Irene Berkowitz is the policy fellow in Ryerson's Faculty of Communication and Design (FCAD) and an Instructor in Ted Rogers MBA.
It's not easy to turn a supertanker, particularly when that ship is a massive public policy framework that's been sailing along for most of five decades. Harvard's business guru, Michael Porter, notes that in disruptive times, the leadership challenge is a tendency for industry to try to turn the ship back towards a cozy past which no longer exists. The boat spins, swirling to disaster.
By launching Creative Canada, Heritage Minister Mélanie Joly has righted our policy ship and set it on a course for new opportunities in the online era. The Netflix deal announced at the same time makes it official: We're in it to win it.
Its broad strokes are a pledge to establish in Canada the first Netflix studio outside the United States, and spend $500-million on Canadian film and TV over five years. Since Netflix already invests in Canadian content, its formal presence here seems a key value proposition.
Here are five reasons to love this deal:
1. It cuts to the heart of the content problem
English-language drama is the world's most popular, profitable content; it's 70 per cent of global demand. An unsolved problem has been to upgrade Canadian drama so it is competitive in the domestic and global marketplace.
Because Netflix is a global player that must deliver compelling content to its 100-million subscribers, it only develops what it believes will win the battle for attention. Canadian content makers will need to up their game if they want to get past Netflix gatekeepers. And they will.
2. It introduces competition to our content marketplace
A weakness of our system (to be fair, an unintended consequence) has been that our broadcasters, the pivotal financial partners for our producers, make Canadian content only as a licence obligation.
They have no need to succeed in the original-content business. The presence of a partner with real skin in the game (Netflix) will introduce competition to the system, upgrading broadcast content, too.
If content gets better, audiences get bigger, which means more ad revenue in the legacy system, too.
3. It drives exports
Exports are linked to the quality of storytelling. Netflix won't develop anything unless it believes it will work in the marketplace. This approach should help address a weak link between drama R&D (development) and ROI (distribution). Could profitable Cancon be an outcome of the Netflix deal?
4. It preserves production, jobs
The hard-won results of the 20th-century framework (world-class media work force and infrastructure) are threatened by the domino effect of digital shift: production decrease owing to dropping cable and broadcast revenues, cord-cutting, over-the-top content. Netflix's need for content will preserve jobs, delivering financial and reputational benefits to our media workers.
5. It deploys carrots, not sticks
The realities of the largely unregulated global media ecosystem suggest incentive instruments will work better than rules and regulations – think carrots, not sticks. The Netflix deal doesn't require regulatory enforcement; it's organic. If great content results, it will stay. It will spend.
Ms. Joly's policy update also seems remarkable for what it will not do: bail out outdated models. It seems to close the door on the conceptual, administrative quagmire of a Netflix tax. An implicit message is that Netflix wasn't born a disruptor. Not that long ago, it was a startup that survived hard times, competitors and financial failure, before it steadied its ship. Now it's an inspiration.
The Netflix deal seems a four-way financial win: for Netflix, Canadian audiences, Canadian industry and Canadian Heritage.