The Canadian Media Concentration Research Project has released the 10th instalment of its “Growth and Upheaval in the Network Media Economy in Canada.” Led by Dwayne Winseck, a professor with Carleton University’s School of Journalism and Communication, the research assesses the country’s communications industry to determine the degree of concentration within its various sectors, but it also provides lots of data on who is up and who is down in Canadian media and advertising this year.
The two-part study is now under the banner of the Global Media and Internet Concentration (GMIC) project, a new project supported by the federal government’s Social Sciences and Humanities Research Council, which awarded Winseck a $2.5 million grant to further his research into whether the media is becoming more concentrated. The project brings together 50 researchers from 40 countries.
This findings of this year’s study once again demonstrate the sheer dominance of the Google and Facebook duopoly when it comes to the Canadian advertising market, a grip that is tightening with each passing year. It also suggests that subscriptions will be a key revenue driver for the media industry going forward.
Here are some of the key takeaways.
1. The duopoly’s dominance is “tightening, enduring and entrenched”
Internet advertising in Canada grew by $900 million last year to $9.7 billion, with Google and Facebook accounting for 80.4% of all online advertising ($4.9 billion and $2.9 billion respectively). The duopoly’s growth in the past half-decade has been astounding—from two-fifths of all online advertising just five years ago, to four fifths today, and now accounts for more than half of Canada’s total $15-billion ad market.
Google and Facebook are also capturing almost all of the new ad dollars flowing into digital, although the report notes that the pace of this trend has been “down substantially” in the past two years from previous years, when they took in four out of every five dollars in new growth.
However, the report said that while it has become an article of faith that the duopoly is the primary cause of an “existential crisis besetting the media in Canada, writ large,” such charges are “superficial and deeply misleading.” The study says there is no general crisis of the media, but instead it is limited to the sectors that have historically relied almost entirely on advertising: Broadcast TV, radio, newspapers and magazines.
2. …Traditional media sectors are in trouble.
Canadian marketers spent about $15.2 billion on advertising last year, about $500 million less than they did in 2019. But when removing online advertising from the equation, the ad market fell by 18.5%. “This was disastrous for media sectors and firms where advertising is the core of their business,” said the report.
Revenue for the four traditional media sectors (TV, radio, newspapers and magazines) peaked at just over $12 billion in 2008, but has fallen steadily since, and is now about half what it was a dozen years ago (see chart below). This trend, said the report, is “unlikely to be reversed.”
The losses for traditional media also coincided with Google and Facebook exerting a firm grip on the online advertising system. “As the digital duopoly lock in their grip on the advertising market, other major players in Canada are falling further into the rearview mirror,” it said.
The quintet of Bell, Rogers, Shaw, Quebecor and the CBC saw their collective share of total advertising spending fall from just under a quarter in 2019 (23.9%) to less than one fifth (18.3%) last year.
The report said that while the Canadian ad market was once most of the most competitive relative to other sectors of the communications and media economy, that was no longer true by 2020.
“To make matters worse, these losses have taken place exactly as Google and Facebook were locking in their monopoly power over the online advertising system and, consequently, what remains from the stagnating/shrinking base of advertising spending in the country.”
Google and Facebook’s dominance is a clear indicator of a consolidating duopoly, with the report finding high to moderate levels of concentration and a “rapid upward tendency.”
3. Tough times for print
While the report says that the death of TV has been exaggerated, the same can’t be said of print media. After peaking at $4.6 billion in 2008, newspaper revenues have fallen off a cliff, reaching less than $2 billion last year. Advertising revenue, which was around $2.7 billion in 2006, fell to about $600 million.
Newspapers have tried to staunch the bleeding by erecting paywalls, with the report noting that nearly 70% of Canadian newspaper circulation is now paywalled, up from less than 5% a decade ago. But the report notes that the revenue attained through subscriptions has “not come close to matching what has been left.”
It’s a similar story with magazines—where revenues have plummeted from a high of $2.8 billion in 2006 to just $832.2 million last year.
“In short, the two media that basically pioneered commercial advertising, and which have depended extensively on it since early last century— many critics would argue, excessively so— are now in a state of economic free-fall, with no end in sight,” said the report.
4. The TV market (but not ad-supported) is thriving
While the report says that broadcast TV (both conventional and specialty) is in “deep trouble,” it notes that the overall TV market—an agglomeration of broadcast, pay TV and online video services—is still thriving. People are watching as much TV as ever, it says; it’s how they watch that has changed markedly.
“The fact that TV services based on subscriber fees (rather than advertising) continue to grow briskly even in the face of economic headwinds over much of the last decade also reveals another crucial point: The TV business has shifted to the direct pay-per model,” says the report.
While advertising once subsidized the TV viewing experience, the report suggests it is now being underwritten by subscriptions. Netflix’s share of total TV revenues, for example, rose from zero nearly a decade ago to 12% in 2020, and it is now the country’s third largest TV operator behind Bell and the CBC.
Subscriber fees have become “the centre of the content media universe,” says the report, and this is particularly true for TV—where advertising’s share of revenue has gone from about two-thirds at the beginning of the 21st Century to one-quarter last year.
This is notable, the report says, since the subscriber model is more resilient than ad revenues when it comes to economic shifts. It does note, however, that the shift “raises pressing questions in terms of affordability and inequalities of access after nearly a century of policies that have tried to foster universal and affordable broadcasting services.”
5. Netflix is the (tiger) king of streaming
Revenues for Canada’s streaming online video market reached $3.2 billion in 2020, up from $2.7 billion the year prior and quadruple what they were five years ago.
Netflix is by far the country’s largest online video service in the country, with 7.23 million Canadian subscribers at the end of 2020 (a 610,000 increase from the previous year) and revenues of $1.1 billion.
Bell’s Crave service is the country’s second largest streaming video-on-demand service, with 2.8 million subscribers and estimated revenue of $486 million, up from 2.6 million and $441 million the prior year. Disney+ has also grown rapidly since entering Canada in late 2019, with its 2.5 million subscribers and revenues of $266.2 million in line with Apple’s Apple TV+ and iTunes services, and Amazon Prime Video.