> What’s your proposed solution? Tell the studio they can only sign deals with global distributors? Tell them to accept less money?
Stop signing exclusive deals with regional distributors. If you're going to put something on Netflix, put it on Netflix world-wide. That doesn't mean you can't also put it on a streaming service based in France that concentrates on French language movies -- do both. Let them each pay you for non-exclusive global rights.
You get paid more per service for an exclusive deal, but you also get paid by fewer services. Which is increasingly looking like a bad deal as the many different services proliferate. Having a hundred buyers is more profitable than having only one buyer that pays ten times as much.
It's the same game they're playing with regional exclusivity to begin with -- get more buyers by dividing up the rights. Rights in one country aren't worth as much as rights world-wide but you can sell them to more people.
The difference is that regional exclusivity makes customers angry and non-exclusive licensing makes customers happy.
Distribution rights for huge back catalogs were sold to third party local to a given country/region distributors long ago. There's a lot of entropy there, and each has exclusivity to control distribution for the given region.
It's not that easy to work away from. Which is why Netflix has been paying more to create or co-create content (most Netflix content isn't world-wide exclusive it seems).
> Distribution rights for huge back catalogs were sold to third party local to a given country/region distributors long ago. There's a lot of entropy there, and each has exclusivity to control distribution for the given region.
Which is another reason not to use regional licensing going forward, and pass laws to disfavor it in general. It increases transaction costs -- then when Netflix or any of your hundred other buyers wants global rights to a particular film, they have to negotiate with a hundred regional distributors instead of just the original creator. The transaction costs go from "N" to "N times M" where N and M are both large. And transaction costs make otherwise profitable transactions either less profitable or not happen at all.
> Which is another reason not to use regional licensing going forward, and pass laws to disfavor it in general
I'm curious what your proposed legislation would be. Just outlaw exclusive licensing? Would you prohibit vertical integration between content producers and distributors or just force vertically integrated companies to license content to competing distributors?
How about a distributor that has an inherent market advantage and so can bid higher on the rights than other distributors? Would that be allowed? Or would you require producers to charge some lowest common denominator fee so that you can't create releases that are effectively exclusive?
I just can't imagine how you would ever effectively police this without taking away a lot of free market rights from participants.
BTW, just so it's clear, I fully support the current EU Digital Single Market rules that try to enforce the fact that you should be allowed to watch your content while you are traveling. I think that's much easier on all sides of the equation because you're not forcing anyone to make additional deals that they don't want to make (i.e. distributing content to other companies when they want it to be exclusive). I just think it's a big step from that to actually legislating away exclusive distribution deals.
> I'm curious what your proposed legislation would be.
A big thing would be to just discontinue legislative support for it. Get rid of any law preventing third parties from circumventing region locks, so that major companies can overtly thwart them.
Then you can get a "tell Netflix I'm in..." selector from your ISP or bank and the problem gets solved by the market itself.
Correct. I've used Netflix accounts in Canada, the US, Taiwan/HK, Japan, and the UK. They all have different content. But access the content is tied to the account's home region rather than your location (at least for the short term on trips).
Stop signing exclusive deals with regional distributors. If you're going to put something on Netflix, put it on Netflix world-wide. That doesn't mean you can't also put it on a streaming service based in France that concentrates on French language movies -- do both. Let them each pay you for non-exclusive global rights.
You get paid more per service for an exclusive deal, but you also get paid by fewer services. Which is increasingly looking like a bad deal as the many different services proliferate. Having a hundred buyers is more profitable than having only one buyer that pays ten times as much.
It's the same game they're playing with regional exclusivity to begin with -- get more buyers by dividing up the rights. Rights in one country aren't worth as much as rights world-wide but you can sell them to more people.
The difference is that regional exclusivity makes customers angry and non-exclusive licensing makes customers happy.