Netflix Content Quota in Europe May Lead to TV Buying Spree

Netflix Countries_Comp - iStock - H 2018
iStock; Courtesy of Netflix

New regulations that require 30 percent of streaming programming to be of homegrown origin are likely to spur streamers to boost their investment in Europe by increasing both original productions and local acquisitions.

Employees at Netflix and Amazon Prime better get used to reading subtitles. Because the U.S. streaming giants may be about to get a lot more European.

The new directive, passed by the European Parliament on Oct. 2 and set to be formally adopted in December, will require that 30 percent of content on all VOD platforms in 28 countries be of local origin, but the scope is actually far broader — encompassing new regulations regulating advertising, explicit content and child protection measures across all audiovisual services, from broadcast TV to YouTube and Facebook. But for many in the TV industry, the 30 percent quota, and what it means for Netflix et al., is the headline news.

The regulation is likely to spur Netflix and Amazon to boost their investment in Europe by increasing both original productions and local acquisitions. This summer, the company rolled out plans for its first-ever European production hub in Spain (where Netflix makes original Spanish-language series including Cable Girls and Money Heist) and announced a trio of new French original series. Amazon is also bulking up, last month unveiling a new slate of European-made programs, including their first British scripted show, Good Omens — based on the fantasy novel by Neil Gaiman and the late Terry Pratchett — and Bibi & Tina, a new German-language kids series.

"Netflix and Amazon have been investing more in European originals, but originals aren't enough to get you to 30 percent, nowhere near," says Alice Enders, director of research at U.K.-based Enders Analysis, who expects streamers to build up their European catalogs by buying local series, mainly from the deep libraries of public service broadcasters.

Just how much the streamers will need to buy to make the 30 percent cut is a matter of debate. Even where Netflix and Amazon currently stand with regard to European content in their catalogs is unclear. Research released by Ampere Analysis in September, ahead of the parliamentary vote, calculated that Netflix, with European content accounting for 15 percent of its online catalog in the U.K., would need to make or acquire nearly 800 new films or TV series, more than 4,000 hours of content, for its U.K. service to reach the 30 percent quota. Amazon Prime would have to add hundreds more series produced in Germany, France or Spain to bring its EU numbers up. That would translate into billions of dollars of new investment in the region. (Netflix and Amazon do not publicize data on the makeup of their European catalogs.)

Ampere's figures, however, are disputed by the EU itself. Roberto Viola, director-general of the EU's communications networks, content and technology department, said a report due in October will show that Netflix "is already close" to meeting the quota.

"The investment in local production by Amazon and Netflix has had an impact," agrees Christian Grece, an analyst with the European Audiovisual Observatory, an EU-backed media think tank. "I wouldn't be surprised if they both are already at or near" the European quota.

The real importance of the new directive, Grece argues, is it requires the big streamers to obey the same rules as the rest of Europe's commercial and public broadcasters. That includes programming European content and, in countries like Germany and France, contributing to local subsidy systems that back original European films and TV series. 

"This is a guarantee that EU content, even in the on-demand age, will be safeguarded and financed," Grece says. "The real challenge will be to make European content attractive and give users, in the EU and around the world, a reason to watch these new, European shows."

A version of this story first appears in the Oct. 10 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.