EU OTT quota rule would have ‘not have huge impact’ on Netflix

The European Union’s rumoured move to make Netflix comply with a European content quota would have limited effect, according to analysts.

News of a rumoured quota applying to SVoD services was first reported in Les Echos yesterday. European Commission vice-president for the digital single market Andrus Ansip told the French newspaper that there needed to be a more level playing field between these SVoD operators and traditional broadcasters.

Separately, Les Echos cited sources saying the quota would be 20%, applicable across the catalogue.

Netflix is by far the most widely distributed streaming service in the EU, but the proposed rules would apply to all SVOD operations.

Industry experts said, however, that the imposition of a quota would not have a huge impact on Netflix and Amazon Prime Instant Video.

Analysts said that the Commission was likely seeking to address a ‘regularity disparity’ between SVOD and traditional TV players, but a quota was unlikely to have a huge effect given the level of local acquisitions and production.

“Regulators do have to address this disparity, although there are only a few multi-territory SVOD players, in Europe it is just Netflix and Amazon,” Ed Barton, head of TV and principal analyst at Ovum told DTVE sister title TBI. “Netflix already does quite a lot of local content sourcing and is increasingly doing local production and that will increase.”

Analysts at another research house, Ampere, said that, having analysed the amount of Europe-originated content on each of Netflix’s services in the EU, Poland was the ‘least European’ and still had 20% of the line-up originating from Europe in whole or in part.

Amazon operates in the UK and Germany, and the UK had the lower proportion of Euro content at 33% of the total, still comfortably above the reported quota level.

“Ampere’s research suggests that such a quota could have only limited effect on multinational services such as Netflix and Amazon – depending on how strict the EC’s criteria are,” the research firm said.

“If the European Commission was to apply more stringent rules, and specify that the main country of origin had to be in Europe, Amazon Instant Video would still be unaffected in its two core European markets of the UK and Germany,” it added.

“Netflix, however, would have to adjust its catalogue composition in the UK, Germany, Portugal, Netherlands, Poland and the Czech Republic – although not necessarily by much.”

Netflix refused to comment but the streaming service is keen to highlight its growing range of European-originated original content, with projects in the UK, Italy, Spain, Germany and France, and the range of Euro content it acquires from distributors.

Ovum’s Barton added that as the rules stand today, there is nothing to stop the traditional broadcasters launching their own streaming services across different territories.

“If the regulatory situation is allowed to stand broadcasters can use the same [strategy] as Netflix and launch multi-territory SVOD services,” said. “That would be another approach.”