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European Union Mulls 20% Content Quota for Netflix and Amazon Prime

The European Commission, the European Union’s executive arm, is mulling moves to impose a 20% European content quota on video streaming sites like Netflix and Amazon Prime. It also looks set to propose local content investment quotas for Netflix and Amazon Prime in some countries in Europe.

The video-on-demand quotas would be implemented as part of a redrafting of E.U.’s broadcasting rules which require TV networks in the E.U. to make 50%-plus of most content European. These rules are set to be extended to include streaming sites, the Financial Times reported. The investment quotas would only hit Netflix and Amazon in the E.U. countries where they currently exist for established TV operators, such as France and Spain, Variety has learnt.

The Commission’s plans to ban geo-blocking, also reported by the Financial Times, is believed to be limited to e-commerce. Attending Cannes Film Festival, Andrus Ansip, the European Commission official leading the campaign for a Digital Single Market, told Variety Sunday that “the principle of territoriality has to stay.”

A move to update Europe’s Audiovisual Media Services Directive — its former Television Without Frontiers regulation — the draft proposals, which will be revealed next Wednesday, would also require VOD sites to “ensure prominence” of European movies and TV series, which could force them to include European content on their home page.

Quotas for European content on VOD catalogs already exist in more than half of the E.U. Member States. The required shares in the catalogs vary considerably between Member States (10-60%). The Commission looks set to propose a harmonization of these levels and their extension to Netflix and Amazon in a move to create a level playing field between new and traditional players. A 20% European content proposal has been reported in the French press.

If that figure proves to be true, according to research undertaken by Ampere Analysis, the E.U. move on a content quota would either have no effect or a limited effect on Netflix and Amazon, depending on the criteria it uses to define European content. If it stipulates that the content is only partially produced in a European country then the two streaming sites already meet the quota. If it specifies that the main country of origin has to be in Europe, then there would have to be a slight increase in European content in several countries for Netflix. (See Ampere research at this link here.)

An investment quota could hit Netflix and Amazon far harder. Canal Plus in France, which operates a VOD service, Canal Play, is currently obliged to invest a sum equivalent to 12% of its annual revenue pre-buying French films. According to a E.U. study cited by the Financial Times, European streaming services invest barely 1% of revenue in new productions, the E.U. found.

Netflix has pushed back against such proposals in the past, telling the EC: “Rigid numerical quotas risk suffocating the market for on-demand audiovisual media services. An obligation to carry content to meet a numerical quota may cause new players to struggle to achieve a sustainable business model.”

Netflix added: “The focus of European audiovisual media policy should be on incentivizing the production of European content and not imposing quotas on broadcasters or other … providers who would struggle to meet the supply.”

News of the proposed quota was first reported by French financial newspaper Les Echos.

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