New law threatens streamers with massive fines over content rules

A bizarre new law and strict testing could see Netflix fined more than $975 million over changes to local streaming regulations.

Streaming services with more than a million Australian subscribers must increase their spending on local content, according to a new law passed in federal parliament on Thursday.

This should be across drama, children’s, documentary, arts or educational programmes, excluding reality TV shows.

The Albanian government says the law will help “bring more Australian stories to our screens”.

“We have Australian content requirements for free-to-air and pay television, but until now there has been no guarantee that we would be able to see our own stories on streaming services,” Arts Minister Tony Burke said in a statement. “Broadcasting services create incredible shows and this legislation ensures Australian voices are now front and centre.

“Now whatever remote control you hold, Australian stories will be at your fingertips.”

The reforms mean companies such as Netflix, Disney+, Paramount+, Amazon Prime and Stan must allocate at least 10 per cent of their local spend, or 7.5 per cent of their Australian revenue, to creating local content.

The maximum fine will be 10 times the penalty faced by local broadcasters, while commercial broadcasters will be fined five times the penalty imposed for violating the law.

Under the new legislation, publishers will be given three years to increase their domestic production.

Apple and HBO are predicted to surpass million users and begin creating new local content in the coming years.

Failure to do so will mean broadcasters will be fined ten times their annual income.

This means Netflix, which has $97.5 million in domestic revenue, could face a $975 million fine if it doesn’t produce enough Australian content.

Other streaming platforms could also face massive fines of more than $500 million under Thursday’s legislation.

“Publishers are not opposed to the concept, it just needs to be fair and flexible in implementation and unfortunately with the way the numbers are going we don’t see either of those things happening,” the source said.

Screen Producers Australia managing director Matthew Deaner told NewsWire the new law was a “watershed moment” for the industry.

“This is a landmark day for storytelling in Australian cinema,” Mr Deaner said.

“Finally, it creates a strong starting point for a regulatory framework that responds to the enormous changes that digital streaming platforms are making in our industry dynamics and viewing habits.”

Broadcasters have also taken aim at the definition of what counts as Australian content, with programs such as Ten Pound Poms, The Truth and Hannah Gadsby Something Special not all being counted as locally produced programmes.

This goes back to a rigorous test that is considered “Australian”.

“The test is a list of factors and is cumulative, so if you miss just one of those factors you don’t count as Australian content,” the source said.

The shows were unsuccessful due to the absence of Australian producers, directors or writers, or at least 50 per cent of the lead actors.

The source also said broadcasters could stop licensing existing Australian content because money spent there would not be counted to avoid huge fines.

Broadcasters claim the current growth rate for local Australian content is up 74 per cent on last year as the industry fails to keep up with current demand.

“We can’t keep growing at 74 percent because we don’t have enough soundstages, capacity crews and things like that,” the source said.

“As two more broadcasters are added, there will need to be slightly more production across the industry, but there is no room for broadcasters to add capacity.”

Mr Deaner countered this, saying Australians could increase their production, which would help keep local talent in the country.

“We have an incredible training base, but our challenge is a great ongoing pipeline of work to keep them here,” he said.

“There are a lot of Australians working around the world who want to be employed here… that’s when we turned the corner in an industry where they don’t have to go abroad for work.”

Mr Deaner said the industry had the capacity to do much more than it was currently doing.

“We’re losing people right now because we don’t have enough jobs for them, but we know that if you build in our industry, you employ people who want to work,” Mr. Deaner said.

“It’s a challenge as a workforce and businesses in this industry to have to navigate temporary work that can be very unstable and inconsistent, but if you can ensure ongoing investment and work, it makes our industry a lot more attractive, so I think that’s very positive for the industry overall.”

Broadcasters said there would be no more soundstages for several years, meaning some broadcasters would have to find “cheaper quality” programs just to comply with the law.

In 2023-24 alone, broadcasters spent $204.9 million on adult and children’s dramas in Australia; by contrast, commercial publishers spent $50.3 million and subscription publishers spent $32.5 million.