Published in DigiWorld Economic Journal DWEJ No. 101 "Towards a single digital audiovisual market?"
Interview with Adam MINNS
Executive Director, COBA, London
Conducted by Sally BROUGHTON MICOVA
The Commercial Broadcasters Association (COBA) is an industry association whose members include digital, cable and satellite broadcasters, both linear and on-demand. The association is active on policy and regulatory issues primarily in the UK, and also in Europe.
DW Economic Journal: When the Audiovisual Media Services directive was drafted it was designed to be platform neutral, maintaining a distinction only between linear and on-demand services with the intention of future-proofing it for potential changes in technology and markets. To what extent has that held up?
Adam MINNS: The European broadcasting sector is a success story, worth more than 74.6 billion euros annually, according to the European Audiovisual Observatory. Audiences have more choice than ever before, with the number of linear channels growing across the EU and the gradual emergence of on-demand services (a recent study by the European Audiovisual Observatory put the number of on-demand audiovisual services established in Europe at 2,563) .
We therefore see no need to tamper with the fundamental principles of the directive, i.e. a technology-neutral approach that applies varying levels of regulation according to consumer expectations and the nature of different services. Indeed, radical change creates a risk of damaging the successful growth of the European audiovisual sector. That said, there is a case for a moderate level of reform regarding certain, specific aspects of the rules for commercial communications for linear services. In some areas, these are overly prescriptive and it is difficult to see the consumer purpose these are serving in a world of rapidly changing behaviour and the ability to access content from a multitude of different devices and services.
Does it still make sense to regulate linear and on-demand differently?
Yes. The directive's two tier approach to regulation has helped underpin this growth and innovation. In comparison with linear channels, non-linear services, while growing, generate a relatively small amount of revenue for COBA members, and the regulatory burden must reflect this if it is not to dampen investment. Many "Catch-Up" VoD services are loss leaders, for example, and are provided to viewers at no additional cost.
In addition, one of the directive's guiding principles, that consumers exercise more control in regard to non-linear services and therefore a lower level of regulation is appropriate, holds true today.
There have been calls to revisit the "country of origin" principle that is at the core of how audiovisual media services in Europe are regulated. How important is that principle to the business of commercial broadcasters?
Few pieces of regulation are more important for our members' businesses than the Country of Origin principle set out in the Audiovisual Media Services directive – but the key point I would like to make is the benefit to EU audiences.
For the avoidance of doubt, I am referring throughout this piece to the principle set out in the AVMS directive, not to any other directive. The AVMSD's Country of Origin rule enables a broadcast or on-demand service – licensed in one EU Member State – to be made available in another country without having to separately obtain another licence at the service's destination. Where, for example, costs and content can be shared amongst channels tailored to multiple Member States, because they comply with a single set of rules, a channel is viable for a more niche audience in each market. This creates more choice for audiences, and supports media pluralism and freedom of expression.
For example, the British Sign Language and Broadcasting Trust (BSLBT) is an organisation in the UK that, supported by broadcasters, provides sign-presented content to the deaf community. It makes a range of signed content available on its on-demand service to viewers in Member States across Europe. Deaf communities in Germany, France, Estonia, Spain and many more countries are watching this content, which is made available under a UK-based notification under the Country of Origin principle in the AVMSD.
The example of the BSLBT is from an independent report COBA recently commissioned on the AVMSD Country of Origin principle from Olsberg SPI. Olsberg are still finalising the report, but their clear conclusions are that the AVMSD's Country of Origin principle has supported the growth of the European broadcasting sector and is critical for unlocking the potential of European non-linear services. Testifying to this, some 41% of linear channels established in Europe are available under the Country of Origin rule, and 34% of on-demand services (this excludes services licensed from outside the EU).
So-called Catch-Up VoD services are particularly dependent on the Country of Origin rule. These are provided by broadcasters to give their audiences on-demand access to their programming for a given period after the original transmission. These are some of the most popular VoD services in Europe (accounting for 29% of all VoD services), but are in general provided to viewers at no additional charge, so there is a real need to keep the costs of providing them down. As you would expect, they are nearly always licensed (or notified) in the same Member State as their parent channel so they can re-use content complied for the linear channel.
Around a third of these (nearly 300 services) are made available under the Country of Origin (mirroring their parent linear services). In a situation where non-linear services were not able to benefit from the Country of Origin rule, these services would clearly be at risk.
As you might also expect, smaller Member States in particular stand to be harmed by the loss of the Country of Origin principle. According to Olsberg's analysis, 41% of linear channels across the EU operate under non-domestic licences supported by the AVMSD's Country of Origin principle. In the ten smallest markets (by population), however, that rises to 75%, reflecting the greater need for economies of scale in markets that might not be able to support a stand-alone channel. To give you an idea of the kind of range and choice these channels offer, in some smaller markets the only children's channels available are provided under non-domestic licences.
COBA's view is that the AVMSD's Country of Origin principle has underpinned economic growth, consumer choice and media plurality in the European audiovisual sector to date, and for the same reasons is set to be pivotal in the on-demand era.
What do you think are the prospects for creating a single market for audiovisual media service in Europe? Is it even desirable?
I would say that it depends on how you define single market. The AVMSD has successfully enshrined an important set of European values, providing for a minimum level of standards and protection for consumers and, through the Country of Origin principle, safeguarding freedom of speech and media plurality, and supporting innovation and the growth of Europe's creative industries, as I have outlined above. At the same time, Member States rightly have the flexibility to prioritise according to national sensibilities. The current balance seems right.
In some of your recent policy papers and consultation responses you have reported impressive growth in the investments of your members in UK original content. As some of your members are large transnational players that operate in multiple European Countries, to what extent is that trend mirrored in the rest of Europe?
These are hugely exciting times for European television content. It's almost a cliché now but television has become the new film, with a range of players all investing in ambitious, high quality original content. Funding has become more fragmented than ever before, flowing from broadcasters, on-demand services, and the production companies, not to mention public support, but that is the new reality.
The most important factor to remember is that it is a mixed ecology. Many COBA members are multi-national, but others are focused on the UK, and some are relatively small. All are investing in different ways, and that mixed approach builds strength into the overall ecosystem, which is less reliant on any one funding stream. QVC, for example, is a shopping channel, that creates 17 hours a day of live television. That high volume of production provides an exceptional training ground for crews and technical staff who go on to work across the industry. It is all part of a mixed ecology, continually building critical mass.
Our analysis of content investment has been focused on the UK so I don't have detailed figures for other Member States. But you can see that investment growing across other markets. Take, the recent European Film Market at the Berlin Film Festival, which held a television drama event to promote investment in European production. At that one event we saw announcements from HBO Europe, Sony Pictures Entertainment and Sky Deutschland involving production in Scandinavia, Germany, Italy and the UK. There is a lot more.
What can be done to boost investment by transnational commercial broadcasters in original content in Europe?
Again, I am not just referring to transnational broadcasters, but to commercial sector broadcasters generally. For COBA, there are two key factors in encouraging investment, and both take time. Firstly, encourage a mixed ecology, where a genuine range of players can grow. That increases creative competition, plurality in commissioning and strengthens the sector as a whole by diversifying funding streams. Frankly, in the world today, where so many different players are investing in content, and production more than ever relies on a patchwork of funding sources, fostering such a mixed ecology seems like common sense.
The second point I would make is to allow the industry to make content that audiences want to watch. That sounds obvious, but it doesn't always happen when companies are forced into quotas or other relatively blunt regulatory instruments. In the UK we have recently experienced something of a transformation, with non-domestic European drama now appearing on our screens in prime time slots, backed by significant marketing. Most importantly, they are achieving record audiences – most recently, German drama Deutschland '83 went out in prime time on Sunday evening and was watched by more than 2 million people.
This didn't happen to fulfil a quota; it is the result of a steady stream of high quality European dramas like Gomorrah on Sky, The Killing on BBC, and The Returned on Channel 4 – broadcast on a range of channels, including both commercial and public interest - breaking down UK audience's preconceptions about foreign-language content.
Of course, it takes time – a lot of time – to develop an industry capable of making shows that resonate with audiences on any consistent basis. I don't mean the funding, which is perhaps more available than ever now, but the creative skills. I found it fascinating, for example, that Denmark has consciously reproduced the American model of the "writer's room" and the primacy of the writer/creator, with of course its own vision. As much as anything, that creative process has established Denmark as one of Europe's key creators of high quality drama, and in the process done far more to promote Danish and European culture abroad than a quota would ever achieve.
And of course underlying these points, the principle of territoriality is still an absolute cornerstone in how production is financed, so needs to be maintained. Undermining the ability of rights owners to tailor how they licence their rights from market to market would harm their ability to generate a return, and so reduce the incentive to invest in creating that content in the first place.
Adam MINNS is Executive Director of the Commercial Broadcasters Association (COBA), the trade association for UK multichannel broadcasters and on-demand services. He leads COBA's work on a range of UK and European legislative and regulatory matters, reporting to COBA's board. He joined from Pact, the trade association for UK independent production companies, where he was Director of Policy and played a key role in Pact's work on the Terms of Trade and a range of other UK and European issues. Prior to Pact, Adam was UK film editor of Screen International, the film business publication, covering the British and European film industries. He has written for the Financial Times and the Independent on Sunday.
 The Development of the European Market for On-Demand Audiovisual Services, European Audiovisual Observatory, March 2015.
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