Predicting the impact of the EC’s content quotas for VoD services is a tough game, but European producers certainly look set for a windfall. Karolina Kaminska reports.

Letterbox and Iris Productions miniseries Bad Banks
The European Commission (EC) last year approved plans to introduce a quota to ensure that at least 30% of the content offered by VoD services operating in Europe originates from the region.
The decision came amid fears from European regulators that the global expansion and deep pockets of the major US SVoD services could harm the local content sectors of individual territories in Europe. Its aim is to level the playing field between multinational VoD services and local broadcasters, the latter being already obliged to ensure at least 50% of their output is European, and will ensure international players are contributing to regional TV sectors.
The quota is part of the EC’s modernised Audiovisual Media Services Directive, which aims to promote European content and cultural diversity. According to an EC representative, the revised directive “creates a media framework for the 21st century,” where “traditional television and new services such as on-demand broadcasting will compete on a level playing field.”
“The media landscape has shifted dramatically in less than a decade,” the EC rep continues. “Instead of sitting in front of the family TV, millions of Europeans – especially young people – watch content online, on-demand and on different mobile devices.
“Strengthening the promotion of European works for on-demand services will lead to a broader and more diverse offer for Europeans. In addition, it will have a positive impact on cultural diversity and bring more opportunities for European creators as they will ensure more access and better visibility for the works produced by the European industry.”
The quota must be included by EU member states in their national legislation by September 2020.

Bo Stehmeier
Regional industry players’ views on the quota are mixed, with some hugely in favour of it, while others suggest it may not be entirely necessary at a time when the SVoD giants are already increasing the amount of local content they offer.
Bo Stehmeier, president of Germany-based distributor Red Arrow Studios International, is among the former, arguing the quota will provide additional opportunities for local production companies, as well as more relevant content for viewers. “From a business perspective, the content industry should be a fair and level playing field with all players – traditional broadcasters, pay TV firms and streamers – adhering to the same rules and regulations,” Stehmeier says.
“The quota will support the European content business and raise the profile of those creatives based in the region.”
Stehmeier believes that, as well as benefiting the European production sector, the content quota will help multinational SVoD services succeed in Europe, given the rising viewer demand for local programming.
“The US streamers that have entered the European markets have quickly learned the importance of offering content with significant regional relevance to viewers,” he says. “Consequently, having European quotas in place could expedite the success of the new streamers as their offerings will be more engaging and appealing for local audiences.”
In the Netherlands, Femke Wolting, co-founder and MD of prodco Submarine, is equally welcoming of the quota. She says it could be particularly helpful for smaller markets and could allow European producers to reach global audiences.

Spanish crime drama La Casa de Papel
“The rise of SVoD platforms has radically increased the demand for content of all kinds,” Wolting notes. “These quotas are especially helpful for smaller countries like the Netherlands, where SVoD platforms are less likely to invest in local production because the language doesn’t travel around the world as easily. For example, a show like Spanish crime drama La Casa de Papel (Money Heist) can attract audiences in the US or Latin America as well as Spain, so it’s much more appealing to invest in Spanish-language shows than Dutch-language shows.
“For these smaller countries, the quota could support the growth of locally produced, culturally relevant content. For producers, it offers an opportunity to create local content, with the potential of reaching a global audience. SVoD platforms have proven that very specific local content can appeal to an international audience. As a producer, I find this an exciting time – we have the possibility to reach a much wider audience when producing local productions.”
Meanwhile, Pascal Breton, founder and CEO of French prodco Federation Entertainment, has mixed views on the quota. Given that most multinational SVoD services are already increasing their local content libraries, he’s sceptical of its impact.
“I don’t think it will really change the industry,” Breton says. “Most of the platforms need European content. And Netflix, which is the leader in Europe, understands that very well. Of course, in terms of volume, it’s always good to have a quota because the big studios are mainly only US properties and it’s good to be sure they also invest in European content. But on the other hand, I’m not worried. I know that free-TV viewers everywhere in Europe prefer local content.
“In countries like France, US shows did extremely well for about 20 years and were doing better than local content for most of the broadcasters. But in the last two years, it has dramatically changed and, in every country in Europe, local content is much, much bigger. The big studios like Disney and Warner Bros know extremely well that it will be much more difficult to sell US shows and that they need the best European and local content on their platforms to get subscribers anywhere in Europe.”
Guy Bisson, research director at UK-based market research firm Ampere Analysis, similarly believes that while the quota should be positive for European producers, it is perhaps unnecessary.

Guy Bisson
“For European producers, it should largely be a positive thing – the streaming players are probably not as far off the quota as you might think, but they are some way off. So, there is a fairly significant volume of European content that will have to be infilled into a number of major streaming services and, in that respect, it is positive,” Bisson says.
According to Ampere research, 17% of Netflix’s UK offering is local-content, meaning it still needs to commission or license 4,285 hours to meet the 30% target. Amazon Prime Video is currently at 15%, while Comcast-backed NowTV is much closer at 26%.
In France, just 15% of Netflix’s line-up is local, while Amazon’s local content catalogue is stronger at 21%. In Germany, the streamers are closer to the quota with Netflix at 20% and Amazon at 24%.
But while the global players still have some way to go, Bisson believes they are heading in the right direction anyway, with or without the quota imposed by the EC.
“My feeling is that market forces would have driven the industry to a similar point in due time. Obviously, it will boost local production and the local industry, but whether it is actually necessary, I’m not so sure,” he says.
Taking a much more negative view of the quota is John McVay, CEO of UK producers’ industry body Pact. “We’ve never been in favour of the quota,” he says. “We think it’s far better for competitive production communities, given all these big platforms need local content, for there to be good creative competition and for local producers to come up with brilliant products, great ideas and great programmes that these people want to commission, rather than it being a compulsory spend.
“I’d much rather we have strong competitive competition here and win more than 30%. I just don’t think the quota is very helpful.”

Docuseries Varane: Destin de Champion
Despite the overall positive feeling from Red Arrow’s Stehmeier, he does identify some potential ramifications of the quota. In particular, he fears the larger European markets could dominate the supply of local content, leaving fewer opportunities for players from smaller markets. “The four largest European markets – France, Germany, Spain and Italy – could end up supplying the bulk of local content, meaning producers, distributors and viewers in the smaller European markets will benefit less,” Stehmeier says.
The exec also points out that streamers may “try to fulfil their quotas by relying on cheaper library content and may place more value on non-scripted as it’s a more cost-effective way of filling the quota hours and delivering local content to audiences.”
In addition, Stehmeier highlights the concern that SVoD services could take local content away from European broadcasters, which may struggle to compete with the bigger-budget streaming giants. “The downside is that the streamers, backed by global businesses with deep pockets, could drive up prices and take content away from local broadcasters and pay-TV platforms,” says Stehmeier, noting that this could also result in “a brain-drain of business talent from local broadcasters to the streamers, which will leave a gap in local markets.”
Bisson also touches on this issue, explaining that more European content from the multinational streamers could remove local broadcasters’ “trump card,” at a time when they are already struggling to compete against such platforms. “The main consequence of the quota is that regulatory intervention to make global players more competitive with local players comes at a point when the market is becoming incredibly crowded. The one unique selling point that broadcaster-led streaming services have is that they have local content. If you’re forcing global players to effectively have as much local content, it potentially makes competition worse for local players,” Bisson says.
“It’s a double-edged sword in some ways, particularly for broadcasters that are managing this very difficult transition of viewing behaviour to online from linear. As they begin to invest more and more in their streaming services, their trump card would have been local content. This new regulation removes that trump card, which is not so positive for them.”

Femke Wolting
However, Submarine’s Wolting believes local broadcasters will only benefit from the quota as it will force them to be more competitive and air better shows, which may help them to reclaim the younger viewers who have defected to the streamers. “It will positively affect local broadcasters, as they will be forced to be more competitive to attract talent. To compete, they will have to produce less generic, more unique and innovative content,” Wolting says.
“This is especially important to stay relevant for younger audiences at a time when viewers, especially younger generations, are increasingly moving away from public television channels. In the Netherlands, the average age of viewers watching public television is 58. The SVoD platforms are much more aggressive and innovative in producing shows for younger audiences, so these demographics are moving away from public channels more and more.”
In light of the need for the SVoD giants to add more European programming to their catalogues, most local industry players are not anticipating any pushback on the quota from the likes of Netflix and Amazon or the new breed of streamers from Apple, Disney, NBCUniversal and WarnerMedia.
“Of course, the SVoDs are happy to have no regulation, but they know there will be regulation now and that they will have to adapt. Netflix has offices everywhere in Europe now and all the other streamers will too,” says Federation’s Breton. Federation has produced and distributed a number of series for the big US streamers. Among its Netflix shows are original dramas Marseille and Baby, the latter an Italian teen drama from Federation’s Fabula Pictures.
For Amazon, Federation has produced originals including docuseries Varane: Destin de Champion – about French footballer Raphaël Varane – and The Banker’s Wife, a thriller based on the book by Cristina Alger, which is currently being produced by Federation Americas.
For Disney-owned Hulu, Federation’s Cottonwood Media produced original teen live-action series Find Me in Paris, commissioned by German broadcaster ZDF and now in its third season. Federation also sold Letterbox and Iris Productions miniseries Bad Banks to Hulu and Netflix.
Bisson likewise expects little resistance from the SVoD players, pointing out that while the quota “is pushing” the big streamers to add more European content to their libraries “more quickly than they probably would have wanted or would fully make sense commercially,” they were heading down that route anyway.
While most European players agree the appetite for local content from multinational VoD services is strong, opinions are generally mixed on how much the EC’s quota will actually benefit Europe’s TV industry and whether the resulting SVoD competition will harm local broadcasters. It’s certainly likely to boost local production sectors, but whether or not the quota is entirely necessary remains to be seen.