Netflix fires back to critics, sheds some light on key details

The company released a public statement Tuesday morning in reaction to criticism over its agreement with the Canadian government to invest in the cultural sector.
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Netflix has fired back against critics of its agreement with the Canadian government to invest at least $500 million in the cultural sector, and shed some light on key issues facing Canadian producers.

Tuesday morning, the company posted a blog on its website titled “What Netflix’s half a billion CAD investment in Canada is really about,” authored by Corie Wright, director, global public policy, Netflix. The statement outlines three points to “set the record straight” on its investment in Canada, including its recent price increase and tax issues over which it has been criticized.

“Since the announcement we’ve seen lots of excitement, questions, and even some conspiracy theories about our investment,” the Netflix statement reads. “We have not made any deals about taxes… no tax deals were part of the approval to launch our new Canadian presence.” It also refuted the association between the company’s recent basic subscription price increase from $9.99 to $10.99 and its role in the government’s new cultural policy, and emphasized its adherence to domestic tax laws (foreign online services not being required to pay tax).

However, while none of the three points in the statement specifically addressed issues close to the heart of Canadian producers – whether the $500 million is in addition to its current domestic spend and whether the $500 million will go to original productions or service productions in Canada - Playback understands that the millions are a guarantee of minimum new spend over the next five years, designed to give the production community certainty of its presence here.

The company’s statement also indicated that the investment will include both service and original production. “We will continue to invest in great Canadian content, and in other productions made in Canada like Hemlock Grove, A Series of Unfortunate Events, and Okja, that are not Canadian content but that make use of, and showcase to the world, Canada’s outstanding talent, facilities, resources and locations.”

The company said in earlier Creative Canada consultations that its 2016 spend in Canada to be “hundreds of millions of dollars,” inclusive of service. In Tuesday’s statement, it remained vague on spend. “We have invested in Canada because Canadians make great global stories. That says more about the quality and strength of Canadian content, talent, and crew than a commitment of any dollar amount.”

Wright’s statement also specified that the $25 million pledged over five years for “market development activities” and French-language content will be in addition to its $500 million investment. That matter was not clear in the government’s initial press materials on the Netflix investment.

The company used its statement to fire a salvo ahead of the Canadian government’s review of the Broadcasting Act over the next year, emphasizing that it is an “online service not a broadcaster,” and that it thinks the government’s 1999 decision not to apply the same regulations to internet-based companies as traditional BDUs was “the right approach.” “We don’t use public property like broadcast spectrum or rights of way and we don’t receive the regulatory protections and benefits that broadcasters get (and, by the way, we’re not asking for them).”

Wright indicated that further information would be forthcoming and that the company had some “planning and hard work to do” before making further announcements.

Updated 12:18 a.m. Oct. 10 with clarification on the reference to whether or not Netflix’s investment constitutes new money for Canadian production or continuance of existing investment and Oct 11 with a clarification that the 2016 spend reference was made in the company’s Creative Canada consultation submission. 

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