Netflix revealed its third quarter 2018 fiscal results today, taking time to discuss business as well as numbers. Among other things, company CEO Reed Hastings brought up the European Union’s heavily criticized “content quota” for streaming companies, warning that it may negatively impact both customers and creativity. Rather than focus on the companies, Hastings says countries can bolster local content by creating incentives for local creators.
Earlier this month, the European Union approved a “content quota” directed at streaming services, requiring 30-percent of their content to have come from the region. This was presented as a way to support local content, but critics have pointed out a number of issues with the plan, including the potential for companies to simply remove foreign content until existing European shows reach the minimum.
EU member states will have a couple years to enforce the new regulations, and big content streaming companies have increased their European-sourced content in anticipation of the rules. Still, Netflix doesn’t seem to have a favorable opinion on the matter, stating that the rule could ultimately have a negative impact.
The company said in its financial release:
We’d prefer to focus on making our service great for our members, which would include producing local content, rather than on satisfying quotas, but we anticipate that a regional content quota…will only marginally reduce member satisfaction.
Though the company doesn’t anticipate this requirement have a large negative effect, it does point out what it believes is a better alternative. “We believe a more effective way for a country to support strong local content is to directly incentivize local content creators,” the company said, “independent of distribution channel.”
Ultimately, Netflix says it expects it will satisfy the EU’s quota requirements by “evolving our content offering,” reaching the 30-percent minimum in time.