The Department of Communications and Digital Technologies plans to enforce local content quotas and other regulations for streaming services like Netflix.
The proposal is included in the Division’s White Paper on the Policy Framework for Audio and Audiovisual Content Services, which was the subject of public hearings last month.
The draft White Paper suggests that this be determined by the regulator in a tiered manner, taking into account the nature of the service, up to a maximum of 30% of the video catalog available in South Africa.
However, Netflix has warned that this proposal is impractical given the nature of the services offered and the fundamental differences in the model and structure of global streaming services.
Shola Sanni, Netflix director of public policy for sub-Saharan Africa, said the streaming service is already investing heavily in local content in South Africa and fully intends to do so in the future.
This is not because of a legal obligation, but simply because it makes economic sense, she said.
Instead, instead of imposing a quota on local content relative to the video catalog, Netflix has proposed revising the government proposal to focus on incentivizing content providers to invest in local content production, which is one of the goals of everyone Commitment to local content is.
“There is also a multiplier effect with every investment: the economic impact of each of our projects in South Africa is many times greater than the dollars actually invested,” she said.
“Between 2016 and 2020, Netflix invested an estimated 800 million renminbi in South African shows, creating more than 1,800 jobs.”
Sanni added that more people watch South African shows outside of the country than in South Africa, with a popular show like Blood and Water receiving 14 million views outside of South Africa.
Netflix has also warned of the other harmful effects introduced by the white paper, including the obligation to submit financial data, subscriber data and other information to regulators in South Africa.
Sanni said this will be an administrative burden not only for a regulator with already constrained capacity, but also for online content service providers.
“This comes with the need to regulate hundreds or maybe even thousands of online entertainment services available to South African citizens.
“Consumers could face higher costs and fewer choices, and fewer providers would mean less investment in quality South African content and fewer opportunities for local talent.”
She added that Netflix’s business model is built around reducing administrative burdens, allowing consumers to access unlimited catalogs at a low cost, and supporting a high level of consumer choice, all of which could be significantly undermined if they were are subject to the proposed licensing framework.
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