This week the Labor government announced it is poised to introduce a bill to parliament that will impose regulatory obligations on major subscription video-on-demand (SVOD) services operating in Australia.

The legislation will require services such as Netflix, Disney+ and Prime Video (any with at least one million Australian subscribers) to support the production of new local drama, as well as children’s, documentary, arts and educational programming.

They can choose to do so in one of two ways. They can either invest at least 10% of their total expenditure for Australia, or 7.5% of their total revenue generated in Australia in the year prior.

In 2024 the market leader, Netflix, reported a local revenue of A$1.3 billion and expenses of $1.25 billion. This would equate to spending A$125 million via the expenditure model, or AU$97.5 million via the revenue model. It’s unclear how the method of determining a model will be decided.

The quota will also apply to Stan and Paramount+ if they meet the subscriber threshold. This is the case even though these services have ownership ties to the commercial broadcasters Nine and Ten, which already have their own content obligations.

A long road to regulation

Major streaming services have been left to operate unregulated in Australia for more than a decade.

The European Union imposed a 30% European-content catalogue quota on streaming services operating in the EU back in 2018. It also provided the option for member states to impose additional investment obligations, levies and promotion requirements on these services.

Similarly, Canadian broadcast regulations were updated in 2023 to require online streaming services to contribute to and promote Canadian content.

In Australia, there have been eight official inquiries into whether, and how, to regulate streaming services. We’ve also seen a 2022 Labor election promise to act on this, a formal commitment in the government’s 2023 Revive National Cultural Policy, and a promised (and subsequently missed) July 2024 deadline.

During these long periods of uncertainly, streamers banded together to lobby hard against multiple proposed models.

Hope for a flailing sector

Rather than regulating streaming services, since 2016 consecutive federal governments instead opted for scaling back licence fees and local content obligations for commercial broadcasters. This has resulted in a significant decline in Australia’s screen production sector.

This week’s announcement provides assurance about how much money streaming giants will have to consistently inject back into the local industry. Early estimates suggest the legislation could guarantee contributions of more than A$300 million per year.

It’s also good news the legislation explicitly identifies and supports key genres of locally-produced content (drama and children’s, documentary, arts and educational programming), rather than letting the streamers decide.

Research has found Australian drama is facing an uncertain future – as is children’s content, which is no longer supported by broadcast TV regulation and has subsequently deteriorated.

The framework’s emphasis on specifically “local” programs is also promising. It will hopefully delineate the creation of Australian stories, rather than allowing streamers to meet their obligations by pumping out offshore productions made in Australian studios.

But some questions remain

What we won’t know until the bill is introduced is what this means for exactly how much content SVOD services will be required to make. Will they have to make a minimum number of local productions, or certain hours’ worth?

As part of their licensing requirements, commercial television broadcasters have long had to produce and screen a certain number of hours of new Australian content to reach a certain number of points per genre.

While these conditions have been relaxed in recent years, this model provided our production sector with a scale and consistency that could sustain jobs, nurture talent and provide industry training.

Currently, it’s unclear whether Netflix and its competitors could meet their obligations with a handful of titles per year. We might see a few big-budget productions popping up sporadically, rather than a larger quantity overall. What good is that for our flailing production sector?

We also don’t know whether there’s anything in the legislative package to ensure that what gets made by these streamers as part of their obligations will actually reach viewers via their algorithmically-personalised interfaces. A spokesperson for Save Our Arts said the collective would like to see “algorithmic prominence addressed so Australian content is not made then buried. It must be discoverable.”

Finally, as much as this overdue regulation is good news, it will no doubt leave broadcasters reeling. Last year, Free TV, the peak body for commercial free-to-air stations, argued the introduction of such legislation “risks creating unintended costs for local broadcasters”.

Broadcasters will struggle to compete with the high per-hour production spends streamers can afford. They will also face increased competition for production labour and facilities.

As is usually the case with such things, the devil is in the details.