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What is going on with Canada Arts and Entertainment Sector

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This presentation looks at the issues facing Arts and Entertainment in Canada.

What is going on with Canada Arts and Entertainment Sector

  1. 1. HERITAGE AND CULTURE POLICIES –BROADCASTING– CANADA – ANALYSIS AND COMMENTS BY: PAUL YOUNG, CPA, CGA DATE: OCTOBER 3, 2018
  2. 2. PAUL YOUNG - BIO • CPA, CGA (1996) • Financial Solutions (FOPM/FPM) • SME – Risk Management • SME – Close, Consolidate and Reporting • SME – Public Policy • SME – Financial Solutions • SME – Advance Technology and Market Entry • SME – Supply Chain Management • SME – Business Strategy and Restructuring Contact information: Paul_Young_CGA@Hotmail.com
  3. 3. AGENDA Radio and Broadcasting – Operational Performance – 2011 to 2015 Film Tax Credits – Canada Android Boxes New funding for small media companies Issues with Digital Media
  4. 4. SUMMARY CBC receives over $1B in funding and shows an Operating Loss Streaming services will continue to expand CRTC needs to be modernized when it comes to streaming of application There should be no handouts to media companies. If media companies cannot stand on their own two feet then those media companies should die Broadcasting industry made 20% of revenue in pre-tax operating income
  5. 5. BROADCASTING INDUSTRY Source - http://www.statcan.gc.ca/tables-tableaux/sum- som/l01/cst01/comm02e-eng.htm Comment: • CBC receives over 1B in funding and runs an Operating loss • Broadcasting sector in general sees a healthy operating income of 21% of revenue Source – CBC
  6. 6. BROADCASTING REVENUE / CANADA - 2015 STATS CANADA
  7. 7. FILM TAX CREDIT • There are both Federal and Provincial Programs to support entertainment and media in Canada • Canada has long been one of the preferred places to complete film projects by foreign producers due to the various federal and provincial tax credits available. The Canadian government has been proactive in encouraging investment by domestic and foreign producers by instituting tax credits to help offset the cost of production. This has had a major positive impact on the domestic film production industry, which now has more than 127,700 employees, and an annual revenue of approximately $5.81 billion. • Given the benefits of being able to access these tax credits, AG Tax professionals have prepared a brief summary of the credits available to the film production industry. We have provided details on existing provincial tax credits, and also analyzed recent changes to them, so that film producing companies can plan their tax measures accordingly. • Source - https://www.pwc.com/ca/en/entertainment-media/publications/pwc-big- table-film-video-2015-09-en.pdf • Source - http://agtax.ca/cra/canadian-tax-credits-for-the-film-production-industry
  8. 8. NETFLIX TAX • https://www.theglobeandmail.com/news/politics/liberal-mps-call-for-5-per-cent-tax-on-streaming-services/article35313367/ A Liberal-dominated committee will be calling for a 5-per-cent tax on broadband Internet services to fund Canada’s media industries, which are struggling to adapt to technological changes and evolving consumer habits, sources said. The move would add hundreds of millions of dollars in revenues to the Canadian Media Fund, which already receives a levy on cable bills to finance the production of Canadian content. However, it would open up the government to accusations that it is once again raising taxes on consumers. • There are already programs in place like tax credit programs for the entertainment industry • CBC needs to look at their vault and license the vault as part of digitalizing their content • Forcing taxpayers to pay into fund for local broadcasting is wrong. If network in Canada want to produce content then come up with original ideas like they did in the past
  9. 9. CORNER GAS MOVIE http://news.nationalpost.com/news/canada/corner-gas-movies-8-5m- budget-is-75-from-government-funding-despite-success-of-the- original-tv-series
  10. 10. NAFTA AND CULTURE • The prime minister also said his government won't sign an updated free trade accord with the U.S. and Mexico if the deal doesn't continue exemptions for Canada's cultural industries, which aims to protect Canada's publishing and broadcast industries. • That too was entrenched in the original Canada- U.S. free trade deal that preceded NAFTA. Giving up the exemptions would be tantamount to giving up Canadian sovereignty and identity, Trudeau said. • "It is inconceivable to Canadians that an American network might buy Canadian media affiliates, whether it's newspapers or TV stations or TV networks," he said. • "So we've made it very clear that defending that cultural exemption is something that is fundamental to Canadians." ” Source - https://www.ctvnews.ca/politics/liberals- won-t-compromise-on-culture-dispute-resolution-in- nafta-talks-trudeau-1.4079435 • Netflix Canada – Canadians have been denied content due to Canada stance on content - https://www.huffingtonpost.ca/2016/07/11/canadia n-netflix-worse-us_n_10931218.html • Netflix and PQ –” For a francophone minister from Montreal, Ms. Joly has been staggeringly deaf to that concern. Last fall, she was pilloried in her home province for claiming she had cut a lovely deal with Netflix, without being able to point to any commitment that the service would run Quebec francophone productions.” https://www.theglobeandmail.com/canada/article- no-applause-in-quebec-as-melanie-joly-gives-netflix- a-free-pass-till/ • Broadcasting has been moving to streaming services like TubiTV or Youtube or other sites • CBC moved content to youtube - https://www.cbc.ca/news/business/youtube- spotlight-canada-1.4228735 • Trudeau has no clue what is happening with the arts including streaming of content. This all about protecting CBC
  11. 11. MARKET SIZE • 15.9% is many small players • Nvidia is growing as player
  12. 12. MARKET GROWTH – ANDROID TV BOX https://www.ericsson.com/en/networked-society/trends-and-insights/consumerlab/consumer-insights/reports/tv-and- media-2016 Since 2010, total viewing hours and time spent viewing content on mobile screens such as smartphones, tablets and laptops, have grown significantly
  13. 13. COST OF CABLE ARE DRIVING PEOPLE TO TV ANDROID BOXES • http://www.cbc.ca/news/business/piracy-android-box-free-tv-1.4098249 The software can be downloaded and used on many devices, including computers and some smart TVs. But Sandvine estimates that most of the households were using it on an Android box to stream the pirated material to their televisions. "It's not an insignificant amount of people if you think how many households there are in Canada," says Sandvine spokesperson Dan Deeth about the Canadians engaging in what he calls "the new face of piracy." Seven per cent of the 15.4 million households in Canada is more than one million.
  14. 14. Main players controlled 84% of the market. The remaining 16% is controlled by small players 721 android boxes available for sale!
  15. 15. AMAZON.COM • There is well over 300 android boxes available on amazon.com
  16. 16. BEST BUY Best Buy as well as other larger retailers only deal with name brand boxes
  17. 17. People need to go beyond headlines and asked questions before they buy a Android Box
  18. 18. CRTC AND BROADCASTERS Source -https://business.financialpost.com/telecom/media/crtc-rejects-call-to-block-content-pirates-in-setback- for-bell-rogers-cbc-coalition?utm_medium=Social&utm_source=Twitter#Echobox=1538504366 A coalition of media organizations suffered a setback in their fight against so-called content pirates on Tuesday when the CRTC said it doesn’t have authority to police the activities they want shut down. The Fair Play Canada coalition that includes Bell Canada, Rogers, the CBC and other large media companies had asked the Canadian Radio-television and Telecommunications Commission in January to help protect their ownership and licensing rights by setting up an independent agency to help locate websites with pirated material. • “The CRTC said it agrees “piracy causes harm to the Canadian broadcasting system and the economy” but that it didn’t consider the proposal because it doesn’t have jurisdiction under the Copyright Act.”CRTC should have work with the Justice Department to modernized the copyright laws - http://laws- lois.justice.gc.ca/eng/acts/c-42/page-26.html • I can see a lawsuit being filed against the CRTC by the entertainers guild - https://www.actra.ca/ • Bains did nothing to work with Justice Department on revamping the copyright laws around streaming - http://www.michaelgeist.ca/2018/04/ellasinjunction/.
  19. 19. BLOG - BROADCASTING • http://nationalpost.com/pmn/news-pmn/canada-news-pmn/no-netflix-tax-but-focus-on-economy-in-upcoming-liberal- culture-policy-sources • I take great offense when I read articles from LPC, especially Melanie Joly. Liberals think as always nothing was done when it comes to Heritage under previous government which is not the case. • Here are facts: • Many provinces promote the arts with their own programs. Corner Gas is a good example of a local TV show that was produced through film tax credits in SK. https://www.slideshare.net/paulyoungcga/government-policies-broadcasting- and-tv-applications-canada-june-2017 • People are cutting their chord with TV and have move to streaming - https://www.slideshare.net/paulyoungcga/digital- media-continues-to-evolve-with-more-streaming-options-april-2017. The problem has always been about licensing. • CBC needs to get back to it roots that includes more original programming. In fact, CBC is sitting on a gold mine if they were to move their historical content like The Beachcombers or Danger Bay or Street Legal to hosted environment. • Urban development also should be reviewed to ensure we protect old buildings, but find other uses for them. • Liberals also have in the past discussed a Netflix tax or lets call what it is and that is streaming tax - http://www.torontosun.com/2017/06/14/liberal-mps-to-push-for-5-netflix-tax-on-streaming-services-in-canada • CRTC also needs to be involved in terms internet fees, especially for devices like iPads, android phones and iPhones. Canada is up there when it comes to internet cost - https://www.thestar.com/business/2016/12/22/crtc-broadband- internet-ruling-still-leaves-room-for-high-prices.html
  20. 20. 2017-2018 – FEDERAL BUDGET - $50 MILLION FOR SUPPORT TO LOCAL NEWS MEDIA • https://www.thestar.com/news/canada/2018/02/23/ottawa-to-pledge-50-million-for-local- journalism.html?source=newsletter • Government should not be supporting failing periodicals. http://www.canadianbusiness.com/lists-and- rankings/profit-500/2017-marketing-media-fastest-growing-companies/ • Are the liberals looking at controlling the news?
  21. 21. ISSUES WITH DIGITAL MEDIA • What are the issues? • Copyright rules, especially with streaming. More and more applications are allowing access to content throughout the world. The legality of streaming is a hot issue as the rules implemented on downloaded content. Source - http://www.pcadvisor.co.uk/opinion/photo-video/is- streaming-pirate-movies-legal-3640854/ . Key quote “Back in June 2014, there was a “landmark” case where a media service company (Meltwater) was sued by several media groups including the UK-based Newspaper Licensing Agency. Essentially, the CJEU ruled against the NLA saying that viewing copyrighted content online is not copyright infringement. It all boils down to the fact that the copyrighted information is stored only temporarily on the user’s computer, and temporary copies are exempt from copyright laws. • Broadcasters have not come clear with their plans on how their content can be shared across different platforms. Broadcasters could be missing access to wider audience as more and more people moved to apple tv, android boxes and smart/android devices. http://www.marketsandmarkets.com/PressReleases/global-smart- homes-market.asp • Local government have rules on local content. How the local content rules will be managed has yet to be determine. • Production companies are looking at different vehicles to host their content, like YouTube or their own sites that host content. How do regulators handle online content directed at their local market? “The CRTC has sent letters to a number of Canadian and U.S. companies, including digital giants like Netflix, Facebook, Amazon, Apple and Google, requesting their participation in the commission’s report on future programming distribution models. In return for their participation, the CRTC has agreed that it will not disclose potentially sensitive data relating to audience size, revenues and viewing metrics. Source - http://mediaincanada.com/2018/02/06/crtc-asks- digi-giants-for-input-in-heritage-report/ Comment • More and more content is being streamed through applications like Crave TV or TubiTv or OVGuide or other sites • CRTC has never made any sort of adjustment to streaming services • CRTC needs to be modernized with the times when it comes to streaming
  22. 22. SUMMARY Small players will eventually be squeezed due constant changing in terms of both application and technology Small players lack the ability to provide support to their boxes, i.e. issues with supported applications, applications not loading, security protocols, etc. Many people enter the market to make a fast buck, but the reality that competition is now squeezing the margins. People will buy what they know in terms of boxes. i.e. brand recognition TV android market will continue to shift to portability as it is becoming more about options to host applications. People need to be leery of the term “Free TV”. There are free applications available like TubiTv or OV Guide, but those applications have agreements with various movie and tv companies as part of hosting content. Much of the content like movies are user fees driven. People also need unlimited high speed internet as part of using TV android boxes. People need to research companies to ensure their testimonies are true “I have the best android box on the market”. People need to read review by various analysts as part of selecting an Android Box

Editor's Notes

  • http://www.androidpolice.com/2017/05/19/casting-nvidia-shield-tv-now-supports-5-1-surround-sound-apps-4k-youtube-60fps/
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