Online streaming services operating in Canada will be required to contribute five per cent of their Canadian revenues to support the domestic broadcasting system, the country’s telecoms regulator said on Tuesday.

The money will be used to boost funding for local and Indigenous broadcasting, officials from the Canadian Radio-television and Telecommunications Commission (CRTC) said in a briefing.

“Today’s decision will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content,” wrote CRTC chief executive and chair Vicky Eatrides in a statement.

The measure was introduced under the auspices of a law passed last year designed to make sure that companies like Netflix make a more significant contribution to Canadian culture.

The government says the legislation will ensure that online streaming services promote Canadian music and stories, and support Canadian jobs.

Funding will also be directed to French-language content and content created by official language minority communities, as well as content created by equity-deserving groups and Canadians of diverse backgrounds.

The release also said that online streaming services will “have some flexibility” to send their revenues to support Canadian television directly.

If, and how, the measure will impact Canadians

Dave Forget, the national executive director of the Directors Guild of Canada, says he believes the decision will ultimately benefit Canadian audiences.

“It increases the offer of great international productions that they have now available to them, as well as shows that get made here, and that reflect their own experience a little bit more closely,” he told CBC News.

While Forget noted that the directors guild has worked extensively with U.S. and international streamers, helping build up a talent pool and creating employment opportunities, “we have stories to tell as Canadians.”

The CRTC’s measures will ensure “we have a world where we are expressing ourselves as Canadians and we are participating in this global industry,” he said, with content created by Canadian writers, directors and performers.

Other Canadian organizations, like the Canadian Media Producers Association (CMPA), applauded the CRTC’s decision. But critics of the measure are concerned that Canadians will ultimately foot the bill. 

“I think one of the prime concerns associated with the decision, as it stands right now, is that there are a lot of other decisions that the CRTC has to make to make the entire framework work,” said Michael Geist, a law professor at the University of Ottawa.

The government has said that the definition of Canadian content needs to be re-examined and modernized. Doing so would ensure that beneficiaries of payments from a foreign streamer are in fact creating works that meet those standards, he said.

“The problem is that the CRTC hasn’t done that,” Geist said.

Geist added that he thinks it’s likely that consumers will ultimately pay for the new legislation, either potentially with fewer choices or with higher bills. 

“If you take away five per cent of revenues and say that has to now go into this fund and [streamers] don’t even benefit from any of this, it seems likely that you have to increase prices if you’re going to stay in the market to ensure that you remain competitive,” he said.

Levy would raise $200M per year

The measure, which will start in the 2024-2025 broadcasting year, would raise roughly $200 million annually, CRTC officials said. It will only apply to services that are not already affiliated with Canadian broadcasters.

The Motion Picture Association Canada issued a statement on behalf of its members, which include Netflix and Disney+, saying it was disappointed with the decision.

It said the new measure “will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here and around the world.”

A spokesperson for Amazon Prime Video said the company was still assessing the decision, but that it was “concerned by the negative impact it will have on Canadian consumers.”

Apple TV+ and Spotify did not immediately respond to a request for comment.

The CMPA was among 20 screen organizations from around the world that signed a statement in January asking governments to impose stronger regulations on streaming companies operating in local markets.

One of the demands was a measure that would force companies profiting from their presence in those markets to contribute financially to the creation of new local content.

Canada isn’t the first country to ask foreign streamers to direct domestic revenues toward local content. France set similar rules in 2021, requiring streamers to allocate 20 to 25 per cent of revenues to European and French content creation.