Change is coming: Netflix, Amazon, Apple get the jump on regulation

Something remarkable happened in the past few weeks: three of the world's biggest streaming operators – Netflix, Amazon Prime Video and Apple TV+ – announced they will make new shows in Australia.

For supporters of local content this is great news, especially since the Netflix show, an eight-part cyber thriller called Clickbait, and Apple's 10-part adaptation of Shantaram are genuinely Australian in origin (Amazon's comedy competition LOL: Last One Laughing is a Japanese format).

Tony Ayres, co-creator with writer Christian White of Clickbait.

Until now, the international streamers have shown little interest in making shows here, which has understandably upset local actors, producers, writers and so on, not to mention the free-to-air networks who are obliged to do so, at great cost and to diminishing audiences.

All this sudden activity, then, might suggest things have changed, that the streamers have seen the light. But not so fast.

Pressure has been growing for the streaming players, which are increasingly stealing audience share from free-to-air television – especially where scripted content is concerned – to face some sort of local content obligations. Parliamentary inquiries from the House of Representatives and the Senate have made the case, but so far to no avail. A departmental inquiry made its recommendations to the government in December 2017, but what they were we still don't know because the government has neither released nor responded to them.

Perhaps most compellingly, the ACCC in July handed down a report that argued it was time for Australia to implement a "harmonised" regulatory framework that "would create a level playing field" across the media.

Rebel Wilson is set to headline Amazon's LOL.Credit: TEN

While not specifically aimed at the streamers, the implications of the report were clear: the status quo, wherein the free-to-air commercial networks and Foxtel are obliged to make and screen Australian content while the streamers are not, is no longer viable.

It's against that backdrop that the recent news should be understood. As one industry source told me this week, "the timing of the announcements may be a coincidence but the fact of them is not".

To some in the industry, government intervention now seems almost certain. "Winter is coming," that source noted. "The White Walkers of regulation are on the horizon."

If regulation is coming – either through a local content quota (as applies to FTA) or, more likely, a requirement to spend a certain proportion of local subscription revenue on local content (as applies to Foxtel) – it makes great sense for the streamers to show themselves willing partners in the creation of Australian content. A good corporate citizen is likely to get off much lighter in a regulated environment than a recalcitrant one.

Stan, which is owned by Nine, the owner of this masthead, has to date proven itself the most willing player in commissioning locally. This year, it has announced four series – new dramas The Commons and The Gloaming, and second seasons of Bloom and dramedy The Other Guy. The combined budgets of those shows are rumoured to be around $50 million – a significant figure given its revenue last financial year was about $157 million.

Phoebe Tonkin in Bloom. Stan has ordered a second season.Credit: Sarah Enticknap

Netflix's Clickbait comes with a budget of $36 million for eight episodes, which at $4.5 million an hour is between two and three times the cost of most Australian miniseries. But Netflix's revenues locally are likely about $700 million and this is only its third local original, following Tidelands and Chris Lilley's Lunatics, since launching here in 2015. (It has, however, also partnered with local broadcasters on a number of other productions, including Glitch and Pine Gap with the ABC and kids' series Beat Bugs, with Seven.)

Apple TV+ is a new entrant to the space, and is making a huge splash with its $55 million series. LOL is the first local commission for Amazon Prime Video, though the service has a significant library of Australian content (though much of it is relatively low-cost and of dubious quality).

As one streaming figure told me last week: "As an industry we're really only four years old, and right now there's so much going on."

Essie Davis, Ann Dowd and Jessica Barden in Lambs of God. Credit: Mark Rogers

Much of what's being produced out of the streamers and pay TV – Lambs of God, Mr Inbetween, No Activity, Bloom – is good enough to appeal both locally and internationally, he added. A heavy-handed approach to regulation might have the opposite effect to what is desired – by forcing the streamers to produce content not because it is good, "but simply because they have to".

It's a point Netflix has made publicly before. And it's worth noting, too, that if change comes it mightn't only be in the shape of local content requirements for the streamers – it could just as easily come in the form of reduced requirements on the free-to-air commercial networks, to rebalance the industry to better reflect audience behaviour.

In other words, the net effect might be stasis for the sector rather than growth; a "harmonised" regulatory environment does not necessarily mean an expanded one.

Like winter, change is almost certainly coming. Whether that's unreservedly a good thing for local content producers, though, remains to be seen.

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