Report Questions European Union's Wish for Ubiquitous Access to Movies and TV Shows16 May, 2016 By: Erik Gruenwedel
With the European Union seeking to implement a “digital single market strategy” that would do away with regional content licensing and distribution windows of movies and TV shows, a new report suggests such policy changes would hurt European consumers and content holders (including Hollywood studios).
Created by Oliver & Ohlbaum for a consortium of content holders, including the British Association for Screen Entertainment (BASE), Digital Entertainment Group Europe (DEGE), British satellite operator Sky, 21st Century Fox, Viacom, NBC Universal International and Entertainment One, among others, the report suggests altering existing distribution policies could have a drastic economic impact on the European entertainment industry.
The European market in 2013 generated €97 billion ($109.7 billion) annually in revenue, spent about €40 billion ($45.2 billion) on content, and employed upwards of 1.1 million people.
The report estimates the European content industry could see nearly 50% fewer movies and TV shows made, resulting in near-term annual losses up to €8.2 billion ($9.2 billion) and €9.3 billion ($10.5 billion) in lost consumer spending. It says spending losses would slow to €4.5 billion ($5 billion) annually over time.
Citing the fickleness of consumers, the report said theatrical and TV show production is an investment risk that often fails financial expectations. To mitigate fiscal risks, the report cited ongoing industry “safeguards,” which include restricted access to new-release theatrical movies (known as ‘windowing’); ownership vs. rental access; and regional distribution licenses.
The report said segmenting consumers into territories along national lines, or regions with a common language, remains important to producers and consumers as it fits with the nature of demand. Such differentiation by geography increases content producers' ability to achieve sufficient return-on-investment, as well as allowing more content to be accessed by different consumers at prices they can afford.
“If content buyers believe that the audience will have already seen the content on other services (such as international VOD providers, or the original broadcaster’s catch-up service), they will be unwilling to invest or will substantially reduce any investment,” read the report.
Indeed, changes in expected revenue due to ubiquitous access to digital movies and TV programs could negatively impact decisions to produce certain types of content, such as small-to-medium-scale locally produced films and certain TV genres (drama, children’s and documentaries).
“Less content would be produced. Locally targeted content would be particularly affected, threatening cultural/language diversity. Some consumers would pay a higher price and/or be left with a lower-quality offering; others would be priced out of the market altogether,” read the report.
But in a May 15 speech at the Cannes Film Festival, European Union VP Andrus Ansip said change is needed. He said existing commission rules regarding distribution of physical and digital media date back to 2007, which he characterized as an eternity in a rapidly evolving digital age.
Indeed, the EU just announced it membership would vote on a proposal that would enable Europeans to access their SVOD services temporarily when traveling through EU-member countries. A vote is slated for May 28.
“Today, TV broadcasting, video-on-demand and [subscription streaming] platforms fall under different [distribution] rules. It is time to update them to reflect new online realities and the changing digital world. This is also about creating a level playing field,” Ansip said.