Entertainment Industry Scores Key Victory in Battle Against European Digital Single Market

Tuesday's vote is a setback for European Commission VP Andrus Ansip, a backer of the Digital Single Market

The European Parliament on Tuesday voted down changes that would abolish country-by-country licensing for film and TV in the European Union.

The European Parliament on Tuesday voted to reject major reforms that would have abolished territory-by-territory licensing across the European Union for films and TV series.

The vote of 344 to 265 was taken at a full plenary session of the parliament, the EU's legislative body. The result is a major victory for both Hollywood and the European industry, which had joined forces to fight the proposals to create a so-called digital single market across Europe.

The alliance of German film and TV producers said the decision showed a “clear commitment to European cinema” and assured “financing stability” for future European projects. ANICA, the Italian motion picture association, echoed the sentiment, saying the European Parliament made a decision in favor of a “strong and competitive creative content industry in Europe.”

The proposal, called SatCab, would have torn down country-by-country licensing and would have allowed European broadcasters to show films and TV series on their streaming services across all 28 countries of the European Union, provided they had licensed the show in their country of origin. The argument was that the EU should be a borderless market, where customers in Poland and Portugal have equal access to programming services.

But critics warned the move would let consumers watch films and TV programs on cheaper streaming services from outside their country, in some cases even before their local theatrical or TV first-runs. Industry insiders warned SatCab would also dismantle the pre-sales market, whereby producers sell exclusive, territory-by-territory rights to films to local distributors before they go into production. The pre-sales market is a key component for the financing of independent movies and, if disrupted, could prove disastrous for the business. The impact on sports rights — which are also sold on a country-by-country basis in Europe — could potentially be even worse.

The reform proposals, which have been in the works for more than two years, were dealt a blow in late November when the parliament's legal affairs committee ruled to throw out the proposals for all but news and current affairs programming. Parliamentarians on Tuesday voted to uphold that ruling.

Hollywood’s Motion Picture Assosciation (MPA), the International Federation of Film Producers Associations (FIAPF) and the Independent Film & Television Alliance (IFTA) were among 20 trade bodies, institutions and companies that officially supported the legal affairs committee ruling, circulating a joint letter to that effect to European representatives last week.

But it is not clear if this truly marks the end of the European digital single market or if it's simply a temporary setback. Supporters of the reforms have framed them as giving European consumers more choice and claim they will boost cross-border consumption in Europe by up to $21 billion (€18 billion).

Given the hard lines drawn on both sides of the issue, it is unlikely Tuesday's vote will be the final word.