Streaming services warn government to dump production quota plan
By Zoe Samios
Local and international streaming services are urging the federal government to dump plans that would force them to make a certain amount of local programs, warning it would have unintended consequences and make the cost of production unpalatable.
Australian screen producers want subscription streaming services to be required to invest 20 per cent of revenue into local content.Credit:Paul Rovere
New communications minister Michelle Rowland said she would push ahead with plans backed by the production sector to regulate how much local content streaming services such as Netflix, Stan, Paramount and Prime Video are making.
In submissions to former communications minister Paul Fletcher about his plans to introduce an incentive scheme, the companies said there was no evidence of market failure, and any move to regulate in this way would cause a production shortage and make costs skyrocket.
Rowland said she would use the submissions to inform future regulation. “Labor intends to regulate streaming services for Australian content, and both Tony Burke and I attended the 2022 launch of the Make it Australian campaign in Sydney last week,” Rowland said. “Stakeholders have submission fatigue on this issue, which has dragged on for years. We will utilise whatever we can of recent processes and submissions to inform our position.”
The Make it Australian campaign, launched by actors, directors, writers and producers last week, is focused on ensuring that global streaming services such as Netflix and Disney+ have some minimum investment levels of Australian content.
“We do not believe there is any evidence of market failure that would justify the proposal set out in the Discussion Paper.”
Netflix
Matthew Deaner, the chief executive of Screen Producers Australia, said the industry wanted 20 per cent of a streaming company’s local revenue to be spent on Australian drama, documentary and children’s content. Such a scheme, which was proposed earlier this year, is strongly opposed by the free-to-air television and streaming sectors.
“We do not believe there is any evidence of market failure that would justify the proposal set out in the Discussion Paper,” Netflix said in its submission. “We are also not aware of economic modelling to assess the wider costs and benefits of a streaming service investment obligation, including the potential inflationary pressures on existing production.”
Netflix said any regulation or policy needed to focus on a skill and employment pipeline, enhancing production capacity to ensure there is enough physical space for programs and films, and focus on ways to attract investment to the sector from overseas.
Prime Video said the government should continue with a voluntary reporting scheme, which is currently being run by the Australian Communications and Media Authority, and monitor investment levels. It said addressing skills and capacity shortages would be better for the production sector.
“A failure to do so may jeopardise the healthy pipeline of planned investment in the sector,” the submission said.
Paramount+, which said it invested in nine local productions in its first year of operation, said the absence of a scheme had not constrained growth in the sector.
“Why are we trying to regulate quotas in an industry that’s not broken?”
Mike Sneesby, Nine chief executive
“Rather, production is constrained by the critical lack of studio capacity, industry-wide skilled worker shortages and the rising costs of production. Paramount is experiencing worker shortages in almost every production role, from writers and directors to actors and camera crews, from set designers, carpenters, to electricians and even production accountants,” the submission says. Paramount also warned an incentive scheme would hurt co-productions with free-to-air television networks, which currently work as a way to manage costs.
The free-to-air television sector, which includes Nine Entertainment Co (owner of this masthead), Paramount (the owner of Network Ten) and Seven West Media, has also strongly opposed the proposal due to cost and capacity pressures.
Seven boss James Warburton said in a speech two weeks ago that forcing the streaming giants to invest in Australian content would result in driving up the price to make local TV shows and films.
Nine boss Mike Sneesby said in an interview that quotas were unnecessary. Nine owns the streaming service Stan.
“I don’t think there is a single player in television, either local or the streaming players themselves, who would believe that quotas are either necessary or a positive thing for the industry,” Sneesby said. “It’s a relevant time to ask again, why are we trying to regulate quotas in an industry that’s not broken?”
Nine’s submission focused on other policy matters, such as ensuring its online streaming application, 9Now, is made easily accessible on smart televisions. It said if a scheme were to be created, exceptions should be made for local broadcasters. Paramount also advocated for the “prominence” of its service, 10Play, on smart television.
Rupert Murdoch’s Foxtel, the owner of Kayo Sports and Binge, said the regulation should apply, just not to local streaming services. The cable TV company said it and its streaming services should not face mandatory content quotas, given it already has obligations. It says the scheme should exclude local businesses already subject to content obligations and streaming services with a focus on local news and sport.
“This will ensure the [subscription video] scheme meets its policy objective of ensuring the large international streaming services such as Disney+, Netflix, Apple TV and Amazon Prime Video are subject to ongoing content obligations that support the creation of Australian stories,” Foxtel’s submission said.
“There is a risk that if this exemption is not clearly set out in the legislation, then it creates additional regulatory distortions for local broadcasters who are already championing Australian content and are competing with international services for local subscribers and audiences.”
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