Further to our October 2021 update regarding an Australian Parliamentary Committee's recommendation that streaming service providers should be required to invest at least 20% of local revenue in new Australian content, the Australian government has now released a more extensive Discussion Paper outlining a proposed Streaming Services Reporting and Investment Scheme (the "Scheme") for consultation, with submissions requested online or by post by 24 April 2022

Broadly speaking, the proposed Scheme will require large Subscription Video On Demand (SVOD) service providers to report annually on their investment in, and promotion of, Australian content. If such service providers invest less than 5% of gross Australian revenue on Australian content or fail to meet reporting requirements, a formal investment requirement could be imposed upon them. 

The Discussion Paper asks several important questions regarding timing and sequencing considerations, designation criteria, services in scope, key definitions, the rates and types of eligible investments, discoverability requirements and reporting requirements. Streaming service providers are encouraged to participate in the consultation as they continue to ride a growing wave of international regulatory developments in this space. 

"Riding the wave" can be an overused metaphor, but it seems appropriate in this case - not only as a nod to the recent completion of the Pipeline Masters in Hawaii, or the statue of Duke Kahanamoku that stands proudly on the headland above Freshwater on Sydney's northern beaches (just a stone's throw from my location of writing) - but more importantly as an acknowledgement of the reality that streaming service providers are currently grappling with, a veritable wave of new regulations imposing local investment obligations which is increasingly difficult for service providers to navigate as it progressively builds with each successive jurisdiction entering the fray. 

It is a wave that has been building over the past couple of years now, in particular following 2018 amendments to Europe's Audiovisual Media Services Directive which paved the way for countries including Belgium, Croatia, Denmark, France, Germany, Italy, the Netherlands, Spain, Switzerland, Portugal and Poland to implement local content requirements to bolster investment in their local content production industries. As recently reported by my colleagues Nadia Rauf and Theo Ling in Toronto, Canada too is looking to impose requirements online streaming service providers to contribute to the creation and availability of Canadian content.

In many ways, all of this is inevitable - it is a wave that had to build, a natural response to changing tides in the form of consumer preferences and the proliferation of over-the-top services displacing traditional linear broadcasting on a global scale. Audiences have shifted away from the linear consumption of audio-visual content in favor of online and on-demand platforms, leaving local terrestrial broadcasters with diminishing market shares (and correspondingly, revenues) to invest in local content production. Governments worldwide are concerned about this and keen to ensure that growing SVOD service providers step in to contribute meaningfully to local content production in the markets in which their services are offered - and establishing strong policy settings to ensure their jurisdiction does not miss out. In this context, it is perhaps futile to fight the wave or seek to argue that local investment obligations for international SVOD providers are inherently unreasonable.

However, with each successive jurisdiction, the wave grows heavier. As experienced surfers know all too well, a heavy wave is not so easy to ride. It requires great skill in the form of timing, balance, foresight, subtle shifts of weight distribution in perfect unison with the wave front. An international patchwork of local investment obligations is similarly difficult for an international service provider to navigate, requiring careful shifts in the investment of resources and forward planning in relation to the content production pipeline, which is particularly tricky if each jurisdiction adopts subtle differences in core concepts such as what constitutes an eligible investment. These subtle differences enhance the degree of difficulty for service providers (and the risk of an inadvertent metaphorical "wipeout").

With this in mind, when engaging with the consultation SVOD service providers may consider emphasizing the importance of simplicity and flexibility, as well as maintaining a level of consistency and harmonization with equivalent international investment obligation regimes where possible. These principles will be particularly important in relation to core concepts underpinning the Scheme referred to in the Discussion Paper such as the rate and scope of eligible investments, discoverability requirements and the frequency and format of reporting, as well as the timing for the Scheme to take effect, in order to ensure it is workable for service providers and delivers the intended benefit in the form of sustained (and sustainable) investment in local content production in Australia.