Opinion: How local content rules on streamers could seriously backfire

Actor Simon Baker at a press conference in Canberra on Tuesday calling for a local content quota on streaming services. (Photo: Lukas Coch/AAP)

This week, actors such as Simon Baker, Bryan Brown and Marta Dusseldorp were in Canberra. Their aim was to convince parliament to introduce rules requiring streaming services such as Netflix and Disney+ to spend 20 per cent of their local revenue on new Australian drama, documentary and children’s content.

Many of Australia’s film and television organisations see local content rules as a key way of tackling significant changes that have disrupted business norms and revenue streams. The Federal Government has indicated it supports quotas for some services at least.

Requirements on global services seem an easy answer — and who doesn’t want more Australian TV? — but this call ignores complex realities of how the TV business and its funding have changed.

Before exploring the key differences of 21st century television, let’s consider why pursuing content requirements on streaming services is a high risk, low reward campaign.

Nathalie Morris and Carlos Sanson Jr. in ‘Bump’, one of Stan’s new original Australian programs.

1. Global streamers could leave Australia

Aggressively pursuing local content expenditure or special “taxes” may lead global streamers to cease Australian operation, risking a replay of last month’s Facebook fiasco in response to the overreach of the mandatory bargaining code.

Global streamers are precisely that: services making a business of circulating content globally, not producing it for all countries with subscribers.

Netflix, for instance, is now in roughly 60 per cent of Australian homes. Yet those 6 million subscribers amount to less than 3 per cent of its total subscriber base. At some point, the cost of producing content for such a small part of a service’s subscriber base becomes unfeasible from a business perspective.

2. New services might not come to Australia

Australia has consistently been one of the first markets entered by new streaming services — our low adoption of cable TV means we are hungry for more video options.

Although much attention focuses on Netflix and Disney+, several smaller global services such as Acorn, Britbox, and Discovery+ are also available here. Many of these offer a particular kind of programming, drama and mysteries in the case of Acorn, and British series for Britbox.

Creating Australian content is contrary to the business of these services. Rules requiring local content will discourage the next stage of streamers offering more specialised services from launching here, leaving Australians with less choice — VPNs notwithstanding.

3. Netflix could become more like Stan, reducing Stan’s key value proposition

A curious part of the plan for local content requirements on streamers proposed in the Federal Government’s media reform green paper is that Australian content requirements would apply to global streamers but not Stan.

Stan reported 2.2 million subscribers in 2020, roughly 22 per cent of Australian households. Stan offers more Australian content than any other streamer. Last year, 7.38 per cent of its library was Australian programs – although this is a decline on 2019 when the figure was 9 per cent.

Offering a substantial amount of Australian content makes sense for a domestic service and distinguishes Stan from global providers. According to the government’s Media Content Consumption Survey, commissioned in November 2020, Stan is the second most subscribed service in Australia behind Netflix.

However, if global streamers are forced to make Australian content, they become more direct competitors, potentially eroding Stan’s point of difference.

Recent data from Ampere Analysis shows the percentage of Australian titles in Australia’s six most subscribed services (plus newcomer Binge). Stan leads, followed by Foxtel Now (just under 5 per cent), Binge, Amazon Prime, Netflix and Disney+.

Unsurprisingly, Australian services have more Australian content than global ones, but less than domestic services in other countries. Most of the titles included here were originally created for television or cinemas so only account for new production activity in a few cases. Stan’s library includes 20 Australian commissions, less than 1 per cent of its offerings.

Percentage of Australian Content in Australian Streaming Libraries, January 2021. Data from Ampere Analysis

Still, it makes no sense to exempt Stan from local content requirements. As an Australia-only service, 100 per cent of Stan’s reason for being is to provide content for the Australian market, while for the global services, providing content for Australians is 3 per cent or less of their business.

4. Global streamers are likely to make programs in Australia but not about Australia

Global streamers aren’t likely to make content that is very Australian. They need stories with universal legibility.

Consider the Australian titles produced to date by Netflix such as Tidelands and children’s drama The New Legends of Monkey. Was Tidelands, with its story of mythical part-human, part siren Tidelanders, one that resonated with the fabric of Australian culture?

Charlotte Best in ‘Tidelands’ (2018), which could have been set anywhere. (Photo: Hoodlum Entertainment)

Despite the rhetoric of Australian stories, this industry campaign is chiefly about jobs. It is about securing new sources of funding for Australian productions in response to commercial broadcasters struggling with diminished advertiser spending. Industry subsidies in the face of such change may be warranted, but effective policy solutions must deal separately with the issues of sector support and cultural policy — such as the need to tell Australian stories.

Let us be very clear, we care a lot about the future of Australian stories. We are deeply concerned with the many policy developments of the last two decades that have allowed industry priorities to subordinate the cultural goals of ensuring Australians see themselves and their lives reflected on screen.

But Australia needs 21st century policy solutions that reflect the contemporary media landscape.

Complex realities

Streamers aren’t broadcasters. They are paid for by subscribers, not advertisers. They do not use public spectrum, which is a basis of local content requirements on broadcasters. A more direct analogue with streamers is the video rental store, which never faced requirements to offer Australian content.

Global streamers are a part of the marketplace viewers find valuable enough to pay for, but they aren’t the cause of the faltering Australian TV industry. The problem there — much like for print journalism — is that advertisers have found more effective ways to reach potential consumers.

Netflix reports that it accounts for 10 per cent of viewing in the US, that’s far from dominance or crowding out others. The new video marketplace is complicated and offers Australians more choice — but global streamers can’t save Australian television.

Amanda Lotz, Professor of Media Studies, Queensland University of Technology and Anna Potter, Associate Professor, University of the Sunshine Coast

This article is republished from The Conversation under a Creative Commons license. Read the original article.

  1. Interesting article, but there’s a lot of unfounded conjecture here that needs to be challenged.
    First, as far as I’m aware no streaming service currently operating in Australia has ever suggested they will shut down if asked to increase their Australian content. Why would they, when Netflix alone makes around $700 million a year from Australian subscribers? In many other countries across the world local content requirements are being imposed with success – France and other EU countries now require Netflix to have 30% local content, and the company has not considered shutting down in response. (As a comparison, this article shows that Netflix currently has less than 2% local Australian content, so any mandated increase is unlikely to reach anywhere near the EU level – but even 10% would give a massive boost to our industry).
    Second, the idea that Netflix and other international streaming services are not interested in making shows that have cultural relevance to Australia is strongly refuted by the evidence. Netflix have already set up an Australian office specifically to commission Australian (and NZ) content, and their senior executive, Que Minh Luu, has repeatedly emphasised that she is looking for distinctively Australian stories. In a recent AFR interview she said: “Hyper-locality is what gives you authenticity. And leaning into that and having a good story can transcend borders.” Recent commissions by Netflix have reflected this – such the reboot of the Australian classic, Heartbreak High, the teen mystery Dive Club, set on the Barrier Reef, and the Australian surfing drama Surviving Summer (among others). In any case, there have always been clear parameters around what qualifies as Australian content, including cultural relevance, so it would be a simple matter to include these requirements in the rules around quotas.
    Finally the idea that streamers have more in common with the now vanished local video stores than with broadcasters, and therefore should be given carte blanche with no obligations to show any Australian content whatsoever, is disengenuous at the very least. The massive drift of viewership away from free to air broadcasters towards streaming services has been well documented, as the writers would know. Roy Morgan Research recently put the number of Australians with access to VSOD at over 14 million, more than half the population. When free-to-air TV had the entire audience to themselves, they were required to fulfil quotas on Australian and children’s content, and as a result the local industry flourished. Now that the audience is split between streamers and broadcasters, with streaming services increasingly becoming the dominant partner, why should they not be required to have quotas? It seems obvious to me and many others working in TV and film, that local content requirements for the global streamers are an essential measure to ensure the health of our home grown creative industry.

  2. I also consider this article misleading, but one issue I am troubled about. For example, a streaming provider has access to decades of content. demanding a % is Australian content appears crazy as it may mean they have to decide what non-australian contant they can offer to counter that commitment.

    The only path I can see is that a % of turnover must be committed to content created in Australia. For example, if Netflix makes $700 million per year in Australia. At least 10-15% of that has to be invested into content made in Australia.

    I simply cannot see how mandating the amount of content on a service can work. Alternate methods need to be applied that take into account the new capabilities of VOD. (Access to the history of all content created)

  3. this is garbage complete paid for garbage

    IF is was this paid for?

    anyone IF should be ashamed of themselves publishing a callow opinion piece that clearly has no basis in reality.

    not worth a detailed response other than people might actually take it seriously because it exists. Again IF for shame.

  4. This is not opinion. Not a shred of this is backed by fact nor is it backed by industry practice overseas where there are healthy local screen communities and industries.

    This is an agenda that is antithetical to the interests of Australians, its screen industries and its culture.

    Inside Film should be ashamed for publishing this, it’s truly shocking that they have but worse that someone is pushing this paid agenda.

    It is also so depressing that here in this country there is so little value placed in our industry and that we are trying to win arguments that were put to bed decades ago elsewhere in the world.

    Furthermore we’re controlled by a cabal of self intereseted people in Ausfilm and the Screen Agencies who have nowhere else to go. An industry warped by the personal agendas of bureaucrats and an organization (Ausfilm) whose interests are not for the genuine betterment of our industry rather private members who are SERVICE providers bring back an Australian Film/Screen Council. All led by politicians who don’t know any better because of Ausfilm and zombie Agencieswho cream themselves for a photo op with a Hemsworth.

    When the music stops, and it will, its gonna be a blood bath.

    Welcome to the SHIT SHOW.

  5. This article is “what if’s” and “maybe’s” with an alarmist headline. It is not helpful to the conversation especially given it doesn’t reference what is happening in other territories nor considers Australian content beyond believing it to mean a story about Australia. Tidelands was indeed a series about mythical mermaids but was very much set in Australia, created by Australians, filmed in Australia, and produced by Australians. That is by its definition what we want as Australian creatives. An opportunity to bring global stories to the screen, created by Australians and made in Australia about universal (or local) themes.
    1. Global streamers could leave Australia
    What the authors don’t recognise in this statement, is that Australia is not leading the way in requiring streamers to spend their ‘local’ revenue on investing it back into the local economy through the commissioning of local content. Europe and Canada are way ahead of us and are looking at higher percentages than the 20% the industry is asking for. That leaves a whopping 80% of Australian-generated revenue in the hands of the streamer. We want them to be profitable. Their success is therefore our success. They are not going to leave as the authors suggest for the very reason they are businesses looking to make profits. This is good not just for industry, but also for taxpayers, as this is Australian revenue then recycled to be spent on Australian jobs, goods, and services. That’s tax revenue back to Government and investment in small to medium businesses.
    2. New services might not come to Australia
    SPA is advocating that there is a minimum revenue required before the requirement kicks in to invest in Australian content. Again, we want streamers to be profitable and successful AND for Australians to benefit as a result. No one has suggested that a new entrant with little revenue should meet this obligation.
    3. Netflix could become more like Stan, reducing Stan’s key value proposition
    Requiring streamers to invest in Australian content is not about Netflix – it is about ALL streaming services that have significant Australian revenue making sure that Australian-created content is commissioned for their platforms therefore creating and supporting Australian jobs, goods, services and businesses. Stan don’t just have Australian content – they have global content that appeals to their audience base. Each service has their own taste, niche and audiences and any content they commission would reflect that.
    4. Global streamers are likely to make programs in Australia but not about Australia.
    Global streamers should be able to make all kinds of content and they do. They make country-specific content for France, Mexico, UK, Indonesia, India etc etc. Why shouldn’t Australia be part of that mix? Whether it’s Tidelands which is a genre or its Heartbreak High, or Bump or Romper Stomper or Packed to the Rafters or Clickbait – they are all Australian. They are created by Australians, made in Australia and whether they are set here or not, their very DNA makes them Australian. Let’s not be parochial about what is Australian. It should be as diverse as we are as a nation.

  6. There is no relationship between a video rental store and modern streamers. Video rental stores were secondary markets, they never commissioned production and had no bearing on what actually got made. Good grief.

Your email address will not be published. Required fields are marked *