“SVODs should pull their weight”

Should Streaming services be forced to produce first-run Australian content?

That’s just one of the questions being considered right now as part of the government’s Supporting Australian Stories on Our Screens Options Paper.

The production sector and lobby groups representing writers, directors, actors and more are pushing for minimum levels to be enforced just as they are for Free to Air broadcasters.

But what do commercial broadcasters think?

Aside from agreement on removing drama, children’s and documentary sub-quotas, there is mild disagreement over whether SVOD services should be forced to adopt quotas.

Seven West Media says SVODs should “pull their weight.” ViacomCBS, which owns 10 and 10 All Access, urges caution arguing that the industry is still in a stage of growth. While Nine did not make a public submission (but is represented through Free TV Australia’s submission), Nine-owned Stan was also not in favour of minimum quotas.

Foxtel, which argues it is heavily regulated, noted new entrants are not incentivised to tell Australian stories.

Netflix, Stan, Prime Video, Disney+ in their joint submission argue that with the sector at an early stage, streaming services should be making a “meaningful contribution to the development and production of Australian content” (which includes development, co-production etc).  But they also recommended such principles be voluntary.

Apple TV+ did not make a public submission.

Here are several excerpts:

Seven West Media:

….if any quotas are to be imposed then we believe it is also time for SVOD platforms such
as Netflix, to also pull their weight. All commercial platforms with significant Australian audience
share and revenues should be required contribute towards Australian cultural policy objectives,
as is happening in Europe. The existing regulatory disparity was specifically identified by the
ACCC as creating competitive imbalance and should be addressed.

While we don’t think it is necessary for commercial broadcasters and online platforms to have
identical regulatory obligations, it is no longer appropriate that broadcasters are the only platforms
that bear substantial quota obligations, when an estimated 70% of Australians now subscribe to
one or more subscription or streaming services. Indeed, it could be argued that foreign based
content distribution platforms should have higher obligations than local commercial broadcasters
in respect of drama and children’s content because:

• children’s content and drama are key genres where audience migration to on-demand
platforms is highest;
• commercial broadcasters already bear an obligation that 55% of the content on their primary
channel must be Australian content;
• commercial broadcasters already contribute significant public benefit by their investment in
news and current affairs.

While an estimated 11 million Australians have access to Netflix, which is the largest SVOD
service currently in Australia, Netflix has very little Australian content. As noted in the Options
Paper, research by RMIT in 2019 estimated that Australian titles made up just 1.7% of Netflix’s
Australian catalogue.

ViacomCBS:

It is our view that instead of imposing quotas, the Federal Government and regulators could, as a first step, seek regular voluntary reporting by SVOD providers (as suggested in Model 2) outlining their investment in Australian content and the creative arts industry. Such a reporting process would give a clear and transparent understanding of the role of SVOD platforms in supporting:

• Investment in the production of new Australian content;
• Investment in the production of other major foreign films and tv series in Australia;
• Licensing of new and existing local content for consumers both in Australia and overseas;
• Investment in local production infrastructure such as film and production studio services;
• Local job creation and flow on benefits to the broader Australian economy;
• The promotion of Australia and its culture in overseas markets.

The Government should also consider measures in the near-term that would incentivise SVODs to work with the commercial FTA TV broadcasters on co-production agreements. Such a measure would have positive outcomes for Australian viewers and would see more high-quality Australian content exported to viewers around the world.

Foxtel:

Despite Foxtel continuing to provide high-quality Australian content and premier programming, the current landscape in which we operate has become increasingly challenging. Developments in digital technology now sees Foxtel in direct competition with subscription services whose business models and lack of regulation in the Australian market create particular advantages for such businesses in what should be a level playing field. International streaming services such as Netflix, Disney+, Amazon Prime and YouTube Premium offer low-priced subscriptions available worldwide which invariably increases their overall market share.

The ability to create and maintain their own content library of international brands on an exclusive basis as well as utilise Australia’s existing internet infrastructure has enabled such services to keep their subscriber base high and their costs low.The fast uptake of these services by Australian audiences is having a direct effect on traditional broadcaster revenues and causing major structural change in the landscape. The sheer scale of large global companies such as Amazon and Netflix means these companies are able to invest in and make premium content at rates that Australian platforms cannot match.

While Foxtel recognises the importance of providing viewers with content from a range of sources, it must be noted that there exists a perpetual imbalance in the landscape. In the current environment local broadcasters remain encumbered with regulation and requirements carried over from a time many years ago when Foxtel was among the few choices in subscription television and no longer reflects where we are now. As noted in the Options Paper, new streaming services are drawing in Australian audiences at a rapid rate, yet they have no reason to broadcast Australian voices, tell Australian stories or showcase an Australian point-of-view. Such businesses benefit from reaching Australian audiences however they have no obligation to support the Australian industry. As also highlighted in the Options Paper, Australian content continues to make up only a small percentage of the catalogues provided in such services.

Netflix, Stan, Prime Video, Disney+:

4. Each streaming service would be required to advise the Government of its investments and contributions to the Australian screen content production industry, provided on an annual basis over a three to five year period of time in recognition of near and mid-term investment plans. This advice should be able to be made in confidence where appropriate (for example, to maintain confidential licensing terms or where disclosure would damage a provider’s competitive position in the industry).

5. If it is determined that any company is not meeting these investment expectations, the Government should provide specific feedback to the company about where those expectations are not being met.

6. The Government would take into account all of the investment made by the streaming sector over an initial multi year cycle to monitor and assess whether companies were continuing to make a meaningful contribution to Australian content and creative industries, or whether more action was required. Government action could range from feedback to individual companies about their contribution (which could be given during the cycle if necessary), or a detailed industry review into whether regulation is required.

10 Comments:

  1. I’m not sure it’s fair to insist streaming services should fund the production industry. We don’t force Used Car Sellers to actually fund production of cars. We don’t force Potato sellers (greengrocers) to actually fund the growing of potatoes. We don’t force Art Dealers to actually fund the painting of artworks or finance artists before they start painting. Just because someone buys and on-sells a commercial product, doesn’t normally mean they should be forced to be financially involved in its production. So, while I appreciate that it’s nice to get money for the Arts, I’m not sure it’s fair to make everyone who on-sells Art pay for its production. After all, they already pay producers for the rights to use the Art, and they also pay tax, which contributes to government funding of the Arts. Just an opinion.

  2. The reason networks have quotas is because it is a licence requirement of using Australian spectrum to broadcast on. Only a limited number of companies get access to this, so therefore if they want to keep access they need to offer something in return.

    An open Internet is an entirely different thing.

  3. It’s a bit rich for any of the 3 commercial networks in Australia to be telling streaming services they should adhere to telling local stories. Well before Netflix became the juggernaut it is those same networks began pulling back from telling Aussie stories in favour of reality garbage. Those very eyeballs which use to be glued to 7,9 and 10 could see the benefits of Netflix. No commercials. Watch content when it suits the viewer. No hanging around for a favourite program to begin at the advertised time of 8:30pm. We’re also forgetting SVOD companies may not be telling local stories but could film a series in any part of the world bringing with it much needed employment.

    • I think it’s reasonable for them. We’re talking about making local content of which they do the lion’s share. The ads and playout are different matters. It’s a question of local output. Europe has set a 30% quota.

      • It’s quota of 30% of content available on Netflix in the EU to be European. That achieves nothing but forcing Netflix to buy European rather than US reruns (which make up 75% of viewing). There are separate measures that force Netflix to subsidise rival EU public and private producers, that is what matters. This ensures the money will be sunk into arty porn, rather than trashy porn.

        More interesting to be what happens to YouTube. The EU is forcing it abide by terrestrial broadcasting standards for advertising and pay for production. When YouTube is mostly advertising funded user produced and posted content.

    • The government doesn’t just give them money, they need to create content for the money.
      Take a Netflix original Australian show like Tidelands, the production is done by a third party and the production company gets the same government assistance that other TV shows do. Netflix just pays the difference.

  4. To me, SVOD quotas are a no-brainer. I don’t think it is fair that streaming services own so much of the market with even harming the Australian economy (free to air TV decline, final nail in the coffin for remanding video rental stores). Streaming services (more so, the international ones, Netflix, Disney +, etc) have little or no numbers of staff in Australia. There has got to be some kind of fairness, which is probably best regulated through quotas.

    • I kind of agree with you the major international players should have some form of quote. But Stan and Foxtel and other large Australian Streaming companies need to be tied to the same rules too.
      I’m in favor of say saying that 15% of your Australian revenue must be invested into new Australian content. Maybe if you have over 200K subscribers in Australia you will be bound by these rules.
      I don’t think that if a quote along the lines of 20% of the Australian catalog must be Australian content, will create new job and shows in Australia, they will simply buy the cheapest content possible to make this quota.

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