Canada leads the world in online video viewership

A growing number of Canadians are tossing aside the remote control and TV guide, and turning to their personal computer or smart phone for entertainment.

More Canadians watch videos online than any other nation, according to new research from comScore’s Media Metrix.

The study revealed that 88 per cent of Canadians – with access to the Internet – watched an online video during the month of January.

The U.K. followed Canada with 81 per cent, Germany with 79 per cent, France with 78 per cent, and the U.S. placed fifth with 77 per cent.

comScore Inc. provides marketing data and services to many of the Web’s largest businesses. Media Metrix tracks Internet usage trends through a Canadian viewer base of 25,000 people.

According to Media Metrix, Canadians watched 3.1 billion videos in January alone – half of them on popular video-sharing Google site, YouTube.

Canada is a world leader in online video usage, said Bryan Segal, vice-president of comScore Canada. On a per capita basis, Canadians view more than 100 videos per viewer, per month.

He said many Canadians are very tech-savvy and the popularity of online video stems from that.

Other factors, such as the inclement weather, which leads people  to look for entertainment indoors, also contribute to the popularity of online video.

Canada is also very well connected to the Web with better broadband access than most G7 countries, Segal said. Seventy-two per cent of Canadians are online each month.

But the phenomenal growth of broadband access – and video/audio over the Web – has spawned new challenges.

To address these, the Canadian Radio-television and Telecommunications Commission (CRTC) held hearings in Gatineau, Que., earlier this month.

For instance, a decade ago, the CRTC ruled to exempt the Internet from the kinds of regulations imposed on TV and radio broadcasters.
But with high-speed so widely accessible, some Canadian artists worry they will be crowded out of a new media environment inundated with foreign content.

Visitors to CTV.ca, a popular Canadian-produced broadcast site, have increased 108 per cent in the last year, with 337 million videos streamed from this site in 2008.

TSN.ca has also experienced a huge surge in users accessing its online video content. The site got 7.2 million unique visitors during the past year, and 700,000 video streams on trade deadline day, alone.  

At the recent hearings, the CRTC proposed a 3 per cent tax on Internet Service Providers (ISPs), to help fund Canadian content. The proposal got a lot of flak from ISPs.

However, most prime-time programming from the American networks cannot be accessed outside of the U.S., because of geo-blocking, a system that blocks transmission of Internet TV channels to foreign countries to protect copyright.

One reason YouTube is so popular in Canada, Segal said, is because geo-blocking prevents us from accessing a lot of content from major American networks.

He said geo-blocking drives Canadians to download Bit Torrents and illegal, unlicensed videos.

This doesn’t benefit anyone, and causes Canadian broadcasters to miss out on key opportunities.

Despite the popularity of online video in Canada, Segal doesn’t see TV usage diminishing anytime soon.

“It’s a strong medium and people will continue to watch it for many hours. But video on the Web will increase further as well.”

The second most popular activity people perform while watching TV is using the computer (the first is eating).

“The interaction between the two media — the Internet and TV — is immense,” said Segal, noting that the Web is an “obvious extension” for TV broadcasters.  “It’s where the eyeballs are going.”

The real crux of the issue is Canadian broadcasters’ inability to put enough quality content online, due to poor ad revenue.

That’s a problem a three per cent tax on Internet service providers (ISPs) – proposed by the CRTC – will not fix, say some observers.

The U.S. has done a much better job attracting advertising dollars, which is why they are able to put between 52 and 80 per cent of their content online, said Alan Sawyer, a new media strategist at Two Solitudes Consulting in Toronto. 

“The economics of putting professional content online have not been proven yet in Canada,” he said. “It costs broadcasters a lot of money and advertisers haven’t fully embraced it yet, so it becomes a revenue-neutral or a money-losing activity.”

One solution – proposed by Rogers at the CRTC hearings last week – is a hybrid model, in which ISPs set up an online site to allow cable subscribers watch on-demand video.

This would enable ISPs make content available online while also preserving their cable revenue stream.

The other option to increase the volume of Canadian content online, is for the CRTC to change the way the broadcasters receive funding, Sawyer said.

At this point, he said, the Canadian media funding model is “broadcast centric.” This means unless your company has licensed channel distribution through traditional means, you will receive very limited funding.

One aim of this model is to ensure Canadian content is produced, and not overwhelmed by a flood foreign content. But it pursuing this goal, the CRTC is  forgetting to value innovation, Sawyer said.

“The model,” he said, “creates challenges for businesses focused on new media as a mechanism for story telling and content creation.”

Sawyer proposes “incentive-based” policies that encourage broadcasters to get content out in a variety of ways. Likewise, they would allowing consumers to watch video where they want, and on the device of their choice.

The only direct bargaining chip, in terms of incentives that the CRTC could use for online distribution is relaxed restrictions, he said.

The CRTC couldn’t really use financial incentives as there is already very little cash to go around, and the suggestion of a 3 per cent tax on profits from all ISPs will most likely be struck down or challenged in court, Sawyer said.

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