Canada has officially implemented new regulations targeting global streaming giants. The recently released rules under the Online Streaming Act will require streaming platforms, including Netflix and Spotify Technology S.A., to allocate 15% of their annual Canadian revenue to funding domestic content production. This move advances legislation already flagged by the U.S. Trade Representative as a source of trade friction.
The Canadian Radio-television and Telecommunications Commission (CRTC) has formally issued the new regulations for the Online Streaming Act, which brings global streaming services under the country's broadcasting framework. A key requirement is for these platforms to contribute to funds supporting Canadian content.
The federal broadcast regulator stated in a release that the rules announced Thursday aim to "ensure traditional broadcasters and online streaming services contribute in an equitable manner, according to their size and business model, to support Canadian and Indigenous content." The regulator emphasized that this is not merely about increasing burdens on platforms but about addressing a current "regulatory gap" between traditional broadcasters and streamers. Historically, streaming platforms had minimal obligations to fund Canadian content, while domestic traditional broadcasters carried significant local content requirements.
The required contribution from traditional broadcasters to local content will be lowered from the current range of 30% to 45% down to 25% of their domestic annual revenue. Conversely, the contribution requirement for online streaming services will rise from a previous base of 5% to 15%.
Notably, streaming platforms can fulfill over half of their required contribution through direct investments in Canadian content. The remainder must be paid into designated funds. Additionally, the CRTC has established rules regarding the "discoverability" of Canadian content on platforms, mandating that algorithmic recommendation systems must not deliberately marginalize domestic works.
In a report last month, the office of U.S. Trade Representative Jamieson Greer once again listed Canada's online platform legislation as a trade barrier. Republican members of the U.S. Congress also introduced a bill in March proposing a trade investigation into the Online Streaming Act.
The new rules have caused significant concern among global streaming leaders. Major streaming companies have consistently opposed this law. In fact, Netflix, Disney, and Amazon successfully obtained a temporary stay from the Canadian Federal Court of Appeal in December 2024, pausing the initial 5% contribution requirement. This stay remains in effect pending a final court ruling.
A spokesperson for the Motion Picture Association-Canada, which represents Netflix, The Walt Disney Company, and Amazon's streaming platforms, stated the organization is reviewing the decision and could not provide immediate comment.
During a media briefing, Scott Shortliffe, Vice President of Broadcasting at the CRTC, acknowledged that streaming giants would prefer no obligation to fund Canadian content at all, "let alone what was put forward today." He stated, "No one likes to be regulated, and they certainly don't like being told they have to pay more into a system."
For investors, the new regulations will directly impact the profit margins of Netflix, Spotify, and others in the Canadian market. For example, Netflix has over 7 million subscribers in Canada, with annual revenue estimated in the billions of Canadian dollars. A 15% local content expenditure translates to hundreds of millions in additional annual costs. Spotify, as the leading audio streaming service, faces similar financial pressure.
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