. The players in the traditional television system must adapt if they are to survive. Broadcasters and creators must find new ways to bring content to viewers as they move away from appointment-based viewing and toward on-demand consumption.
We at the CRTC were mindful of such changes, the pace with which they unfolded and the challenges they created. We’re not blind to the industry—despite what some occasionally say. It’s why, even as far back as the summer of 2013—at this very festival, no less—I told you a few truths about the broadcasting industry.
I said that traditional television no longer holds a monopoly on information and entertainment.
I said that people consume programming in ways and on devices that didn’t exist a decade ago.
I said that broadcasting, as we once knew it, is no longer—and will never again be—the same.
I said that new strategies were needed to help the industry navigate such change.
I said that regulation—for its own sake—gains us nothing.
And I said that all of us who regulate and create and distribute works in the television industry had to change our thinking from making and following rules to fostering successful outcomes: better quality programming, more empowered viewers, a freer regulatory environment.
Those truths drove us to launch the Let’s Talk TV conversation, to ask Canadians about what they watch on television, how they watch television and how they interact with their service providers. We used the intelligence given to us by more than 13,000 people during that conversation to build a new framework for the television system that serves the needs of Canadians.
The cornerstone piece of that framework—and for much of the audience here today, I daresay the most impactful—was our March 12 decision. In it, we took aim at a number of regressive, outdated and restrictive tools of the old television policy regime and offered exciting new incentives for content creation. Our goal was to change the way creators and distributors think about bringing television to Canadians, to encourage them to use their innovation and creativity to meet the diverse needs and interests of their audiences, both in Canada and abroad.
In today’s day and age of abundant programming choice, national borders, as they pertain to television productions, are less and less relevant. It doesn’t matter if it’s Australian, Danish, Irish or Brazilian: good content will travel. Canada’s television industry is perfectly poised to take advantage of this new reality.
It is rich with talent. We boast writers, actors, directors and producers that are known as the best in their crafts and who reside here at home and abroad.
It is open for business. We routinely fund and produce co-productions and co-ventures—such as Orphan Black—that already enjoy some international renown.
It is well funded. As a nation, we invest more than $4 billion each year in television content generation.
And it is adapting. The rules and regulations emerging from the CRTC’s Let’s Talk TV conversation have created even more opportunities to bring Canadian programs to the world: pilot projects and new financing arrangements.
The way forward in the new television age is through innovation and creativity, through adapting to the new dynamics in play. So if your business is just about renting foreign content, or if it’s about making Canadian content just for the Canadian marketplace, then you might as well leave the room now. This speech is not for you.
But if your aim is to make great Canadian content for the world stage, then listen carefully. Because the future of television, of communication—of media—is about technology. And innovation. And connectivity. And smart homes. And smart cars. And—most of all—smart producers.
DHX Media: a Canadian success story
Consider DHX Media. DHX is a Canadian producer, distributor and broadcaster. It’s headquartered out of Halifax and employs about 1,100 people. It’s not the largest company in the country, but let me tell you something: it is Canada’s great, untold success story.
DHX is the largest independent owner—and one of the largest producers—of children’s and family programming in the world. It holds more than 11,000 half-hours of programming across more than 400 titles. Their properties include Yo Gabba Gabba!, Caillou, Teletubbies, In the Night Garden, Inspector Gadget, Johnny Test, Slugterra and the Degrassi franchise. In this regard, they’re kilometres ahead of their next closest competitor. What’s more, DHX maintains more than 1,500 distribution arrangements with more than 270 networks and services worldwide: the BBC, Nickelodeon, the Cartoon Network, the Disney Channel, PBS—as well as Netflix and Amazon.
What’s remarkable about DHX is not just its girth (it’s a 1.2 billion-dollar company), its growth (it recently announced year-over-year revenue growth of nearly 200%), or even its prolificacy (DHX spends about 30% of its revenues on content production). What’s remarkable is its approach to content creation and monetization. It sees that on-demand is the way of the future because it understands that its principal audience is a group that expects to connect with television content in this fashion. It’s not catering to stubborn, change-resistant curmudgeons. It’s catering to the new generation of television watchers—children—who let’s face it, don’t want to wait for anything!
As a result, DHX has already uploaded 70% of its library to YouTube. It collects between $500,000 and $550,000 CAD per month in revenues from the online service. It has even devised a method to monetize its content that users have uploaded to YouTube.
Here is a company that is playing on the world stage, building brands for the world, and creating programs for online broadcasters as well as conventional. DHX is a model for the future of Canada’s video content industry.
In the Age of Abundance, with hundreds of media options at their disposal, viewers can watch anything they want—whenever and wherever they want. They have become active explorers who are challenged to discover content without the aid of a reliable guide.
In the coming months, we will host a Discoverability Summit to unleash new ideas to solve this challenge. The CRTC will bring together public-policy makers, engineers, scientists, psychologists and more—from here in Canada and around the world. We want to create the spark that ignites new ideas, invents new tools and builds new business models that will help resolve this fundamental problem. We do this in part because we want audiences to find great content made by Canadians, but also because discoverability is not only Canada’s challenge—it is the world’s challenge.
Your kids are going to love this
Although transformative, our Let’s Talk TV decisions were not universally loved. Some producers worried they’d be put out of business. Some channels said they’d lose market share. Some broadcasters feared the effects of more open competition. Even some viewers furrowed their brows over Canadian-made content’s ability to survive.
I’m here to tell you—all of you—it will be OK. Whenever changes happen, someone always objects. It’s human nature to fear the unknown. But listen: changes in this industry are not simply inevitable. They’re already happening. There’s no use in being nostalgic about the good old days because they’re behind us. What worked then—and this applies to making content, producing ads, airing shows and even governing the industry—doesn’t work nearly as well today and will work even less well tomorrow.
So innovate. Be creative. Seize upon the opportunities that emerge from this change. They’re there, I assure you. And the decisions the CRTC made this winter will expose even more changes and opportunities. As we say in French, profitez-en. Take advantage. Innovate and you’ll succeed. Stay still and you’ll wither away.
There’s a marvelous scene toward the end of the first Back to the Future film where Marty McFly plays a wild guitar solo on stage during the Enchantment Under the Sea dance at his parents’ high school in 1955. When he sees the shocked expressions on the faces in the audience, he realizes that he’s inadvertently brought the future into the past. So he stops and he quips, “I guess you guys aren’t ready for that yet. But your kids are going to love it.”
I couldn’t agree more.
Content creation and monetization
When Back to the Future II was released in 1989, the filmmakers had a particular vision of 2015. We can chuckle about that vision today because it feels far-fetched. But look a little deeper and you’ll see otherwise. We’re a long way away from the commercialization of the flying car of course, but flat-panel television sets, ubiquitous cameras, video-chat systems, video-game systems that track players’ movements—they’re all right there in the film.
Of course, the producers didn’t get everything right about 2015. No one uses a smartphone in the movie, and we all know how important those devices are to our everyday lives. They’re the tools we use to connect with media. We text, we send emails, we watch movies, we use online services, we like, we unlike, we tweet and we retweet.
Today, about half the world’s adult population owns a mobile phone. By 2020, experts predict that figure will rise to 80%.
There’s a lesson we can learn from that future truth—and it fits perfectly with this conference theme of the global content creation and monetization market. It’s that mass creates revenue.
If I were to ask you right now to sell me your latest 30-minute TV show for a penny what would you say? “Thanks but no thanks,” or something perhaps just a little more forceful and colourful. But if I were to tell you that five years from now, when more than four billion adults carry mobile phones in their pockets and purses, you could sell that same new show directly to each of them for a penny, would you do it? Would you turn down potential gross revenue of more than $41 million?
The irony is, in our super-connected smartphone world, where big and fast and being everywhere all the time means everything, the once unappreciated penny—now consigned to history’s scrap heap—matters more today than it ever has. The simple truth of the global content creation and monetization market is that mass creates revenue. Why sell that new production to one broadcaster for thousands of dollars when you can sell it to the world for pennies? Start thinking big. Really big.
As McFly would say, “that’s heavy.”
Click to retail
The revival of the penny transaction will be one hallmark of the future. Click to retail will be another.
As they break free from constraints of traditional broadcast media, producers will increasingly put themselves in position to use new platforms to sell products direct to consumers. Imagine creating a sit-com set in a clothing shop. Now imagine empowering the viewer to click on a designer dress that appears in the show and having it delivered to his or her home the next day. That’s “click to retail” and it’s tomorrow’s next big media idea.
Some independent producers have said that they are worried about the effects the CRTC’s decisions have had on terms of trade. They are also concerned that online video services and Internet service providers are not required to invest in content made by Canadians in the same way as traditional broadcasters and television distributors.
My message to you is don’t worry about what’s passed. There is nothing to be gained by applying regulatory tools that were designed for the traditional system to the digital world.
Instead, invest your time and energy on the future. Make click to retail a reality. Start negotiating new terms of trade—with banks and credit card companies, with Purolator and Canada Post, and with Proctor & Gamble and The Bay. Get the arrangements in place to not just monetize the content you create, but also capture potentially enormous sources of spin-off revenues through new direct-to-consumer channels.
Later this week, you’ll have the opportunity to visit with Joe Lewis, the head of original programming for Amazon Studio. I’ll tell you right now that I know nothing about what Joe plans to say during his session. We’ve never met, nor have we spoken. But I am willing to bet the CRTC’s gas-guzzling DeLorean on the fact that he will reference click to retail as the future of media. Why else do you think Amazon is so keen to get into this game?
Ladies and gentlemen, if you think the future of media is about simply streaming content online, you’re thinking too small. It’s about much more than that. It’s about connectivity.
Broadband Internet services
We have broadband technology to thank for this sea change. It’s the platform on which mobile technology stands, the superhighway that we all travel to reach our online destinations, the attractive nuclear force that has fused the telecommunications and broadcasting industries.
In just a few short years, broadband services grew from occasional, nice-to-have amenities to ubiquitous services. In the broadband home of the future, everyone and everything will be connected—the kids, the parents, the grandparents, as well the home monitoring system, the thermostat, the refrigerator and other appliances.
Outside our homes, it will be the mailbox and the vending machine.
As a result, nearly every aspect of our lives will be connected in some way: entertainment, education, health, safety, wellbeing, banking, communication, access to government services, participation in democracy.
Broadband services now are fundamental to Canadians’ ability to participate in the digital economy. The CRTC said as much in 2011 when we challenged Internet service providers to meet a minimum target for all Canadians: 5 megabits per second (Mbps) download speeds and 1 Mbps for uploads.
Four years later, we have launched another review of basic telecommunications services. Do the targets we set in 2011 still make sense? Or are they laughable? For example, the Federal Communications Commission recently set 25 Mbps as the minimum download speed in the United States. Germany, meanwhile, is aiming for 50 Mbps by 2018. In Australia, the goal is for all households to have access to 25 Mbps as soon as possible. .
We will undoubtedly discuss fundamental issues such as these in the months to come. Stay tuned. Because after Let’s Talk TV, we are well on the road to Let’s Talk Broadband.
Future of media
The future of broadband is the future of media. And before I conclude, I want to share a few truths with you about the future.
The first is that the Age of Abundance is here to stay. Content will become evermore available and widely dispersed. Stand out by making yours good, because good enough simply won’t do.
The second is that Canada is perfectly poised for success. Our media industry is rich in natural resources—actors, writers, directors—and opportunity. Seize upon these to make the world’s next great production.
The third is that ever-increasing broadband speeds will continue to push the pace of change. South Korea is about to give birth to a 5G mobile network that will deliver a full-length movie to a user’s phone within a second. A second! Think about that when you promise on-demand service to consumers.
As a result—and this is the fourth truth I propose—promotion and discoverability will matter immensely. How you connect people with content, and content with people, without the aid of traditional intermediaries will determine your success in the market. Consider that. Make it your focus.
The final truth is that the world is waiting for you. Content is abundant and the best shows will travel high and far and wide. Stop thinking about distributing them locally, or nationally or even across the continent. That’s yesterday’s success model. Tomorrow’s is about putting content directly into the pockets and purses of people everywhere—and inviting them to spend even more money through click to retail.
So go ahead, make something brilliant. Tell your stories to the world. Capture the mass. Earn the revenue.
We at the CRTC have done a great deal of listening and thinking about the future of media in the past two years. My message to you today is to take the decisions we have made on behalf of all Canadians and make the best of them. Use them as tools to build new business models, as maps to reach new destinations.
In the global content and monetization market, mass creates revenue. In tomorrow’s broadband world, everything is instant. In the Age of Abundance, everything is possible.
As Marty McFly told us, “if you put your mind to it, you can accomplish anything.”
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