Can Netflix help support Australia's film and television industry?
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Australia's film and television industry is changing.
A recent Screen Australia report showed that film production expenditure in Australia reached a record $2.29 billion during the 2022 financial year, with more than $1.5 billion going towards local titles.
However, the same report also showed a shift in who is producing this content.
Between 2017/2018 and 2021/2022, free-to-air television annual spending on drama productions dropped from $250 million to $208 million.
Arts Minister Tony Burke has promised a renewed focus on the arts but is staying quiet on the question of funding.
By contrast, spending by international subscription television and subscription video on demand (SVOD) producers, like Netflix and Amazon Prime, skyrocketed from $96 million to $445 million over the same period.
There's another shift happening too. A Queensland University of Technology analysis found that in 2019, the average Australian drama television series produced by a commercial broadcaster had seven episodes. In 1999, this number was 21.
So what's driving this decline in homegrown productions?
Some say it's how Australians are consuming media these days. Technology analyst firm Telsyte found that in 2022, the streaming industry in Australia was worth $2.7 billion, reaching 23.4 million Australians. Of these, 6.3 million were Netflix users.
The appetite for on-screen content is clearly there, even if the local industry isn't serving it.
Yet some academics, like Queensland University of Technology's Dr Amanda Lotz, say the upside of the emergence of these overseas players, particularly Netflix, could usher in a new wave of Australian content.
Dr Lotz says SVOD is a "really complicated sector" but the Netflix model is unique.
Unlike Amazon Prime or Apple TV+, Netflix's entire revenue stream comes from video content. And, unlike HBO Max or Paramount+, it's not dedicated to streaming only its own content.
"I think Netflix stands alone in that it is a global service. And it's pure play. The only business Netflix is in is providing video to subscribers right now." she tells ABC RN's The Money.
Netflix reaches a global audience of 240 million households, including 115 million in the US.
However, she says this US-centric outlook doesn't deny Netflix's potential for international film and television.
Dr Lotz says that Netflix is the only streaming service with a content strategy "aligned to developing an international subscriber base" [so] it offers an "unprecedented opportunity" for the creation of global content.
"Netflix isn't just pushing US-made content around the globe," she says.
"In any market, US-produced titles only account for about 40 per cent of the titles in a Netflix library. So it is doing something pretty different."
Dr Lotz says that, while there is competition between big budget programs, Netflix has given many "low budget shows" a platform, connecting them with broader audiences and helping to create local content.
For example Heartbreak High – the Australian remake produced by Fremantle and Netflix – was one of the top 10 most viewed shows globally for three weeks after its September 2022 debut, amassing 42.6 million hours worth of views. It was recently renewed for season two.
Netflix is also producing the Australian television adaptation Wellmania, the film The Stranger and teen drama Surviving Summer.
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In December 2021, Netflix announced that it would expand its Australian content creation with the introduction of a local production team. At the time they promised "strategic investment" into local content creation.
Then in March 2022, it was announced that Netflix and the Australian Children's Television Foundation (ACTF) would partner to "fund the development of two new original Australian children's series".
The QUT professor says that this global vision also has benefits for Netflix, despite its recent well-publicised financial issues.
Last year, in the wake of losing one million subscribers in the space of a few months, Netflix announced that it would introduce ads and crackdown on shared accounts.
Dr Lotz says this is more of an investor-focused response, rather than a comment on the business model.
"I honestly think that Netflix's business fundamentals are much stronger than the others.
"It has been designed to be a global subscriber funded service in the way that the others are trying to figure this out without giving up their old way of operating."
But, while international streaming giants like Netflix could help drive the creation of more Australian content, some experts are unclear if this would actually benefit Australia's film and television industry.
Claire Pullen, the executive director of the Australian Writers' Guild, agrees there are positives for streaming platforms coming to Australia, but says there are also questions as to whether these platforms are investing sufficiently in local content.
"Some of the streamers are choosing to make shows here. But in our view, it's not enough," Pullen tells ABC RN's Breakfast.
"And it's certainly not enough to deliver the sort of industry that we want to grow and create the products that are incredibly successful overseas, and are the future of the industry."
Those who make Australian TV shows say it's slim pickings when it comes to Aussie stories on platforms like Netflix, Apple TV and Disney Plus.
Then there's the question of tax. Despite Netflix reaching $1.6 billion net revenue during the first quarter of 2022, it's been reported that the platform paid just $868,000 in taxes in Australia in 2021.
One option could be the introduction of local content quotas. In 2018, the European Union legislated that international streaming platforms' catalogues had to meet a 30 per cent local content quota.
Currently, there is no such quota in Australia, but a 2021 parliamentary report recommended that platforms should be required to invest at least 20 per cent of their revenue into Australian content.
That report also suggested that financial incentives for overseas production bodies to work in Australia should be introduced.
Federal arts minister Tony Burke has long been a proponent of the introduction of content quotas.
Speaking at the Woodford Folk festival late last year, the minister said: "The competition from overseas will always be cheaper per minute to produce for the available audience. That puts us on a disadvantage. The only way you fix that disadvantage is with Australian content quotas. It's the only way."
However, Pullen says there are commercial caveats to be aware of with overseas production.
"And that will often be: Where's the cheapest place to make this? What's the biggest incentive I can get from taxpayers and where? And will it drive new subscriptions? So those are the considerations for the multinational streaming companies," she explains.
"That's different to the considerations that Australians should have as consumers, and that our government should make in terms of our taxpayer dollars and our cultural wealth and heritage."
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Can Netflix help support Australia's film and television industry? – ABC News
