Market Insights

Content

Market Insight 16. Long-form content: ‘Golden Age’ or ‘Peak TV’?
Video market

The growth of online TV services has driven an unprecedented investment in content: the number of scripted TV series has doubled in less than a decade, and budgets for some shows are exceeding US$10 million per episode. But while critics and industry watchers are calling it the ‘golden age ‘of TV, analysts wonder if it is, in fact, ‘Peak TV,’ questioning the sustainability of such a massive investment.

Market Insight 17. User-uploaded content offers nearly unlimited choice.
Audio market Video market

User-uploaded video provides an almost limitless supply of new short-form video content in all its endless permutations, which is matched only by consumers’ appetite for such content.

“I watch a lot of tutorials on YouTube on how to fix things, or lessons on Khan Academy if I want to brush up on my algebra or math skills.”

Focus group participant from St. Boniface, translated (EKOS)

“When I go to YouTube I get music from the world - it’s not restrictive. I'm not having to listen to American stuff, or just Canadian stuff. I get to listen to music from all over the world of all different genres.”

Focus group participant from Sault Ste. Marie (EKOS)

Figure 41

Market Insight 18. The economics of long-form video production still favour large markets over smaller ones, even in the digital era.
Video market

Video content is expensive to finance and often involves some combination of participation from producers, video platforms (including broadcasters) and governments. Large markets clearly have an advantage over small ones. When large markets produce products with low or no marginal costs, their opportunity to sell and profit is amplified. The U.S. market, for example, is roughly 10 times the population of Canada, but its TV industry is 20 times the size of Canada’s industry. U.S. content can therefore be first monetized within its own borders before being sold internationally. Since successful content from the U.S. market can be sold in Canada at a fraction of what it actually costs to make a TV show, it incents Canadian media companies to acquire foreign content and discourages the risk associated with creating original content that would cost multiple times more to finance and produce. Since this relationship is relative to size, the principle is equally true in the digital era as in the analog era.

The equation is not the same in the French-language market as in the English-language market, but it is still relevant. The most popular shows in the French-language market are domestic, but foreign content is very profitable in the French-language market and global, largely English-language online video services like Netflix are growing in popularity. The economics for offering dubbed U.S. programming that can compete in some cases with French-Canadian shows are strong and increasingly evident.

Market Insight 19. Foreign content still has value to Canadian broadcasters, but there are signs it is weakening in the English-language market.
Video market

A key profit centre for Canadian broadcasters is the acquisition of foreign content, which exceeded $1 billion in 2017 (English $836 million; French $212 million). In the face of more direct foreign competition online, English-language broadcasters’ profits on foreign content declined by 4% in 2017 from 2016 but remained considerably higher than a decade earlier. Conversely, French-language broadcasters’ profits on foreign content are increasing, rising by almost 10% in 2017 over the preceding year and representing three-and-a-half times the value that it did a decade earlier.

Market Insight 20. Public policy is sustaining a level of domestic production the market would not naturally bear.
Video market

Virtually all genres of content benefit from direct and indirect financial support. Absent this support, domestic production of virtually all genres of programming would not be sustainable at current levels. This situation is amplified as the target audience gets smaller, as in the case of local news and content for official language minority communities, Indigenous communities and persons with disabilities (e.g. persons with visual or hearing impairments).

Market Insight 21. The cost of producing music is not the barrier to entry it once was.
Audio market

Advances in technology and declines in production costs have made recording, mixing and producing music more accessible than ever for artists. Getting discovered and getting compensated for your work, however, may be harder than ever.

35+ million songs in Spotify’s catalogue

Source: Spotify

Market Insight 22. Canadian musicians are renowned globally.
Audio market

Canada’s support mechanisms (e.g. CCD, music quotas, funds) have helped nurture successful artists. Year after year, Canadian recording artists and music selections appear on the charts for the most popular musical artists and best-selling tracks and albums worldwide. There is also a star system closer to home, with Canadian French-language musicians occupying the top spots for the highest-selling albums in Quebec in 2017. In addition, several Canadian French-language artists also shine on the international stage (e.g. Coeur de Pirate and Pierre Lapointe), with album sales in France that are as high as sales in Quebec.

Market Insight 23. Online providers may be contributing to the audio and video market in unconventional ways that are difficult to verify.
Audio market Video market

Many online audio and video providers take a hands-off approach to content, allowing content creators to make whatever they want with little direct involvement. This has resulted in some innovative revenue-sharing models (e.g. YouTube, SoundCloud), as well as new services that appear to be licensing and paying royalties for Canadian TV and music. This hands-off approach has also resulted in global models that focus on abundance, where access for creators is open and inclusive, allowing them to reach a global audience. Significant foreign contributions to the domestic audio and video production market, such as providing a platform and potentially some remuneration for user-generated content, though unconventional, are clearly present but difficult to quantify.

Figure 46: Business Model Highlights