Netflix is urging the government to abandon a proposal to introduce content quotas for international streaming services, warning it would raise the costs of creating programs and put further pressure on an already under-resourced production sector.
The global streaming giant, which says it invested more than $110 million in local drama and children’s programs last financial year, also claimed there was no need for a requirement that forced it to invest a percentage of its revenue in creating local programs.
The data was provided by Netflix in response to a federal government green paper that is proposing a raft of changes aimed at creating a more sustainable commercial television industry. The streaming giant’s concerns over the introduction of quotas are shared by the television sector, which agreed that it will raise the price of production and remove their point of differentiation from global streaming giants.
Netflix is warning co-productions with broadcasters such as the ABC on its show Stateless will not occur as often if the government introduces more content quotas. Credit:ABC
In its submission, obtained by The Sydney Morning Herald and The Age, Netflix argues the introduction of any content rules would reduce the amount of co-productions that currently occur between streaming services and television broadcasters and inflate the costs of making the programs. It also suggests the quotas could cause other unintended consequences, such as setting a financial cap on content, that would make streaming services reluctant to invest any more capital than required.
Netflix invests in the local production industry by commissioning and licensing content. In the 2019/2020 financial year, it spent $111 million on creating originals and co-commissions. That does not include shows such as Byron Baes, which was commissioned in this financial year, but does include programs such as Dive Club (a co-production with Network Ten), ClickBait and Izzy Bee’s Koala World.
Commercial free-to-air (FTA) broadcasters are currently required to create a certain amount of local content while subscription pay TV company Foxtel is required to dedicate an amount of money on local content based on a percentage of overall program spending. But the green paper takes this further, proposing three new forms of content regulation that would apply to subscription streaming services and advertising-based online services.
“Our existing framework is inconsistent, with [current] content obligations not applying to newer market entrants, including popular [subscription video services],” Communications Minister Paul Fletcher said in November. ”The measures would contribute to a more equitable regulatory framework and would further promote and protect Australian screen content.“
But Netflix warns in its submission that introducing quotas could damage the industry permanently: “It could exacerbate the current capacity and capability problems, create a content ‘arms race’ driving up prices for certain forms of content production, and add greater costs to the free-to-air television business model.”
This view is shared by commercial FTA television lobby group, Free TV, which represents the interests of Nine Entertainment Co (owner of this masthead), Seven West Media and Network Ten. Bridget Fair, chief executive of Free TV, said the government should not assume quotas for platforms like Netflix, Prime Video, Stan (which is owned by Nine) or Disney+ will help the sector in the long term.
“We shouldn’t be barrelling into just introducing quotas because they’re just going to make it harder for free-to-air broadcasters to meet their existing partner obligations,” Ms Fair said.
”This whole process is supposed to be about sustainability of free services into the future and so we need to look at any proposal for subscription video on demand quotas by considering what impact will it have on the ability of FTA broadcasters to meet their existing quota obligations, the potential impact of quotas on the prices, and constraints on production capabilities.“
Netflix is advocating for the government to invest in upskilling and employing more people in the production sector to ensure they can meet the global demand for local content. It is also proposing the government find ways to increase the amount of studios and locations available for production to incentivise overseas investment.
The green paper, released in November, also proposes scrapping annual broadcast spectrum taxes for commercial TV networks. Under the proposal, TV networks would be forced to use compression technology to free up some of the spectrum they currently occupy so it can be sold to telecommunications companies.
Ms Fair said that proposal would affect the number and quality of services that television broadcasters can provide to the public. Free TV chairman Greg Hywood said there are alternatives to the current proposal to sell spectrum.
“The green paper is a bit of a straw man operation,” he said. “They put out what they think is a good idea and then they get consultation. What we’re saying is what they’ve put up is not the best option.” There is a better option with better technologies, which will enable broadcasters to be able to deliver by the quantity of programming through existing channels, plus move to higher quality transmission, but it’s going to take a bit of time.
“It’s important that governments make decisions for the long term, not just within the electoral cycle, and particularly around issues relating to big technological changes.”
Free TV is also advocating for legislation that requires FTA broadcast channels and their online services to be easily accessible and discoverable on smart televisions. It also is calling for a review of existing anti-siphoning legislation to avoid the risk of Australians being forced to pay for sporting events they watch for free, and for the abolishment of taxes for use of spectrum.
Spectrum fees which were introduced after the abolishment of broadcast licence fees back in 2017, were expected to be reviewed this year before the green paper was introduced. The fee is dependent on a range of factors, including how much spectrum a network has and its strength, but broadcasters have advocated for these to be removed altogether.
The green paper is one of several initiatives the government has tried to create a more sustainable industry. Another initiative was the introduction of bargaining laws that force Google and Facebook to enter commercial talks with media companies for use of their news articles. News Corp and Seven West Media have formalised these deals. Nine’s deals with Google and Facebook are expected to be formalised imminently.
Business Briefing
Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up here.
Zoe Samios is a media and telecommunications reporter at The Sydney Morning Herald and The Age.
Most Viewed in Business
Netflix and local TV industry united on no content quotas for streaming apps - The Sydney Morning Herald
Read More
No comments:
Post a Comment