Connected TV: The future for European Audiovisual ContentEscrito por Lluis Borrell el 27/05/2014 a las 18:09:02
(Head of the Spanish Office, Analysys Mason)
The Audiovisual Media Services (AVMS) Directive has traditionally ensured that European works are produced and widely viewed, in spite of the US domination of audiovisual markets. IP-based, or connected, TV does not only mean that one can watch favourite programmes via the Internet on a TV, a tablet or a mobile phone. It also means that these programmes can increasingly be distributed from all over Europe and delivered on-demand via broadband networks. The advent of connected TV and the eventual decline of public service and commercial broadcasting and associated revenue might have an impact on investment in European works in the long term. This article reviews the current regulation, looks at the market dynamics and explores regulatory decisions that might be taken in response to this potential threat.
The AVMS Directive is based on the territoriality of 'national' cultural ecosystems
This Directive reached a compromise between two approaches:
- The 'liberals' consider that audiovisual content, like other goods and services, needs a minimum set of common rules to function optimally within a 'single European TV market'.
- The 'regulators' favour an ambitious European media policy in terms of promoting cultural diversity (that is, the production and distribution of European works) and of content regulation (such as protecting children), allowing EU member states to go beyond minimum content rules.
The compromise found in the 1980s is based on ecosystems corresponding to a model of Europe that is fragmented by linguistic diversity and dominated by strong national players.
In this situation, fostering 'national' ecosystems means that broadcasters in specific cultural areas have to finance and show original content from this area complying with content obligations relating to broadcasting quotas and independent production, and so on. This regulation is based on the 'country of origin' principle.
The country of origin principle (Article 2 of the Directive) is fully recognised for legal jurisdiction, but member states retain the power to manage their own TV ecosystems with national (public and commercial) broadcasters signing contracts with national producers of original local content.(1)
Broadband on-demand audiovisual services challenge the assumptions that underpin the AVMS Directive
Internet-based TV and broadband strongly challenge this European production model because they bring into question the territorial arrangement that underpins the AVMS Directive.
Most of the new players that distribute content via connected TVs are not under the jurisdiction of any of the most-regulated member states. A significant number of these new players have chosen to 'cherry pick' and base themselves in the European countries where tax and regulation standards are lowest – for example, Ireland (Google and YouTube) and Luxembourg (Apple and iTunes).
The extent to which the broadband Internet services of the world's biggest players, such as Netflix or YouTube, will transform the European audiovisual model is still uncertain, but they are undoubtedly changing it. YouTube has had an impact on the advertising revenue of European broadcasters – the company's worldwide advertising revenue is estimated to have been approximately USD5.6 billion in 2013, an increase of more than 50% in 1 year. However, commercial TV operators in Europe have smaller total revenue, and are facing advertising markets that are stagnating or experiencing slow growth in most European countries.
Therefore, it seems that more regulation might be necessary to deal with the migration of audiences to connected TV. In fact, commercial audiovisual groups are already campaigning for a level playing field in the future linear and non-linear TV market. What is at stake is the financing of diverse and original European content:
- Would both commercial European and worldwide services concentrate their budgets on established or standardised European audiovisual content to the detriment of diversity?
- Can public service broadcasters alone finance original and diverse European production in a context of declining budgets and audiences?
The time has come for the EU to comprehensively revise the AVMS Directive
As discussed, AVMS Directive rules apply on a territorial basis, which is crucial for original European and national audiovisual content production.
A wide range of options can be imagined, and will undoubtedly be discussed in the coming debate on revising the AVMS Directive, but mere adaptations are likely to be insufficient to deal with the renewed territorial question. At the two extremes, two options can be identified corresponding to the liberal versus regulatory approaches:
- The country of origin principle has the advantage of avoiding cases of double jurisdiction – the revised AVMS Directive could catch new players through a full harmonisation of minimal European content rules (the same rules everywhere in the EU, concerning minor protection, advertising, quotas and so on).
- The regulatory approach could call into question the country of origin principle – in order to maintain European/national audiovisual production policies corresponding to cultural/linguistic areas and to apply these policies to new cross-borders players.
More options are likely to be debated, but to keep different national standard of regulation applied on a country of origin basis will necessarily allow for 'cherry picking'. That is why the time has come for the new European Commission, which will probably come under pressure from some member states, to propose a reform of the AVMS Directive after the European elections of June 2014. It seems that 2014 will be the year that arguments in this debate start to consolidate.
(1) Each provider of media services comes under the jurisdiction of just one EU country where its central administration is located.