Streaming services to face formalised Australian content requirements

There has been a dramatic shift in the way that Australian viewers consume content in recent years, and this has no doubt been accelerated by the COVID-19 pandemic. Free-to-air television has seen a sharp decline in viewership numbers, and in turn advertising revenue, as viewers turn to large, usually overseas-based, online subscription video-on-demand (SVOD) services.

While Netflix's current outlook may not look as favourable as the past year or two, viewers are nonetheless still heavy consumers of Netflix, Disney+, Amazon Prime and other SVOD services. This has unsurprisingly garnered the attention of lawmakers and regulators.

Staged regulatory reforms

As part of its response to the recommendations of the ACCC's Digital Platforms Inquiry Final Report, the Australian Government has introduced, and continues to consider and propose, various reforms in a move towards greater harmonisation of the Australian media regulatory environment. Rather than a big bang upgrade of the Broadcasting Services Act 1992 (Cth), the Australian Government appears to be gradually chipping away at particular areas of concern, one of those being SVOD services.

The Australian Government released the 2022 Media Policy Statement in February. The Statement represents the Australian Government's response to the Media Reform Group Green Paper process that was initiated in November 2020. A key theme of both the Green Paper and the Statement is enhancing and enabling the provision of Australia content across devices and platforms.

Building on earlier developments, the Australian Government now identifies its intention to proceed with a second stage of reforms. One of these is the proposed Streaming Services Reporting and Investment Scheme.

The Australian Government also released the Streaming Services Reporting and Investment Scheme Discussion Paper in February to facilitate discussions with stakeholders on key design elements of the Scheme.

Investment in Australian content

At present, commercial and subscription broadcasters are subject to Australian content requirements, but streaming services are not.

The intention of the proposed Scheme is to support the provision of Australian content to Australian audiences and the vitality of the Australian screen production sector over the long term. The Scheme will:

• require large SVOD services to report annually on their expenditure on, and provision, of Australian content and the steps they are taking to make Australian content prominent and discoverable on their services; and
• enable the Minister for Communications to impose formal investment requirements on large a SVOD service if the service invested less than 5 per cent of its gross Australian revenue on Australian content.

Australia is not alone

A number of other jurisdictions are grappling with and have implemented regulations on SVOD services to incentivise or require the provision of local programming. Measures include catalogue quotas, direct investment and levies.

For instance, from September 2020 SVODs operating in the European Union (EU) were required to devote 30% of their output to programs made in Europe. There is some flexibility in the way in which the EU's Audiovisual Media Services Directive may be implemented, but many member states have already implemented content requirements and some have elected to apply levies. At the higher end of the spectrum, France requires large SVOD services to spend between 20-25% of revenue earned in France on French content creation.

Where to from here

The consultation period for the Scheme Paper recently closed on 24 April and it is understood that this feedback will be used to develop the legislation necessary to implement the Scheme. When looking at previous related consultation processes, we expect that many of the SVOD services, broadcasters and others will make submissions and have potentially divergent views on the way forward.

While it is a bit of a "watch this space" at the moment, at least on the Australian content front it seems that some level of regulation of SVOD services is inevitable. It's something to think about as we emerge from our COVID-19 chrysalises and take stock of (and potentially cull) the many SVOD services that we have acquired.