Streaming platforms such as Netflix, Amazon Prime Video and Disney+ will soon face regulations to invest in Australian content as Australian regulations catch up to other global players.

Nearly eight years after Netflix launched in Australia in 2015, closing the “regulatory gap” between unregulated streaming platforms and regulated traditional television is at the forefront of Arts Minister Tony Burke.

Streaming regulations in Australia
Announced as part of the Labor Party’s new national culture policy, a six-month consultation period will begin to look at the shape and intensity of new streaming rules. The implementation deadline of the new streaming regulations is July 1, 2024 at the latest.

The regulation takes the form of a revenue levy, requiring a percentage of a streaming platform’s Australian revenue to be spent on local television and movies. Existing television regulations in Australia include the 55% local content broadcast quota on commercial free-to-air television and the 10% spending requirement for drama content on pay-television. A revenue levy would be a new policy mechanism in Australia’s television regulatory arsenal.

There is a particular urgency to regulate local content on streaming platforms for government – ​​in 2020-21, for the first time, Australians watched online video before traditional television. Major US streaming platforms now dominate the viewing landscape, with Netflix, a mass service in Australia reaching more than 50% of television households.

The government is concerned about the growth of online video without cultural regulation, and fears that this, coupled with the prominence of US platforms, could contribute to “drowning out” Australian voices and stories. Regulating local content on streaming platforms is a way of supporting Australian cultural identity, ensuring Australians see themselves reflected on screen and supporting the screen sector with jobs and investment.

Some industry stakeholders, such as Screen Producers Australia, are strongly advocating for a high revenue tax of 20%. There are estimates that a 20% levy would result in about $500 million a year in addition to 10,000 jobs in the screen sector.

However, some experts have warned that such a high levy on local and global platforms could backfire and reduce the competitive advantage Stan could have with Australian content. If every service has to invest in Australian content, there’s less to discern Stan’s place in the industry.

Resistance to the new regulation
Unsurprisingly, the major streaming platforms have previously expressed opposition to new regulations, believing their current level of investment in Australia is sufficient. The Australian Communications and Media Authority reported Australian content spend from five major platforms at $335.1 million in fiscal year 2021-22.

While lobbying against new regulations, the streaming platforms are also planning ahead for potential liabilities. For example, Amazon’s resurgence of Neighbors would be a big help in meeting future Australian content obligations.

At what percentage an income tax would be charged, that is what the consultation period is for, they say, the government has not been alerted. However, no figure is excluded either.

Regulations for streaming around the world
Some countries around the world have much more sophisticated regulatory frameworks than Australia for regulating streaming platforms. There are important lessons to be learned from these countries, both in terms of seeing what kind of regulation is possible, but also in terms of understanding the pitfalls of potential regulation.

The European Union is widely regarded as the world leader in the regulation of digital platforms. The EU legislated a 30% catalog quota for European works on streaming platforms in 2018 under the Audiovisual Media Services Directive, which is due to come into force in 2021. However, several EU member states have been slow to implement it.

The catalog quota takes into account the total size of a streaming library and requires 30% of these titles to be European. For example, in 2021, the average Netflix library in major markets was about 5,300 movies and TV shows, which would result in about 1,590 European titles. The catalog quota uses a broad definition of “European” works that includes a range of countries across Europe outside the EU itself, such as Turkey and, ironically, the United Kingdom.

Australia’s focus on a revenue levy on streaming platforms is more akin to some of the additional regulations of EU member states set out in the Audiovisual Media Services Directive. France, which has a history of strong cultural policies and “cultural exceptions”, has been aggressive in legislating a high income tax. The French 20-25% levy is at the top end in Europe and is also a country that Screen Producers Australia explicitly referred to when calling for a 20% levy in Australia.

The French levy is not without quirks or criticism and was even found to be too high by the European Commission. Part of the 20-25% revenue requirement can be met by spending money on generally European content (including content from the UK), as well as investing in things like restoring archival footage and sub- and dubbing of contents.

The variety of spending options is worth bearing in mind when comparing possible regulations in Australia to those in France. There are a number of other percentages that have been introduced in all EU Member States – after extensive negotiations in Denmark, the level reached was 6%. The process in Denmark showed some of the challenges that can arise during the negotiation of new regulations – during a difficult period, Netflix and other services completely stopped ordering Danish productions in the face of what the services considered overly onerous proposals.

Beyond the importance of debating the intricacies of policy mechanisms for regulating streaming platforms in Australia, the upcoming consultation period is a vital opportunity to reflect on the cultural dividend Australian content can deliver, and how much of the money raised will go to drama, children’s production or independent production. So far, Labor has prioritized First Nations stories and perspectives as the first pillar of national cultural policy, which is a worthy goal to consider for streaming and local content regulation.

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