Netflix and the "Doomsday Scenario"

A report by Peter Miller (who is not the same Peter pictured above from the doomsday finale of Dr. Strangelove), formerly of the CAB, CHUM , etc., has just been released by the CRTC, which commissioned it.

It is entitled Developments in the Canadian Program Rights Market 2011. It is essentially a description of the threat to the relatively comfortable status quo of Canadian broadcasting posed by "Over- the-Top TV" in the form of Netflix, which is available by the internet. 

The paper makes an interesting read and is very evocative about the ongoing phenomenon of old business models resisting innovation. The term '"doomsday" scenario' is actually used.

Yes - we all say we want Canadian content. But does the production and distribution of quality Canadian content really require a labyrinth of laws, regulations, policies and practices that effectively stifle competition, innovation and technology?

The paper candidly admits that two of the "competitive and structural advantages" supporting "a distinct and separate marketplace for Canadian program rights" include:

• Usage-based billing and low bandwidth caps that discourage use of OTT as a replacement for BDU service
• Vertical integration, and the common incentive BDU/broadcasters have to purchase exclusive multiplatform rights, to preserve the BDU franchise 

This seems to suggest that that it's a good thing that Canada has:

• UBB that makes Canadian internet services among the most expensive in the world - and coincidentally forces Netflix to degrade its quality to Canadians to fit within these artificial caps and favours the delivery of higher definition movies purchased from from the ISPs rather than Netflix
• An astonishing regulatory tolerance of vertical integration with respect to all major aspects of the content, communication, and media sectors  (including cross ownership in potentially competitive sectors within those categories, such as ISPs v. BDUs, print news media v. online, etc.)

Once again, incumbent business models prepare to resist new technology and competition.

The world survived the player piano, radio, TV, the VCR, and computers.

How many more "doomsday" scenarios must we endure before legacy industries stop being Luddites?

HK

PS

Lest we forget perhaps the most unforgettable "over-the-top" and seriously wrong doomsday copyright prediction ever:

"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone."

Jack Valenti, President of the Motion Picture Association of America in 1982. See WIPO Magazine article.