Netflix Reaches 30% Threshold for European Content Offerings

Netflix has long been a pioneer among streaming services offering original European movies and TV shows to subscribers. The SVOD pioneer’s content slate now averages about 30% European content, according to new data from Ampere Analysis.

The European Union mandated foreign streaming services — starting in 2021 — carry at least 30% localized content, or risk undisclosed penalties. The new rules stipulated that if SVOD giants Amazon Prime Video, Disney+, HBO Max, Peacock and Paramount+ wanted to expand into Europe, they had to up their local content spending.

The mandate was put on hold following the outbreak of the COVID-19 pandemic.

Regardless, Netflix has now satisfied the ruling for most of the EU member countries. The notable exception is the U.K. and Ireland, where 27% of titles are European. France is also slightly under, as are minor markets Belgium and Switzerland. With the 30% quota already being introduced in a number of markets, Netflix is now just a ‘rounding error’ away from meeting requirements across its entire European footprint, according to Ampere.

The shift to hit quota is recent. In December 2021, 16 of the 27 markets analized were under the quota. Even in the U.K. (which exited the E.U.), Netflix will hit 30% European content with the addition of just 408 European titles (or the removal of 953 non-European). Even fewer would be required for France, Belgium and Switzerland to reach 30%.

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“Quietly, while no one was watching, Netflix has boosted the proportion of its catalog titles that are European to the point where meeting new quota regulations should have no negative impact on its regional business,” Guy Bisson, research director at Ampere, said in a statement.

Bisson said Netflix reaching the milestone is a reflection of the service’s “heavy” investment in foreign content, which is rapidly being mirrored by other global streaming players.

Indeed, while Netflix is ahead of its global streaming rivals in programming European content, Amazon also exceeds the 30% quota in Germany, Switzerland and Italy and is on a par with Netflix in the U.K. with 27% of catalog titles being of European origin. Other Amazon markets range from 16% to 28% European.

HBO Max also has a large proportion of European titles in its local catalog, with the majority of its European footprint already exceeding 25% European. Disney still has some way to go, hovering around the 10% European mark. But like other studio and global streamers, Disney has recently been ramping up its European local original production activities.

The change can be viewed from two sides of the fence in terms of success. It either reflects the benefits of regulatory pressure in boosting the acquisition and production of European film and TV by U.S.-based players operating in the region, or it shows how global players are increasingly competing directly with local and regional players with content that was hitherto largely the stronghold of single-market local broadcasters, according to Ampere.

“Perhaps more surprising than Netflix’s 30% milestone is the fact that some of the newer major studio players are already rapidly approaching a similar proportion of European content in their local catalog,” Bisson said.

Amazon’s $8.45 Billion MGM Studios Acquisition Gets European Union Approval

Amazon’s $8.45 billion acquisition of MGM Studios cleared a major hurdle March 15 after the European Union gave its approval on the transaction, which has international implications. The deal must still pass U.S. regulatory (Federal Trade Commission) scrutiny to become finalized.

In its ruling, the EU, which represents 28 countries, including France and Germany, found that Amazon and MGM don’t have overlapping business interests and that MGM movies, which include the James Bond franchise, “cannot be considered as must-have.”

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Amazon has reportedly asked that the FTC make a decision by the middle of this month whether it would further investigate the transaction. Without an objection, Amazon said it would move ahead with the transaction.

Regardless, Amazon (and other U.S. tech companies) remains in the EU crosshairs regarding its e-commerce business allegedly operating afoul of antitrust laws, including harming smaller local businesses, among other issues.

Netflix and Other Streamers Avoid Proposed Spanish Tax Until 2023

Netflix, HBO Max, Amazon Prime Video and other U.S. streaming video operations in Spain will reportedly avoid being subjected to a proposed 5% tax on revenue generated in the country until 2023.

Under the government’s “Digital Spain 2025” initiative, foreign streaming services generating at least 50 million euros ($56.7 million) would be levied the tax, with the funds used to support independent Spanish cinema and public television network RTVE, among others.

Reuters reported that at least 6% of the streaming platforms’ content must be in Spain’s co-official languages: Catalan, Galician or Basque. The requirement is part of a broader European Union mandate requiring foreign streamers produce at least 30% of their original content in Europe.

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The tax proposal, introduced this year in the Spanish Parliament, was shelved for a year until regulators obtain the streamers’ 2022 local tax returns — a contentious issue as many platforms are officially based in tax-friendly countries such Luxembourg and Ireland.

The EU has upped efforts to enforce regulatory measures on U.S. tech/media giants such as Google, Amazon, Netflix and Disney, which it claims often take steps to avoid paying regional sales taxes.

Spain last year passed a law imposing a 3% tax on internet behemoths Google, Apple, Facebook and Amazon, with individual global revenue of at least 750 million euros ($850 million) and 3 million euros ($3.4 million) in Spain.

Netflix Questions New Proposed Italian Content Spending Mandates

Netflix Italy is questioning new proposed localized content requirements that could see over-the-top video distributors required by 2025 to spend 25% of net revenue on Italian and European programming. Current European Union rules stipulate streamers like Netflix spend 12.5% annually on localized content.

SVOD pioneer Netflix has more than 210 million subscribers globally, including 68.7 million subs in Europe, the Middle East and Africa. Netflix does not breakout individual country subs, but reportedly represents a majority of Italy’s 5 million SVOD subs, according to a recent study by Ernst & Young.

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“The feeling is that you have an iniquity,” Eleonora Andreatta, VP of Italian original content, told Italian media outlet Il Sole 24 Ore. “And this leads to more-difficult investment decisions. You trust a country if you are treated fairly and understand the logic of government decisions.”

Andreatta said the Italian government is looking for the local video market to help spearhead the country’s economic comeback following the pandemic. To jumpstart a “Revolution of Cinecittà,” the government is looking at tax credits to local production companies — fiscal assistance funded in part by taxing foreign media companies.

Stefano Ciullo, director of institutional relations of Netflix Italy, said the streamer spent €300 million ($356 million) on Italian content productions from 2017 to 2020 — up from an initial investment of €200 million ($237 million). Ciullo contends there remains time for OTT video distributors and the government to hash out a compromise ahead of the Set. 16 Parliament deadline.

“The hope is to arrive at corrective measures because there is the possibility of a short-term benefit for producers, but we have strong doubts that it will benefit competitiveness.,” Ciullo said. “And this thing concerns everyone, us as well as traditional broadcasters.”

Disney+ French Launch Delayed to April 7

The Walt Disney Co. March 21 confirmed it is delaying the previously planned March 24 launch of Disney+ subscription streaming video service in France to April 7. The SVOD service will bow as scheduled in other European countries on March 24.

The move came after the CEO of French telecom Orange — one of the country’s largest ISPs — suggested Disney delay the launch. The company is also joining Netflix, Amazon, YouTube reducing streaming speeds 25% to limit the service’s impact on local and national high-speed networks.

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In France, deaths related to the virus have risen to 562, according to the French Health Ministry. There are more than 14,400 infections, with 6,172 in hospitals and 1,525 of them in intensive care.

“In line with Disney’s longstanding commitment to act responsibly, we are responding to the request of European Commissioner for Internal Market Thierry Breton to work together to ensure the smooth functioning of the broadband infrastructure,” Kevin Mayer, chairman of Direct-to-Consumer & International at Disney, said in a statement. “In anticipation of high consumer demand for Disney+, we are proactively instituting measures to lower our overall bandwidth utilization by at least 25% in all of the markets launching Disney+ on March 24.”

Breton earlier in the week had called on streaming platforms, telecom operators and Internet users having a joint responsibility during the pandemic that has infected more than 300,000 people globally and 13,000 deaths.

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“[We need] to take steps to ensure the smooth functioning of the Internet during the battle against the virus propagation,” Breton said.

French Telecom Asks for Disney+ Launch Delay; Apple TV+, Amazon Prime Video, YouTube Throttle Streaming Speed in Europe

With hundreds of millions of Europeans quarantined in their homes to help stop the spread of the coronavirus, the CEO of French telecom Orange has called on Disney to postpone the planned March 24 launch of branded subscription streaming video service Disney+.

In an interview with French daily Le Figaro, CEO Stephane Richard requested “a few weeks delay” for the Disney+ launch, citing heightened ISP demands throughout the country during the pandemic that has infected nearly 300,000 people globally, with the death toll around 5,000. Orange is one of four major ISPs in France.

Disney already canceled a major SVOD launch party slated for March 5 in London.

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Separately, Apple TV+, Amazon Prime Video and YouTube have joined Netflix in Europe reducing streaming bit rates in an effort to not overwhelm  local networks during the crisis. The slowdown means subscribers with high-definition access, including 4K, could be throttled as low as 600kbps, limiting resolution to about 360p on mobile devices and 670p on TV.

The move follows Netflix’s decision to reduce streaming speeds by 25% after CEO Reed Hastings met with European Union commissioner Thierry Breton — the latter requesting all major streaming video services voluntarily throttle bit rates.

“We are making a commitment to temporarily switch all traffic in the EU to standard definition by default,” YouTube said in a statement.

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Netflix Reducing Streaming Bit Rates 25% Across Europe

As one of the largest distributors of digital data across high-speed networks, Netflix has agreed to reduce its streaming bit rates in Europe over the next 30 days as the region grapples with the coronavirus pandemic that has now exceeded China in the number  of infections and deaths.

The move comes after CEO Reed Hastings met with European Commissioner Thierry Breton about Netflix reducing its strain on European networks.

“Following the discussions between Commissioner Thierry Breton and Reed Hastings — and given the extraordinary challenges raised by the coronavirus — Netflix has decided to begin reducing bit rates across all our streams in Europe for 30 days,” Netflix said in an email. “We estimate that this will reduce Netflix traffic on European networks by around 25% while also ensuring a good quality service for our members.”

With mandatory at-home quarantine in some countries, people have turned to the Internet for work and school. At the same time, Netflix has more than 106 million subscribers outside the United States. Its standard definition videos reportedly consume about 1GB of data per hour, while HD videos eat up 3GB of data per hour. Video consumption accounts for about 70% of bandwidth used across European networks.

Akamai reports its networks are experiencing 50% more Web traffic than previously used during this time period. CEO Tom Leighton told Business Insider the company’s peak traffic load in Q1 is twice what it was during the same period last year.

“I think we’ll see more acceleration due to the fact that you have so many more people working from home and you have, kids out of school and spending more time at home,” Leighton said.

 

Netflix’s Reed Hastings Meeting With European Union to Discuss Bandwidth Issues During Virus Pandemic

With much of Europe under quarantine due to widespread outbreaks of the coronavirus, the European Union is calling on streaming video services such as Netflix and Amazon Prime Video to curtail offering content in high definition.

The EU encompasses more than 450 million people, many of whom are home-bound as local governments and health officials battle to contain further spread of COVID-19, which has seen Europe surpass China in the number of infections and deaths.

With people turning to over-the-top video, demands on local ISPs and networks could exceed capacity, according to European Commissioner Thierry Breton, who tweeted “#SwitchtoStandard definition when HD is not necessary.”

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Breton reportedly met Netflix CEO Reed Hastings on March 18 about the issue and is scheduled to do the same today. Netflix, in a statement to CNN Business, said the service already limits streaming to network capacities, including housing content closer to subs in each country.

“Commissioner Breton is right to highlight the importance of ensuring that the internet continues to run smoothly during this critical time,” a Netflix spokesperson said. “We’ve been focused on network efficiency for many years, including providing our open connect service for free to telecommunications companies.”

By 2024, about 63 million Europeans are projected to have a Netflix subscription — up from 40 million in 2018. Netflix had 106 million international subs at the end of 2019, in addition to 61 million in the United States.

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Amazon Tops Netflix as Top SVOD Buyer of European Movies

New data from the European Audiovisual Observatory finds that Amazon Prime Video is the largest streaming video buyer of European movies.

Established by the Council of Europe in 1992, the EAO found that 16 North American, three Chinese and one Russian streaming services have the largest catalogs of European-produced movies.

Amazon topped Netflix with 3,281 unique European-produced titles, followed by Netflix with 1,816 unique titles. Russian streaming service Ivi and the Chinese services Youku, iQiyi, Tencent Video were the biggest single country services acquiring European films.

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Indian service Eros Now, Canadian service Sundance Now, Viu and CBS All Access carry from three to 31 unique EU film titles in their catalogs.

 

The report focused on a sample of 79 non-European SVOD services and their catalogs in 21 countries across the globe.

The majority of EU films found on SVOD services around the world are produced in five countries.

The United Kingdom is the biggest supplier of EU films with 38% of all unique EU titles, followed by France with 18%, Germany with 12%, Italy with 11% and Spain with 6%.

Together, these countries account for 85% of all unique EU film titles available on SVOD outside of Europe.

The report also found that medium-size, film-producing countries contribute significantly to SVOD services.

Belgium, the Netherlands, Austria, Sweden, Denmark, Finland and Ireland export films outside of Europe. These seven countries account for 11% of all unique film titles found in the SVOD catalogs.

“With 7,450 unique film titles, EU film titles represent 14% of film titles on offer in the 79 SVOD catalogs studied,” Christian Grece, on-demand audiovisual markets analyst, wrote in the report.

 

European Union Launching Movie VOD Platform Similar to ‘Movies Anywhere’ in the U.S.

The European Union is launching a platform aimed at informing consumers where they can access more than 35,000 European-produced movies on-demand across more than 150 video-on-demand services, including Netflix and Amazon Prime Video.

Dubbed “Lumiere VOD,” the platform — currently in beta rollout — is designed to support European films and filmmakers after an internal study found just 29% of feature films offered on VOD services originate from European countries.

By comparison, European VOD services feature about 50% movies originating from Hollywood studios, according to the EU.

VOD services financially backing Lumiere include Prime Video, Ampere Analysis, Apple, CNC, EuroVOD, FilmDoo, Filmin, Filmtoro JustWatch, Kino Fondas, La Cinetek, La Pantalla Digital, Le Kino.ch, Mediathèque Numérique, Netflix, realeyz, uncut, UniversCiné, VOD Club, VOD.lu and Vodeville.

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Lumiere VOD is similar to Movies Anywhere in the United States, which offers consumers a landing platform for third-party digital services selling digital movies, including iTunes, Prime Video, Vudu, Xinfity, Google Play, Microsoft Movies & TV and FandangoNow.

The EU previously passed a mandate that all streaming and VOD services operating within its jurisdiction include at least 30% localized content.

At the same time, the economic organization cited scant availability of databases promoting European movies available on VOD, despite the fact the region produced more than 18,000 films from 2007 to 2016, including 47% increase in global production in 2017.

With Digital TV Research projecting an increase of 409 million VOD subscribers by 2023 to 777 million globally, the EU decided to act.

“Europe is a major player in film production therefore we must ensure that European films and other audiovisual works attract the audience that they deserve,” Mariya Gabriel, commissioner for digital economy and society, said in a statement. “This is yet another important initiative aimed to ensure that European works of art and cultural heritage stay high on the political agenda.”

Lumiere VOD is slated to launch publicly at the end of the year.