European Union's Newest Consumer Attack is Against Streaming Services
posted Saturday Oct 20, 2018 by Scott Ertz
Over the last year or so, the European Union has seemed intent on either isolating itself from the rest of the digital world or in crippling the ability of consumers within. GDPR seemed to be the beginning, though the regulations ended up being mostly easy to implement (unless you're using blockchain). They followed it up with copyright laws that could prevent user-generated content sites from operating within the Union.
Their newest attack on consumers comes in the form of what is being referred to as "content quota." This new idea would mean that, if a streaming service operates within the European Union, at least 30% of all of the content available on the platform must be produced within the region. This means that companies like Netflix, which produce content wherever makes the most sense, either for the story, scenery, or budget, will have to make decisions to either move production to the EU (which is unlikely), or remove content from their European services.
Reed Hastings, CEO of Netflix, took the opportunity on the company's quarterly conference call to speak out against the idea. He said that, rather than imposing a penalty for not producing content locally, which will only limit the availability of content, especially in the short-term, the EU would do better to provide incentives to produce content locally. In their release, the company said,
We are heavily investing around the world to share stories broadly and to strengthen local production capacity and opportunity. We'd prefer to focus on making our service great for our members, which would include producing local content, rather than on satisfying quotas, but we anticipate that a regional content quota which approximates the region's share of our global membership will only marginally reduce member satisfaction. Nonetheless, quotas, regardless of market size, can negatively impact both the customer experience and creativity. We believe a more effective way for a country to support strong local content is to directly incentivize local content creators, independent of distribution channel.
Take Atlanta, Georgia, as a great example: 20 years ago, nothing entertainment-based was produced in the city. Today, a lot of television and film projects are produced in and around Atlanta, entirely because of incentives provided by the city. Decades before, Toronto did the same thing, transforming the city into an entertainment hub, thanks to production incentives. Neither of these cities got to where they are because of coercion.
Netflix believes they can satisfy the rules by "evolving our content offering," but what this means is questionable. Luckily, the member countries have a couple of years before enforcement begins, giving the companies involved time to comply.