Canada to Force Netflix, Amazon Prime to Pay for Local Content

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Ottawa unveiled Bill C-10 to collect $800 million from foreign streaming platforms by 2023 to tell Canadian stories.

Canada's federal government has unveiled long-awaited legislation to regulate U.S. streamers like Netflix and Disney+ and force them to pay for the production of Canadian film, TV and music product.

The proposed amendments to the federal Broadcasting Act will create a new "online company" category and for the first time regulate global media players active in the Canadian market. The resulting obligations will include foreign players having to subsidize the development, production and distribution of local entertainment and cultural content.

"We're asking these large and wealthy companies to invest in Canadian stories, in Canadian music, in Canadian artists," much as local cable TV providers and broadcasters already do, Heritage Minister Steven Guilbeault told an Ottawa press conference. He added U.S. digital platforms were already "investing in Canada," as Guilbeault did not distinguish between American and other foreign companies producing their own originals north of the border and hiring local creative and crews to do so, and investing in local content to stream on their global platforms.

Ottawa has reacted to an earlier blue-ribbon panel on Canada's broadcasting and telecommunications sector that urged the federal government to require foreign streaming services like Canadian market leader Netflix to invest in local programming.

Guilbeault argued that until now American players have voluntarily invested in local content production. "Online broadcasters, web giants if you prefer — the Netflix, the Spotify, the Apple Music, the Amazon Prime of this world — need to be brought under Canadian regulation, and that's exactly what we're doing," he said.

Netflix and Google are unregulated in Canada, unlike local broadcasters and cable players that contribute a share of their revenues to subsidize local TV production. And U.S. streamers are increasingly making Canada their latest home away from home as they take advantage of local incentives, soundstages and production crews to produce their own originals.

The Canadian government estimates Bill C-10, if it becomes law, could result in online broadcasters being required to invest more than $800 million in local content creators by 2023. Before that happens, the CRTC, Canada's telecom and broadcast regulator, will hold hearings to determine how foreign media players will be compelled to invest in local content, whether through the creation of new production funds or the imposition of quotas on individual companies, among other options under consideration.

Currently, domestic broadcasters and cable TV providers must invest between 25 percent and 45 percent of their revenues from within Canada in local content, depending on their market share. "We can expect similar obligations from streamers," Guilbeault told reporters, including penalties if foreign companies do not fulfill their local content funding obligations.

Guilbeault said separate legislation is planned to determine how internet giants like Facebook and Google will be regulated, for the first time, in the Canadian market.