After its world-leading tech bargaining law, Australia now has another challenging piece of legislation under consideration. Duncan Greive explains.

What’s the ‘Netflix quota’ – and why should New Zealand be paying attention?

Earlier this year the newish Australian Labor government under PM Anthony Albanese announced an expansive “national cultural policy”, which included extensive support for arts and culture across a number of different areas. The biggest headline came from a proposal to create a streaming quota, which will force major international platforms like Netflix, Amazon Prime and Disney+ to spend as much as 20% of their Australian revenues on local productions. 

Deadline reports that the Australian streaming sector generates up to AU$2.5bn in annual revenue, implying as much as AU$500m might be spent in the local production sector if it were to go ahead as planned (for scale NZ on Air, the biggest funder of local productions, spend less than a fifth of that here). The streamers already spend significant sums in Australia, but New Zealand has seen almost no commissioning which feels targeted primarily at New Zealand audiences, versus that which is shot here or made about this country for global audiences. In the aftermath of the merger’s failure, it’s inevitable that the production sector will closely watch Australia’s moves to address the yawning gap between Aotearoa’s vibrant representation on free-to-air television and the comparative wasteland that is international streaming. 

Why is it being considered?

The bedrock driver is that as more viewing shifts online, it also globalises, and risks a loss of cultural identity as a result. Additionally, diminished free-to-air audiences mean less spending on local productions, which employ thousands of people and play a major role in our culture sector. The thinking is that the policy can address both those issues without any tax expenditure.

Australia has always had a greater government participation in culture, and a more activist streak when it comes to achieving desired outcomes on screens. It has a 55% local quota between 6am and midnight on primary free-to-air channels, and 10% minimum drama spend for some pay TV revenues. It also has anti-siphoning laws which keep major sporting events freely accessible, and funds the ABC far more lavishly, on a per capita basis, than the piecemeal New Zealand approach through RNZ or NZ on Air. The merger intended to change that – but was dumped last month.

Australia’s arts minister Tony Burke framed the streaming quota in terms of continuity and fairness at the policy’s launch, saying “there is no requirement that [Australian content] be there at all, and the percentages of what we’re seeing with Australian content are way down on what traditionally was expected on free to air.” 

What does the Australian production industry think? 

The idea was first mooted in 2020, and the MEAA, an umbrella group representing multiple cultural sectors issued a statement at the time saying it was “heartened by today’s news.” Matthew Deaner from Screen Producers Australia was similarly jubilant in January, saying the quota is “not a big ask of a business that is mostly creating content in other markets, and earning billions of dollars in our market, to contribute a portion of that back into creating content that’s localised, and is still its own investment for itself,” he said.

How about the broadcasters and streamers?

They’re more circumspect. Netflix already has a number of major Australian productions screening, including a rebooted Heartbreak High and Boy Swallows Universe. It told Variety that its “position is clear: we don’t oppose regulation, but do want it to be sustainable, equitable and evidence-based.” 

The broadcast television industry is similarly circumspect, seeing the move as having potential to drive up the cost of local production and erode a major point-of-difference between free-to-air and streaming. “I understand we’ve got to compete in a new environment, but I’m not sure we need to distort the market with new quotas,” broadcast industry representative Free TV’s chief Bridget Fair told the AFR. “If we skew it too far in favour of the streamers we will end up with more content behind the paywall.”

What are the challenges? 

While the idea of forcing the media and technology giants to support local industry and culture seems a no-brainer, there are a number of challenges within the policy area. One of the largest is that the broad viewing shift is not just from broadcast to digital, but from professional production to user generated content. Young people worldwide are much more likely to watch YouTube than Netflix or Disney+, and the legislation has no view on how such platforms might be similarly directed to prioritise local content. 

Additionally, the Liberal opposition raised questions about whether an overly onerous quota might lead to services withdrawing from Australia. This isn’t completely outlandish. Google wondered aloud about ending search in Australia, and has recently sabre-rattled in Canada during its own news funding battle. Facebook, always more aggressive, briefly and catastrophically turned off access to its services during a heated battle with the then-Liberal government at the same time. So far, none of the streamers have made similar noises.

Does the New Zealand industry have a perspective?

Andrew Szusterman, GM of production powerhouse South Pacific Pictures wrote a charged op-ed for The Spinoff 18 months ago calling on our government to make a similar move. “None of these services have commissioned any New Zealand premium drama content directly for New Zealand audiences, and there is not a chance that they will unless change is forced upon them,” he wrote.

The head of screen production guild SPADA, Irene Gardiner, wrote in a recent email that the streamers are “not regulated in any way. So SPADA has always [wanted to] see if we can get them to contribute in some way – perhaps a percentage levy on New Zealand revenue, that is invested directly back into local production.” She went on to suggest that “some Government work could be done to establish what is the best way for New Zealand to handle this.”

What does the government say? 

This country has history as a keen observer of Australia’s legislation – late last year broadcasting minister Willie Jackson announced a plan to essentially copy and paste the 2021 tech bargaining code to fund journalism. That policy is well-advanced within the Ministry for Culture and Heritage, with cabinet papers targeting it to replace the Public Interest Journalism Fund when it winds down in June.

Could streaming legislation follow suit? I put the question to deputy PM Carmel Sepuloni, who also holds the culture and heritage portfolio. She said in a statement “this isn’t something the government are looking into at this point in time.” That’s the whole statement.

For Bailey Mackey, the founder of Pango Productions and a member of the board set up to work on the now-defunct merger of RNZ and TVNZ, that reticence is something which needs to change. “This is probably the most important issue we have as a sector,” he says. “The justification for the PME [the merged TVNZ and RNZ] was to help a calcifying public media sector… [this would] force the streamers to pay their way here.”

Despite the governmental indifference, he believes there is still hope for a direct conversation between New Zealand’s content producers and the streamers, and says he has found commissioners at the streaming platforms highly receptive to the idea of more locally-focussed programming. He cites the Whakaari documentary on Netflix as an example of the good that can come from our stories playing out on global screens, and says that “seeing us on these global streamers gives us another perspective on who we are.”

Follow Duncan Greive’s NZ media podcast The Fold on Apple Podcasts, Spotify or your favourite podcast app.