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- South Africa’s department of communications and digital technologies wants streaming services to have a local content quota.
- Collin Mashile, chief director of broadcasting policy, said: “Anything you show South Africans in terms of your catalog, 30% of that catalog should include South African content.”
- This comes after they proposed to change the legislation to broaden the definition of a television license so that streaming services and pay-TV broadcasters can collect license fees for the SABC.
The South African government is launching a controversial new plan to force local and international video streaming services like Netflix, Showmax, Amazon Prime Video and others in the future, to carry at least 30% of local content in the country.
Forcing streamers to make a third of their content be local South African series and films will likely end up hurting consumers by taking away the choice if these streamers decide to downsize rather than increase the size of their overall offering to comply in order to comply. that South Africa meet.
South Africa’s department of communications and digital technologies doesn’t just want to impose content quotas on streaming services. As part of his plan, he now also wants to change existing legislation to force MultiChoice (DStv), StarTimes (StarSat), as well as video-on-demand (SVOD) subscription services such as Netflix SA, Showmax, Apple TV +, Amazon Prime. Video and others to collect the SABC TV license fees that will be added to the consumer bills of these private companies, because the SABC cannot collect the license fees properly.
READ MORE | SABC wants DStv, Netflix viewers and mobile users to pay a TV license fee
On the plan to impose a 30% local content catalog quota on streamers, Collin Mashile, chief director of broadcasting policy for the department of communications and digital technologies, said: “These video-on-demand subscription services, when They arrive and operate in South Africa, everything they show to South Africans in terms of their catalog, 30% of that catalog must include South African content. “
The bill also proposes the creation of a government “team” that could blacklist and block payments from South African bank subscribers to international streaming services like Netflix and Amazon Prime Video if broadcasters fail to comply. regulations.
However, forcing video streaming services to make their offering local by 30% will have unintended consequences for the South African consumer that only become clear when it is known how these streamers operate and how they make money.
There are three problems with local content quotas for video streaming services:
1. Reducing the size of the catalog instead of increasing the size is detrimental to consumers
First of all, video broadcasters are most likely not “boosting” their content catalogs to add local South African content to make a 30% local target; they will downsize to manage margins.
South Africa doesn’t produce enough and doesn’t have enough local content for a streaming service like Netflix to add it, even if it wanted to. For every two new shows Netflix adds, you’ll need to find a local South African series to add.
That’s next to the great South African local content catalog. A streamer like Netflix would have to suddenly search and acquire, even if this volume of content was available.
A streamer like Netflix alone adds more new (international) content per month in terms of scripted series than a local South African streamer like SABC produces at the same time and often in lower quality.
If Netflix, Showmax or Amazon Prime Video were forced to carry 30% local South African content, maybe they will add more local content to some extent, but what they will definitely do to make the formula work is not add local content as much. and rather reduce its overall content.
Netflix South Africa’s general catalog of content is already smaller than that of other countries, such as the United States, for example, due to existing licensing rights and licensing restrictions for the territory. If Netflix SA, for example, had 1000 titles and must have 30% local content, it will not change and will add or make 333 titles local. It is much more likely to reduce the overall availability from 1000 to 300 so now you only need 100 local programs to make the percentage.
That means fewer options for the consumer.
International streamers like Netflix do not buy or commission content for a specific territory, but instead create content in a specific country destined for their entire global service. It would be strange to force Netflix to buy content for South Africa only, and the truth is that Netflix will not. It will just further restrict what you offer in South Africa, and that is not good for consumers.
2. Pay to carry the dead weight of video content
Second, private companies like Netflix, Showmax, and Amazon Prime Video are in the video content business with the goal of being profitable and making money.
Ordering expensive local South African content costs money, as does acquiring content license rights to content from the local library. All video streaming services use consumer data and constantly analyze algorithm data to see what content resonates and what shows and movies are being watched. Content that does not attract or retain viewers is selected, removed, or canceled.
Similar to how YouTube algorithms carefully observe you while you watch a video and promote videos based on the amount of video watched, neither MultiChoice, Netflix, nor Amazon are interested in, nor would they spend hundreds of millions of rands to purchase hours boredom. and unappealing local content that isn’t seen just because it’s “local.”
Private video companies that are not in the charity business want to earn, keep, and earn money from users by monetizing their time and attention. In this monetization of entertainment, the consumer engagement experience is key.
These companies are not going to dilute their catalog or expertise with local South African content that their users are not interested in, or that makes the content discovery process for the consumer more difficult as users are forced to navigate. through more local content than they don’t have. I don’t want to see it in the first place, but it costs a lot of money to carry.
3. Not enough local content to share
Third, it is not as simple as adding local content. The content must be purchased from the library or, more specifically, the license rights must be obtained to carry and display it over a period of time.
This can be non-exclusive or exclusive, and services typically pay a little more for exclusivity. Why would you pay to offer game of Thrones and take advantage of the opportunity to acquire a title on your operating expense budget if your potential client might also decide to access your competitor because game of Thrones there is also?
Netflix SA just acquired and added the South African drama series Strong copy from Quizzical Pictures. It doesn’t make sense for Netflix to pay to get the show for a period of time just to have Strong copy also available on Showmax at the same time. It is a waste of money.
Now imagine that each of these streaming services tries to find enough shows for each of them to reach a 30% share. Not enough is available. And Showmax or Amazon Prime Video will not add Strong copy right after the license expired on Netflix because the potential return on expenses will be even lower after the exposure of that window for a specific title.
