When communications & digital technologies minister Solly Malatsi first announced that he was considering introducing a “streaming levy” to tax streaming services for operating in SA to fund the seemingly always struggling SABC, many commentators and middle-class South Africans were outraged.
Though the levy has yet to be passed into law, the idea that those who long ago opted for the convenience and higher-quality offerings of streaming services should still have anything to do with the SABC was anathema in an age in which consumer choice talks and the SABC and its TV licence could take a hike as far as they were concerned.
Even if, as the minister and others have pointed out, the reality is that most citizens still rely on the SABC as their main source of news and entertainment and cannot afford to subscribe to streamers, the rest of us are unwilling to see that as our problem. The inevitable result of such a levy would be an increase in streaming subscription fees we would have to carry even though we do not watch the SABC, which is supposed to be the beneficiary of the levy.
The government’s argument is that too much time and resources are spent trying to collect the officially mandated TV licences that so many people just don’t pay any more and that a levy on Netflix, Prime Video, Disney Plus and so on would provide an easier, more efficient way of helping to put the national broadcaster back in the black. The cost of collecting licences exceeds the revenue generated from them for the SABC.
However, it’s not only in SA that the highly competitive and generally unregulated streaming market has had a negative effect on local broadcasters and the local film production industry. This week the UK’s culture, media and sport committee of the House of Commons released a report after an inquiry into the state of the media environment in the UK. The committee concluded in the report that “urgent action is needed” to “protect distinctly British content”. One of the urgent actions that the report recommends will probably serve as music to Malatsi’s ears — “a levy of 5% of UK subscriber revenue on foreign streaming services” to, according to a report in The Hollywood Reporter, “help finance British drama production”.
The report makes the argument that streamers working in the UK to produce local productions for their platforms benefit from the creativity of British producers without having to “put their money where their mouth is” regarding contributing to the wider sustainability of the British film industry. The report calls for Prime Minister Caroline Dinenage, ’s Labour government to initially get streamers to contribute 5% of their subscriber revenue to a cultural fund for assistance with funding for drama with “a specific interest to British audiences”. If the streamers are unwilling to do this voluntarily within a year, the committee has called for the “introduction of a statutory levy”.
The recent blockbuster success of Netflix’s hard-hitting drama Adolescence has proved an example of locally British produced content that has resonated with the platform’s global audience, but, as the report indicates, the deals that production companies agree to for such shows don’t offer them enough potential to “fully monetise their intellectual property”. The report calls for a re-examination of these deals by the government to ensure that “British production producers can retain a greater share of intellectual property rights when working with streaming platforms”.
Caroline Dinenage, chair of the House of Commons’ culture committee, said: “While streamers like Netflix and Amazon have proved a valuable addition for the industry and economy, unless the government urgently intervenes to rebalance the playing field, for every Adolescence adding to the national conversation, there will be countless distinctly British stories that never make it to our screens.”
The report also proposes a government-supported tax relief programme “for the print and advertising costs of films to support distribution and exhibition”, which would allow smaller British films to catch up with the impossibly huge amounts that streaming giants have available to promote their content. Marie-Claire Benson, head of the production company Lionsgate UK, welcomed this proposal, pointing out that “the introduction of a 25% tax relief on P&A [prints and advertising] costs would be a transformative boost for the UK’s independent film sector. It’s a smart, targeted initiative that recognises the vital role distribution plays in the film industry’s ecosystem: connecting great British storytelling with audiences across the country.”
As with the SABC in SA, the rise of streaming has negatively affected the BBC in the UK. The report warns that without regulation in the UK “competition from high-budget overseas production is driving up costs, revenue models are changing due to the terms offered by streamers and commissioning budgets of public service broadcasters are being squeezed by a fall in the licence fee and drop in advertising revenue”.
The idea of a government-implemented levy on streaming services may help to boost local production sectors, but, as analysts in SA and the UK have warned, the cost of such a levy would ultimately be carried by streaming subscribers. In an increasingly uncertain global economic environment in which cost of living increases are hitting ordinary people everywhere, money spent on entertainment services is fast becoming a luxury rather than a necessity. Any further increases may see streaming services shedding profits, which, though it might seem like a good thing for state broadcasters, will mean little if those broadcasters don’t have the funds or capabilities to produce content.
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