Audio Streaming Revenues Puny, Latest CRTC Report Shows

The CRTC has released its latest figures for Canada’s broadcasting services in its annual Communications Monitoring Report.

In 2017, broadcasting services generated total revenues of $17.3 billion, a 3.3% decrease compared to 2016, and contributed approximately $3.4 billion or about 20% of total revenues to Canadian content across radio and television through their respective funding mechanisms.

BDUs generated the largest portion, reporting $8.5 billion in 2017, almost half of the total broadcasting revenues, followed by television services ($6.9 billion, 40%) and radio stations ($1.8 billion, 11%).

In comparison, the revenues in Canada of Internet-based audio and video services were estimated to total $2.7 billion, less than a sixth of the revenues of the traditional broadcasting services.

In 2017, television distribution via cable was still generating the most revenue at $4.6 billion, followed by discretionary services at $4.0 billion. Both of these types of services also reported strong profitability, with an EBITDA of 18.6% for cable services and a PBIT of 25.1% for discretionary services. All categories of broadcasting services were profitable in 2017, except for private conventional television stations, which collectively reported a -6.3% PBIT.

While all but one type of service were profitable in 2017, most saw their revenues decline. The apparent decrease in revenues of CBC television, down 20.4% ($241 million) compared to 2016, was mainly a result of a change in CBC’s reporting methodology to exclude digital revenues and parliamentary appropriations related to digital activity. Part of the decrease was also attributable to the decline in conventional television advertising revenues.

The majority of radio revenues came from commercial services (84%), which include both AM and FM radio stations broadcasting in English, French and ethnic languages. Although radio services have been declining in revenues, on average 88% of Canadians still use radio each month.

Consistent with previous years, the majority of TV revenues came from discretionary services (59%), which relied on subscriber revenues to generate most (65%) of their revenues.

Finally, among broadcasting distribution undertakings (BDUs), IPTV still leads in terms of growth, reporting a 10.3% growth in revenues compared to 2016, while DTH services were still the most profitable distribution services with a 28.1% EBITDA in 2017.

In terms of the regional distribution of revenues, the most populous provinces, Ontario and Quebec, lead with 38% and 25% of broadcasting revenues in 2017 respectively, while according to the 2016 Census their population represented 38% and 23% of the Canadian population.

In 2017 as in previous years, the broadcasting industry was largely dominated by a few entities. Together the top 5 entities generated approximately 81% of total broadcasting revenues. Entities operating radio stations, conventional television stations, discretionary/on-demand services, and broadcasting distribution undertakings generated 65% of broadcasting revenues in 2017, while entities operating only one type of these services accounted for 5% of total broadcasting revenues.

Internet-based audio and television services, also known as over-the-top (OTT) services, generated estimated revenues of $2.7 billion in Canada in 2017, the majority coming from subscription services for Netflix, Amazon Prime Video, Crave TV and Spotify.

Notable is the fact that OTTs surpassed radio revenues ($1.7B), representing 16% of the total traditional broadcasting revenues in the year. Video services led with a reported $2.3 billion, while audio services brought in around $383 million. The report says that $109 million of the audio revenue came from downloads, while the remaining $274 million came from streaming services.

Even though Internet-based services are becoming more popular, a majority of Canadians continue to use traditional TV and radio services. More specifically, in 2017, on average 94% of Canadians watched traditional television, and 88% listened to the radio in any given month. These penetration figures are far higher than those for their Internet-based counterparts, which stood at 63% for Internet television and 59% for streaming music content on YouTube.

– Delve deeper into the Radio Sector of the report here, and the mobile sector here. The complete Communications Monitoring Report 2018 is available to download as a PDF here.

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