Netflix and Amazon face EU Quota Threat

As part of an overhaul of the EU’s broadcasting rules, Netflix and Amazon’s video streaming services could be forced to devote “at least” 20 per cent of their catalogues to European films and TV shows.

Potentially forcing video-on-demand groups to replace valuable space on their homepages given to Hollywood blockbusters with French cinema, they would also be obliged to “ensure prominence” of any European works under a Brussels plan to be unveiled next week.

In order to make sure that viewers are not overwhelmed by US imports, such video-on-demand services are not currently covered by legislation that requires national broadcasters to keep 20 per cent of their content European.

Obliging US streaming services to “contribute financially” to the production of European works in countries where such levies are placed on national broadcasters, they would be put into the same regulatory regime as broadcasters according to a draft of the European Commission proposal. The streaming services are dominated by US companies.

Going so far as forcing Brussels to cut audiovisual issues from a trade deal under negotiation with the US, France has led a charge within the EU to allow for cultural exceptions to broadcast and movie regulations.

Increasing investment in the EU’s television and film industry is the aim of the new proposals. According to an EU study, traditional broadcasters invest more heavily than their online peers. Roughly 20 per cent of their turnover in new productions is invested by broadcasters such as the BBC in general. The EU found that this figure drops to barely 1 per cent for streaming services.

There have been mixed success for companies such as Netflix who have started work on more original European content. For example critics have panned its recent blockbuster series Marseille, starring Gérard Depardieu as the mayor of the French port.

The market would be distorted and a “perverse incentive” would be created for operators to buy cheap titles due to the rules requiring a minimum of European content, Netflix has warned Brussels.

“Rigid numerical quotas risk suffocating the market for on-demand audiovisual media services. An obligation to carry content to meet a numerical quota may cause new players to struggle to achieve a sustainable business model,” Netflix wrote in its response to the commission.

According to the video streaming company, the “personalised” approach to providing on-demand video services would be interfered by the rules on prominence of European content.

“The focus of European audiovisual media policy should be on incentivising the production of European content and not imposing quotas on broadcasters or other . . . providers who would struggle to meet the supply,” Netflix wrote in a submission.

According to the draft seen by the FT, none of the new streaming requirements would apply to “small and micro enterprises”.

Stronger age barriers for young viewers could be introduced by websites such as YouTube by the new proposal. These rules do not apply to video-on-demand services even though TV channels across Europe tend to have “watersheds” to keep adult content from younger viewers.

Netflix declined to comment on Wednesday. Amazon could not be reached.

(Adapted from CNBC)

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Categories: Economy & Finance, Uncategorized

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