CRTC News Release on the Changing State of Television and Advertising

While we have removed some text from this article it is still fairly long but there is a lot of relevant information that people may find interesting.

May 21, 2015 (Toronto, ON)
Tom Pentefountas, Vice-Chairman, Broadcasting

Thank you for your warm welcome. I thought you might all be depressed these days, following the finale of the Mad Men series. As this Forum makes clear, we’re entering a new ad man – and woman – era; one every bit as exciting as the earlier advertising age.

I don’t pretend to be an expert on advertising, of course. But I know – from the CRTC’s recent consultations … public hearings … and eventual decisions surrounding our Let’s Talk TV policy review – that a world of opportunity is opening up for your sector. I’ve come today to highlight how the Commission’s roadmap for the future creates new avenues for advertising. Before I do, I’ll provide a broad overview of what we set out to do with Let’s Talk TV … the conclusions we came to … and some of their implications for the future of TV advertising in this country.

Let’s Talk TV

It’s no secret to anyone here that the TV world is undergoing a profound shift; a shift being led by viewers, who are now in the driver’s seat. And one which demands that content creators and distributors, as well as television advertisers follow their lead to remain relevant.

Canadians’ viewing habits have evolved rapidly in recent years. They are migrating away from the traditional TV set and watching the content they want, where, when and how they want, using the latest technologies. The volume of content and viewing options available has never been greater. Consider that 300 hours of video are uploaded to YouTube every minute, of every day, of every month. That’s on top of the 1,300 hours of traditional television Canadians can access every waking hour of the day.

This abundance of content, coupled with new tools to access it, has empowered the viewer. It has fundamentally changed the roles played by mainstream broadcast media – including advertisers. As the CRTC’s Chairman likes to say, while content remains king, the viewer is emperor. And no amount of regulation can stop that.
So, with Let’s Talk TV, we set out to hear what Canadians have to say about the future of TV – what they need, what they want and what role new technologies will play in providing it. The CRTC also wanted to ensure that the new framework fosters choice and innovation … encourages the creation of compelling programming made by Canadians … and empowers Canadians to make informed choices. We needed public input to develop a forward-looking framework that ensures Canada’s television system not only adapts to, but capitalizes on, the rapid rate of change.

We listened to more than 13,000 Canadians who participated in various phases of Let’s Talk TV and received presentations from industry experts from across the broadcasting spectrum. Based on what we heard, the Commission concluded that we need to update our toolbox and challenge conventional thinking to respond to changing times. Old solutions no longer suffice. Protectionism is an anachronism in an age of abundance and a world of choice.

So, the CRTC is tearing down barriers to innovation that have hampered broadcasters and producers, and throwing open the door to new ideas.
We want to cultivate the necessary conditions for the creation and promotion of compelling high-quality content that audiences at home and abroad will choose to watch. And as a result, you can pitch sponsors’ products to these audiences.

The sand is moving beneath our feet and it would be irresponsible to ignore it. American broadcasters, too, have no choice but to change. Who would have guessed the Cable television Advertising Bureau would become the Video Advertising Bureau and now include the networks?

Key changes

I will highlight a few of our recent decisions, focusing primarily on content related issues since they are the most relevant to you.

We’ve decided that Canadian video-on-demand services will be able to offer exclusive content as long as they are available to all Canadians over the Internet without needing a cable or satellite television subscription.

Many stakeholders felt disadvantaged in the face of foreign online video services. Well, here you have it – a level playing field. Producers need to create innovative and appealing programming in order to stand-out in a sea of content. So we’re reducing our reliance on quotas for the amount of Canadian programs that local television stations and specialty channels must broadcast. Quotas simply won’t work in the future.

Instead, we are focusing on prime time. We’ve also struck down rules under which specialty channels could only broadcast certain types of programs. And Canadians will be able to choose the television channels they want – either on a stand-alone basis or through small, reasonably-priced packages. This paves the way for programming innovation, as broadcasters will need to be creative to distinguish their brands and appeal to viewers. We are not dictating business models; our objective is to foster a more open and competitive television market, and an environment that nurtures innovation in the programs Canadians watch.

Another significant change, we now expect all broadcasters to financially invest in programs made by Canadians. We will require a greater number of local stations and specialty channels to reinvest a portion of their revenues into the creation of made-in Canada content.
This shift away from outdated protectionist policies to expenditure requirements underlines that we want creators and distributors to choose quality over quantity.

Audiences around the world have access to the best content. If we’re going to be playing on the world stage, our content has to be of the same calibre. Otherwise, we risk being left behind in the digital world and becoming known as creators of second and third-tier content that no one wants to pay for or watch.
If you have a top-notch product that can take on the world and attract big audiences – the world is now your oyster. So, think big.

Let’s be world conquerors, not the conquered; the victors, not the vanquished.

Golden Age of Targeted Advertising

We may agree to disagree about a few of these things, but I’m sure there’s no disagreement that the potential for advertisers in this new age of television – whenever, wherever and however it is watched – is extraordinary. As you’ve undoubtedly heard this week, there may never be a better time to be in the ad business. There are all kinds of new approaches to advertising that are dramatically reshaping your sector – for the better.

Addressable ads

The ability to deliver addressable TV advertising is revolutionizing the advertising industry.
Addressable ads have far greater precision than traditional approaches. Because of their focus on particular consumer profiles, they can be directly targeted. And they provide immediate feedback from these audiences. This means marketers can both target and interact more effectively – tailoring and coordinating messages across TV, online, smartphones and tablets. The Television Bureau of Canada says that major media generated net advertising revenue of $12.3 billion in 2013. So, there’s clearly a lot of money – and opportunity – at stake.

Set-top boxes
Just as the era of Mad Men is passé, so, too, are audience measurement tools from the golden age of television.

We no longer live in a four-channel world where you get up to change the channel. As you know only too well, today’s 500-channel universe has led to audience fragmentation. And that poses major problems for advertisers like you and the sponsors whose products you promote. Traditional measurement systems are unable to capture these fragmented viewers. Knowing who’s watching what is critically important because measurement equals monetization. And we’re leaving money on the table when we don’t know precise market shares.

Proper measurement not only increases content creators’ pool, but also contributes to the advertising community’s bottom line. The fragmentation of audiences and multiplication of platforms and windows need not be feared.

Discoverability Summit

Something else coming along later this year is a Discoverability Summit, to be hosted by the CRTC. The Commission appreciates that making great programs and measuring their viewership is only half the battle. Great content means little if viewers cannot find it. For Canadian-made content to succeed, it must be widely available…visible on multiple platforms…and easily found.

The Discoverability Summit, to be held in the fall, will generate new thinking about tools and methods to connect viewers with content.
Algorithms – such as those used by online retailers to recommend goods to consumers – are among the tools used to connect viewers with the content they’re seeking. In the same way that big data is now being mined to target sales of laundry detergent, the likes of Netflix, Crave and Shomi are also finding innovative ways to capitalize on viewers’ shifting tastes.

Conclusion

All of the measures I’ve outlined today set the stage for an exciting new era in Canadian broadcasting that enables Canada’s creators – and, by extension, advertisers – to excel in a fast-evolving environment. Let’s Talk TV confirmed that Canada’s television system is healthy. We have the necessary financial resources in the system to create and promote great programs. We have the talent to bring these programs to life. We have viewers who are hungry for new and interesting content.

I think we need to have an outward vision. We need to leverage the infrastructure we have in Canada to seduce the world with our vision, our stories, our creative genius. Given the advertising industry’s proven track record of being bold and innovative, I have no doubt you will identify and seize new opportunities in this brave new world of television.

I am equally confident that you will continue be successful as TV advertising of the future unfolds.

Thank you.

CRTC Talk about the Transformation of Television

Montebello, Quebec
May 8, 2015
Jean-Pierre Blais, Chairman
Canadian Radio-television and Telecommunications Commission

Here are some interesting excerpts from this talk about the issues that matter to us and are defining the future of the television industry.

The time to change and innovate has come. Your advantageous position is your springboard to the future. As Peter Drucker said, change is an opportunity—a chance. It must be seized. And the time to do so is now.

We held Let’s Talk TV—our national conversation on the future of television. In our ever-changing world, it is key that we update the regulatory framework for television. The system will follow suit to give you the tools and opportunities to compete and showcase your talent.

So you are at a crossroads. What will you do? Will you rest on your laurels, trapped in nostalgia, glorifying the past? Or will you take advantage of your situation to forge ahead and seize this golden opportunity?

We find ourselves at a time when TV content has never been as abundant. Supported by technology that continues to amaze us every day, the world of television is transforming rapidly. Competition has flourished, and comes from all over the world. As producers, your competition is worldwide.

The Television Viewer as Emperor

People view audiovisual content at will and according to their schedules. And although content is king, the viewer is now emperor.

We are creating an environment in which Canadians watch content produced by our creators not because it is forced upon them, but because it is excellent.

It should also be noted that we are bringing about these changes in a measured and responsible manner, and that they are centered on openness, innovation and quality.

Challenges

Public broadcasters have much less flexibility than in the past. The public is demanding greater investment in health, education, infrastructure and environment. There’s no point in kidding ourselves or being nostalgic: public funding will never again be what it once was.

However, you have the means to rise above those challenges. They are all the more reason to welcome change with open arms and think globally. You are now competing with the whole world, and that opens the door to international audiences you didn’t have access to before.

Funding

Now let’s talk about the funding system for television productions, which is quite complex and consists of a combination of public and private funds. Each year, Canadian television productions receive over $4 billion in public funding.

We need more large-scale productions to be able to compete with large international productions. We believe that there would be significant benefit in pooling our resources and investing jointly in large productions to show the world what we can do.

Creating the Conditions for Success – Pilot Projects

I would like to highlight an initiative that will encourage governments and partner organizations to consider more flexible and forward-looking approaches to the production and funding of Canadian programs. The CRTC is launching two pilot projects aimed at redefining Canadian productions. We want to broaden the definition of “made by Canada” to include large-scale drama and comedy series with budgets of at least $2 million an hour, as well as series based on best-selling novels by Canadian authors. Yes, it is true that both pilot projects are directed primarily at English-language productions.

Discoverability

In this age of content abundance, a critical issue for the success of Quebec and Canadian productions is the ability to discover content. And I’m not only talking about audiences here, but the world over. Content availability is not a one-way street. How can we make sure that audiences here and abroad can find our productions?

Even if, during our recent consultations, many stakeholders acknowledged the importance of the discovery and promotion of content made by Canada, few concrete proposals have been put forward to that effect.

Therefore, this fall, the CRTC is organizing a Discoverability Summit to explore the tools that could help TV viewers find Canadian-made content in this age of abundance. The Summit will bring together leading innovators and players in the public and private sectors from here and across the world. This will not be a regulatory exercise, but rather a chance to give free reign to innovative ideas.

The Future

It is now clear that the world of broadcasting is increasingly tied to the world of telecommunications. And while some of you are nostalgic, you are missing an opportunity to shape the future.

Today, Canadians rely on their connectivity in almost every facet of their lives. It is central not only to our economy, but to our culture as well. But technology cannot accomplish its mission unless it is available, reliable, secure, neutral and affordable.

That is why we began a major proceeding in which we will review the basic services Canadians need to actively participate in the digital economy.

We are looking at telecommunications services from every angle. We are asking such questions as: “What download and upload speeds are required in this digital age? Should broadband be considered an essential basic service for all Canadians?

It goes without saying that these issues affect you directly. Your market is increasingly dependent on the ability to connect with households.

Conclusion

My message today, therefore, is that the market is wide open to you, and we would like to help you conquer it. You owe it to your faithful audience to adapt to the future. To stay fixated on the past would be to its detriment.
Certain things must come into play—including change management—that may be more challenging for some industry players than for others—particularly those who do not put in place the means to adapt. Competition is coming from all directions, but you have the tools and the talent needed to remain successful.

The time to change and innovate has come. Your advantageous position is your springboard to the future. As Peter Drucker said, change is an opportunity—a chance. It must be seized. And the time to do so is now.

Thank you.