Netflix on EU Content Quota: Incentives for Local Creators Would Be More Effective

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Netflix on EU Content Quota: Incentives for Local Creators Would Be More Effective

Netflix has resigned itself to new European quotas, set to pass into law later this year. But it isn’t happy about them.

In its letter to shareholders published with its third-quarter earnings after the U.S. stock market close on Tuesday, Netflix cited the new legislation, which will require all video-on-demand services operating in the European Union to devote a minimum of 30 percent of their online catalogs to European works.

In addition, certain European countries, among them France and Germany, will require streaming platforms to contribute a portion of their revenues to subsidy bodies that finance local film and TV productions.

Netflix said its increased investment in European productions, already underway, meant the company anticipated “being able to meet these requirements by evolving our content offering.” But, it argued, the quota approach is an effective way to promote the European industry.

“We anticipate that a regional content quota which approximates the region’s share of our global membership will only marginally reduce member satisfaction,” Netflix wrote. “Nonetheless, quotas, regardless of market size, can negatively impact both the customer experience and creativity. We believe a more effective way for a country to support strong local content is to directly incentivize local content creators, independent of distribution channel.”