How Netflix redrew the landscape of Canadian media

As the streamer marks its 10-year anniversary in the Canadian market, Ted Sarandos, Stephane Cardin and Domique Bazay discuss its remarkable journey and what lies ahead.

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The Canadian media industry was forever changed on Sept. 22, 2010, as Netflix headed north in its first foray beyond U.S. borders.

The streaming service, which was still three years away from carrying any original content, arrived in Canada with significant momentum, having racked up around 15 million subscribers in the U.S. with its expansive library of licensed content.

However, the majority of those 15 million members had started as DVD-by-mail subscribers – a business Netflix didn’t have in Canada – meaning it was essentially starting from scratch in the Canadian market. Success was anything but guaranteed.

It didn’t take long though for domestic audiences to warm to the direct-to-consumer platform, which represented a wholly new proposition for Canadian viewers: a vast library of hit shows and movies, delivered on-demand via the internet.

Given its success in the U.S. market, Netflix brass knew they had a winning platform on their hands. But many great business plans have fallen flat when they are taken abroad, and so the Canadian market served as a truly crucial litmus test of whether Netflix – or Netflix.ca as it was more commonly known – had a viable business that could be scaled in the global marketplace.

screen shot 2021-06-01 at 9.46.25 am“Expanding into Canada was a natural first step in the process of exploring how Netflix would be received by audiences outside the U.S. We were excited by how eager Canadians were to sign up, and it cemented the fact that what we had to offer was appealing to them,” Ted Sarandos, co-CEO and chief content officer (pictured right), tells Playback of the reception to the streamer’s Canadian launch. The California-based company applied some of these learnings to its move into Latin America 10 months later, he adds.

To drum up interest in the Canadian launch, co-founder, chairman and co-CEO Reed Hastings ventured north (pictured below), recalls Sarandos, where he was quizzed by journalists on where Netflix fit into the wider Canadian broadcasting landscape, which at the time was ruled by cable.

“Reporters were most interested by his comment that Netflix was a supplement to traditional television, which it was,” says Sarandos.

It was true. In 2010, Netflix’s role was as a companion to traditional TV. It wasn’t long though before the streamer was turning the Canadian viewing landscape upside down – and turning audiences onto a new way of watching television.

Within two years, Netflix had demonstrated that its business model could be applied successfully in markets outside the U.S., confirming that its Canadian operation had become profitable in 2012.

The following year, Netflix hit ‘go’ on its original-content strategy, blazing a trail in the streaming space and initiating a paradigm shift in content consumption. The debut of Netflix originals such as House of Cards, Orange is the New Black and Toronto-shot Hemlock Grove presented enticing new offerings for subscribers, and the number of originals only continued to grow. Sarandos notes that the Canadian market served as an “early proof of concept for how local stories can be entertaining and relevant to our members from all around the world.”

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As Netflix’s grasp on viewership grew, domestic players began to recognize the scope of the challenge, and opportunity, before them and raced to launch their own streaming platforms. Rogers Communications and Shaw Communications were first out of the gate with the joint venture Shomi in November 2014, which lasted around two years before folding, while Bell Media came to market a month later with Crave, which has amassed around 2.8 million subscribers since it launched.

A potent partnership in live-action and animation

It wasn’t long before Netflix was working alongside the Canadian broadcasters. Between 2014 and 2017, it co-commissioned Between with Roger Sports & Media and Shomi, Frontier with Bell Media, Travelers with Corus Entertainment and Anne With an E and Alias Grace with CBC.

More recently, the power of the “Netflix effect” has also been on full display as CBC comedy Schitt’s Creek morphed from beloved domestic comedy to Emmy-sweeping worldwide cultural phenomenon following its launch on Netflix in the U.S. As well, glass-blowing competition series Blown Away debuted to enormous viewership in the U.S., according to Nielsen streaming data.

While Netflix’s live-action work in the domestic market typically receives the majority of the attention, it has also established somewhat of an animation fortress in Canada.

In fact, the streamer broke into the kids originals space – which has grown to become fundamental to its global strategy – with a Canadian show: True and the Rainbow Kingdom, produced by Toronto’s Guru Studio.

“It was a great first experience in the preschool space, and from there we’ve basically worked with all the major studios in Canada,” says Dominique Bazay, Netflix’s director of original animation.

Highlights of the streamer’s work with Canadian animation studios include multi-award-winning 2D series Hilda, which is animated by Ottawa’s Mercury Filmworks; The Last Kids on Earth, produced by Atomic Cartoons; Carmen Sandiego, animated by WildBrain; and Kris Pearn-directed The Willoughbys from Bron Studios, which Netflix says was viewed by approximately 37.6 million households in the four weeks following its release. Its Oscar-nominated animation feature Over the Moon was also animated at Sony Imageworks in Vancouver.

The depth of the animation talent pool in Canada is what keeps Netflix coming back for more, says Bazay, who was formerly a programming exec at Bell Media’s kids specialty channel VRAK from 2008 to 2015 and before that was VP, distribution at DHX Media (now WildBrain).

On both the animation and live-action side, Netflix’s spending in recent years has been colossal. Since 2017, the company has spent more than $2.5 billion in Canada, according to Netflix, shooting in eight out of 10 provinces. It also leases more than 1 million square feet of studio space across its hubs in Vancouver and Toronto.

The best of frenemies

It hasn’t all been high-fives and hit shows though. While Netflix and Canada have been a potent and successful combination, there has also been regular friction over the years. There was the infamous occasion in 2014 when, as part of the Let’s Talk TV hearings, Netflix’s then- director of global public policy Corie Wright declined to provide the Commission with sensitive data, raising the ire of then-CRTC chair Jean-Pierre Blais and leading to Netflix’s intervention and supporting documentation being written out of the public record.

There was also the furor over the Creative Canada Policy Framework, which included a commitment from Netflix to spend at least $500 million over five years in Canada. And who could forget the social-media storm following the cancellation of CBC and Netflix’s coproduction Anne With an E.

Most commonly, though, the debate has focused on whether Netflix and other streaming entities operating in the Canada should be mandated to contribute to the domestic funding ecosystem, a debate that has raged on for a decade.

Integration in the Canadian system

Despite those tensions, the collaborations have been undeniably fruitful. Since 2018, Netflix has sought to further ensconce itself within the Canadian creative community by establishing program partnerships with more than 20 organizations across the cultural ecosystem, including the Banff World Media Festival, Canadian Film Centre, Indigenous Screen Office, L’institut national de l’image et du son and Hot Docs.

Through this, Netflix says it has supported the career advancement of more than 600 Canadian creatives, in addition to becoming acquainted with some of the brightest talents the country has to offer.

photo  tony powell. netflix dc portraits. december 19, 2019“These programs are also a gateway to working on Netflix shows,” says director of public policy for Canada, Stéphane Cardin (pictured left), who joined the streamer in August 2018 from the Canada Media Fund.

The next evolution in Netflix’s Canadian strategy is to hire a dedicated content executive, tasked with working directly with the Canadian creative community. Cardin says the program partnerships are helping Netflix identify up-and-coming creatives who could end up pitching the streamer once a Canadian content exec has been appointed. (Netflix has said it will begin its hiring process in June.)

The impetus for a Canadian office also comes from its desire to stay ahead of the pack, notes Cardin: “Quite frankly, the competition is increasing here, with other streamers announcing that they are also commissioning more, and putting people in place. [We] want to make sure [we] are the first to get to the best stories.”

Of course, the launch of Netflix’s Canadian office is also with an eye to what’s to come. Namely, that Bill C-10 or some other policy amendment could see Netflix brought under Canadian regulation and mandated to make contributions into the domestic funding ecosystem.

For its part, Netflix says it supports the bill, with certain caveats. First and foremost, says Cardin, is that the bill mustn’t apply a one-size-fits-all approach to regulating digital platforms, and recognize the disparate lines of business of each.

“Netflix is here – we’ve been here for a decade. We are very much committed to the ecosystem, we want to play our part to continue to contribute. But we feel that the system will be better off if it recognizes the different objectives and different program strategies of different players within the system.”

Another request from Netflix is that the legislative review brings with it a re-examination of the definition of Canadian content. According to Netflix, a number of the projects it has commissioned, including French-language feature The Decline, don’t qualify as Cancon simply because they were financed solely by the streamer, despite having Canadians across all key creative roles. For its part, The Decline was watched by more than 21 million households, says Netflix.

Asked whether Netflix has cooled on the idea of co-commissioning and co-financing projects with Canadian broadcasters, Cardin says that simply isn’t the case, pointing to a number of recent titles such as unscripted series Rust Valley Restorers and Quebec dramedy M’entends-tu? 

Cardin adds that, despite the fact there have been fewer English-language fiction coproductions between the streamer and domestic broadcasters over the past 18 months, Netflix is still interested in working with the Canadian broadcasters.

“There are natural cycles in development, and while it is true that it’s been a few months since we had a coproduction on the fiction side in the English-language market….we’re absolutely interested in that model. We would be very interested in seeing that come back on the fiction side in English Canada, and basically try to find the next Schitt’s Creek.”

With lots potentially set to change over the next few years, the competition both in Canada and internationally is set to intensify further, especially now that the Hollywood studios have all rolled out streaming offerings.

For Sarandos, however, maintaining Netflix’s position as the most-subscribed-to streaming platform in Canada will be about continuing to tap into the best creative across the globe, and deepening its ties with the local creative community.

“With the opening of our first Canada office, we expect to work even more closely with creators from the region to bring authentic, local Canadian storytelling to our more than 200 million members around the world,” he says.

This story originally appeared in the Spring/Summer edition of Playback magazine