Australians love Netflix. If statistics are to be believed, roughly half of all Australians have a Netflix subscriber in their household. That’s more than double the market penetration of Foxtel. And while Foxtel has been around since 1995, Netflix has only been available in Australia since 2015. It’s no wonder that Foxtel has suddenly started offering better price points. They finally have some competition.
Building on its local success, Netflix reportedly plans to open an office in Sydney later this year. It is hiring Australian staff and planning more Australian production as part of a push to cement its lead over fierce international competitors like Amazon and the looming content giant Disney, which is licensing exclusive family-friendly programming to Australia’s home-grown streaming service, Stan.
So what does Australia’s political class plan to do about the bonanza of low-cost, high-quality, hugely-popular video content unleashed on Australia by Net-flix and its competitors? Why, regulate it, of course.
The Australian Competition & Consumer Commission – the organisation that is supposed to foster greater competition so that consumers get the best choices at the lowest possible prices – has just completed a major inquiry into digital platforms like the Netflix streaming service. The Australian television industry (no surprise) came out swinging, with a submission that asked for streaming services like Netflix to be subjected to the same kinds of local content rules that require them to broadcast 55 per cent Australian content between 6:00 am and midnight.
In line with the broadcasters’ demands, the ACCC (motto: ‘making markets work for consumers, now and in the future’) recommends that the Australian government should address local content obligations as one of the ‘regulatory disparities of immediate concern’ facing the video-streaming industry. There’s no word yet on when they will start making us all listen to locally-recorded podcasts, or require Australian families to post more pet videos on YouTube. It’s the television lobby that has the politicians’ ears.
If the Coalition, Labor, and the Greens can all agree on one thing, it’s socking it to the big American media companies. But can you imagine what Australia’s political leaders would say if Donald Trump were to tweet support for American content rules? Trump could, for example, use executive authority over immigration to revoke the visas of Australians working on US film and television productions. It’s not going to happen, but you get the point.
Australians love it when one of their own makes it in Hollywood. Just think of Australia’s pride in the likes of Cate Blanchett, Melissa George, Mel Gibson (before his fall from grace), Hugh Jackman, Nicole Kidman, Baz Luhrmann (even if he didn’t cast an Australian to play Elvis), Naomi Watts, and Rebel Wilson. Poor Paul Hogan still gets pulled out of retirement to pose as the true-to-life Australian Crocodile Dundee. They’ve all shown that they can compete on the global stage – and succeed.
But many other Australians, particularly in the government-sheltered arts world, don’t want to have to compete. That’s fair enough. Everyone likes a subsidy now and then, and Australian taxpayers provide massive subsidies for Australian content through their support for the ABC, SBS and the Australia Council. The taxpayers also subsidise free-to-air television by virtually giving away broadcast spectrum in exchange for nominal licence fees – and the obligation to show 55 per cent Australian content. If Australia’s broadcasters really believe they are being gouged by government license fees and local content rules, they should ask the government to auction the broadcast spectrum. Good luck with that.
Nonetheless, Australia’s communications minister Paul Fletcher seems to want to please the broadcasters by applying local content rules to Netflix, arguing in press interviews that since streaming services ‘are essentially competing for the eyeballs of Australians and delivering video content’, they should be subject to the same regulations as Australian broadcasters. By that line of reasoning, streaming services should receive the same kinds of subsidies as Australian broadcasters. Of course, they might just turn down the money. In the American technology world, innovation trumps subsidies.
With internet governance moving to the forefront of practical politics, Australia has a choice to make. It can continue down the freewheeling American road toward an ever-evolving global future, or it can follow Europe in taxing and regulating its own local internet. In addition to its special taxes on American internet companies, the European Union has now slapped a 30 per cent European content requirement on American streaming services, to be achieved by September 2020. The rational response from Netflix will be to withhold niche American content from its European subscribers. Why should they make their whole global catalog available, if the regulators will fine them for it?
And so Europeans who want to watch American (or Indian, or, for that matter, Australian) content will find those shows blocked in their region. Netflix is rapidly going global and producing content in local markets around the world. Nearly all of that content is available to consumers in the United States, where there are no local content laws. Only the most popular content will be made available in Europe. If Australia goes down the European route, it can expect a limited selection, too. And the only ones to benefit will be Australia’s entrenched broadcasters – and Foxtel.
Foxtel launched in 1995 with just 20 channels at a time when American cable companies routinely offered 100 or more. To be fair, no one really needs that much television. But it does illustrate the difference between an open, competitive media landscape and a closed, regulated one. Australia went down the regulated route for television, and it got limited channel choices while many of its best talents went to work overseas. That’s no national tragedy, but it’s hardly ‘making markets work for consumers’.
If Australia now follows Europe in regulating content on streaming services, it will get a second-class, European-style internet. In the long run, that might be a much more serious drag on the Australian economy. But don’t worry: Australia’s biggest stars will still make it to Hollywood. You just won’t be able to watch them on your restricted Australian streaming service.
Salvatore Babones is the author of The New Authoritarianism: Trump, Populism, and the Tyranny of Experts.