Europe Calls for Netflix, Amazon Content Quota

Marseille Still - H 2016
David Koskas/Netflix

Marseille Still - H 2016

In addition to a 20 percent European content quota, new legislation would allow countries, such as France, to force streaming giants to invest in European films and TV series.

The European Commission wants to impose a quota on on-demand and streaming video services, such as Netflix and Amazon, forcing them to ensure European content makes up at least 20 percent of the films and TV shows in the catalogs.

In addition, the Commission proposed Wednesday to allow individual European governments to force online companies to comply with their national quota systems, even if the companies are based outside the country in question.

The Commission unveiled the proposals in Brussels on Wednesday as part of a broad overhaul of European laws regulating the online world.

The 20 percent quota is unlikely to have much immediate impact on Netflix and peers. A recent study by the European Audiovisual Observatory found that European films already make up 27 percent of all titles on online video platforms across Europe. The average for Netflix and iTunes is 21 percent, well within the proposed quota.

The second change to the law, however, could have major consequences. Several European countries — notably France — require national broadcasters and online video companies to contribute directly to the production of European films and TV series, often in the form of a levy on their total revenue. SVOD operators in France have to invest at least 12 percent to 26 percent of their net revenue towards “the development of European cinematographic and audiovisual works.” France's catalog quota is also significantly higher, requiring that European works account for 60 percent of online catalogs and that SVOD companies “display an adequate proportion of European works on their homepage.”

Netflix set up its European headquarters in the Netherlands in part to avoid that strict legislation, as well as France's higher tax regime. The Dutch, like Germany, the U.K. and Scandinavia have no quotas or levies for streaming companies beyond a vague requirement that on-demand services “promote the production and access to European works.” Amazon operates its Prime Video service in the U.K. and Germany, but not yet in France.

Andrus Ansip, Vice-President for the Digital Single Market, was quick to dismiss any suggestion that the proposed quota would unfairly target U.S. or non-European operators, insisting that EU law applied to everyone equally. "Everyone here in the EU has to respect our rules. No exceptions," he said.

Netflix has made a point of investing in European series, recently premiering its first French-language show, the political drama Marseille starring Gerard Depardieu. The streaming giant will drop its mega-budget Brit period drama The Crown later this year and has local-language series in the works in Italy, Spain and Germany. Netflix is also cooperating with the BBC on its upcoming animated miniseries Watership Down featuring the voices of John Boyega, James McAvoy, Nicholas Hoult and Ben Kingsley; recently snatched worldwide rights to ITV's new crime drama Marcella from The Bridge writer Hans Rosenfeldt and co-financed the third season of TV2 Denmark's bad-teacher comedy Rita (a surprise hit on Netflix worldwide).

"Our members around the world love European programming, that’s why our investment in European programming, including Netflix original titles created in Europe, is growing," a Netflix spokesman told THR. "We appreciate the Commission's objective to have European production flourish, however the proposed measures won't actually achieve that."

Netflix, however, has previously said it does not believe that quotas or fixed levies are the way to promote European content. The company has suggested a European content quota could increase demand for inexpensive and library filler programming, not high-quality, original European films and TV series.

Gunther Oettinger, European Commissioner for the Digital Economy and Society, dismissed this suggestion, however.

Oettinger said, “If [a service] tries to fill the quota with junk programming, their viewers won't tune in and their business will suffer.” 

Unsurprisingly, the Society of Audiovisual Authors (SAA), trade body representing television and film screenwriters in 22 European countries, welcomed the new proposals.

The group said in a statement, “The SAA is convinced that these two proposals will help create a fair and balanced market for both European works and Europe-based distributors. Regulatory forum shopping, used by some distributors when establishing headquarters in countries with weaker audiovisual regulation, should no longer be a competitive advantage.” 

However, the SAA called the proposed 20 percent content quota “insufficient” and called for higher targets.

The Commission's new proposals, which still have to be ratified by the European Parliament before becoming law, give national governments significant leeway in implementing the overall goal of “supporting and promoting European content.”

They also continue to distinguish between on-demand services and national broadcasters. For the latter, at least half of their content has to be of national or European origin.

The 20 percent European content quota for on-demand services would apply across all EU member states. The majority of European countries already have a quota of some form or another but the required level of European content varies considerably, from as little as 10 percent to as much as 60 percent in the case of France.