Local content quotas for streaming services

The sharing of Australian stories is central to Australia’s cultural policy, Revive: a place for every story, a story for every place. In line with this, the Government committed in 2023 to legislating local content quotas for streaming services (p. 89). However, the promised 1 July 2024 commencement date has come and gone, and recent reporting suggests any change may now be delayed indefinitely.

This FlagPost briefly outlines the policy proposal, the reasons for it, and why it has been delayed.

The issue

According to a 2023 Australian Communications and Media Authority (ACMA) report, more Australians watch subscription video on demand services (SVOD; 66% in a 7-day period) than live free-to-air television (FTA; 52%) or FTA broadcast video on demand services (BVOD; 43%). Deloitte’s Media & Consumer Insights 2024 report found that 81% of Australians subscribe to at least one SVOD service, with the average number of subscriptions being 2.1 when considering all respondents, and 2.6 when considering subscribers only (pp. 17–18).

Quotas for local content have long been required of broadcast FTA, however similar provisions do not apply to SVOD services. SVOD providers voluntarily report to the ACMA on their number of Australian titles and expenditure on Australian content.

The 2020 report, Supporting Australian stories on our screens—options paper, authored by the ACMA and Screen Australia provides 3 main arguments for why local content quotas should apply to SVOD services:

• Cultural significance: ‘Stories influence us in many ways, ultimately reflecting, shaping and challenging our perceptions of ourselves and each other’ (p. 14).
• International reach: commissioned Australian content is shared around the world, supporting Australia’s ‘global brand and standing’ and increasing tourism to Australia (p. 6).
• Economic impact: the screen sector contributes significantly to Australia’s economy. However, Australian content is expensive to produce and may be a relatively unattractive option for SVOD services without regulated quotas (pp. 5–6).

These views are reflected in many submissions made in response to the options paper.

The proposal (and its brief history)

Imposing local content requirements on SVOD services is not a new idea. Conversations around the issue have been building for the better part of the last decade, since Netflix, Stan and other streaming platforms launched Australia in 2015.   

Multiple parliamentary inquiries and government reviews have considered the issue and suggested action.

In February 2022, then Minister for Communications, Paul Fletcher MP, announced that the government was developing:

A proposed Streaming Services Reporting and Investment Scheme to incentivise and, as needed, require large subscription video on demand (SVOD) services to invest in Australian content.

The government released a discussion paper on the proposed scheme at the same time, and provided funding for it in the March 2022–23 Budget (p. 145).

Following the change of government later in 2022, the Albanese Government also committed to addressing the issue. Revive – the National Cultural Policy released on 30 January 2023 – included the action to ‘introduce requirements for Australian screen content on streaming platforms to ensure continued access to local stories and content in the third quarter of 2023 and to commence no later than 1 July 2024’ (p. 89).

The May 2024 Interim Report of the Senate Standing Committee on Environment and Communications’ inquiry into Revive included a brief overview of progress on this action (pp. 10–12). Specifically, this included that the government was considering two models for content quota requirements, in consultation with industry:

• an expenditure model—being a progressive obligation to spend a percentage of revenue on local drama content based on number of subscribers, with no obligation for services with less than one million subscribers, up to a 30 per cent obligation for services with more than five million subscribers; or
• a revenue model—services would be required to spend 10 per cent of their Australian revenue on new local drama, with sports streamers having a reduced obligation, and with the potential for the obligation to be increased to 20 per cent over time (p. 11).

Representatives from the Department of Infrastructure, Transport, Regional Development, Communications and the Arts provided updates on the scheme’s progress in response to questioning at Senate Estimates hearings on 30 and 31 May 2024. They revealed little new information, noting that the department was still working on the scheme to inform cabinet decisions (pp. 25–26). At this time, Senator Carol Brown reaffirmed the government’s commitment to a 1 July 2024 implementation date (pp. 5–6).

Current status

From late 2023, reporting began suggesting that the government’s proposed model may violate provisions of the Australia-United States Free Trade Agreement (AUSFTA). A blog post published by the Computer and Communications Industry Association argues that the proposed models appear to contravene 2 articles of AUSFTA:

Article 16.4 of AUSFTA’s E-Commerce Chapter … prohibits preferential treatment for digital products based on the national origin of an “author, performer, producer, developer, or distributor.”

…

Article 11.9 of AUSFTA’s Investment Chapter (Performance Requirements) … prohibits measures designed to “achieve a given level or percentage of domestic content…”

It further states:

AUSFTA does allow the Australian government to enact content requirements inconsistent with these rules, but only in the case where a finding is made that the amount of Australian content in the market is “not readily available to Australian consumers.”

In reality, this condition is not remotely close to being met…

On 6 November 2024, potential violations of the AUSFTA appeared to be confirmed, with the ABC reporting that Minister for the Arts, Tony Burke, ‘told Labor's caucus on Tuesday [5 November] that the interaction of any new local content rules with the US free trade deal was a stumbling block’.

The apparent complexity of introducing local content quotas is reflective of the broader difficulties the government has encountered regarding domestic regulation of global digital platforms. It is not yet clear how – or when – the government intends to work around this new obstacle. However, it does seem clear that industry will continue to advocate for a policy that has now been almost a decade in the making.