Australian TV networks are up in arms after an “outrageous” move by the Federal government to make government film-production support funding available to online platforms such as Netflix, Stan, and Amazon Prime.

Announced just before the government entered caretaker mode upon the calling of the May 18 federal election, the decision by Minister for Communications and the Arts Mitch Fifield will extend the Post, Digital and Visual Effects (PDV) and Location Offsets to online content-delivery platforms.

The decision removes a competitive advantage for free-to-air networks, which account for the majority of Australian content but have struggled to balance investment in that content with previously-imposed content obligations that have not also been imposed on streaming services.

The “outrageous” decision “defies logic”, Free TV CEO Bridget Fair said in response to the policy announcement, which she argued highlights the government’s lack of policy change and “piecemeal decisions that advantage unregulated competitors on digital platforms”.

In the wake of inaction after the 2017 Australian Content Review (ACR) – which Fair said had so far not driven any substantive changes in policy or funding – the new policy offered little to local networks facing an onslaught of cashed-up streaming competitors.

“It is deeply disappointing,” she said, “that the only significant Australian content policy announcement from this Government in six years is to make Australian tax dollars available to fund Netflix productions.”

Serious business

The investment of billions in exclusive content has been a cornerstone of Netflix’s strategy for years and paid off big time this year the network gained its first-ever Oscar nominations.

Roma, for one, received 10 nominations and took home three statues including the coveted Best Achievement in Directing award, while The Ballad of Buster Scruggs earned three nominations, including Best Adapted Screenplay for Oscars bellwethers Joel and Ethan Coen.

The global network spent $US12.04 billion ($A17b) on content last year – up 35 percent on 2017 figures – and analysts expect this figure to pass $US15b ($A21.3b) this year and $US17.8 billion ($A25.2b) next year.

Some of this is going to acquire and repurpose foreign-language series like Spain’s Money Heist and Mirage or Germany’s Dark.

Yet despite Netflix’s dominance here – the network has quickly become ubiquitous in Australia, where it has gained around 10 million subscribers since launching in 2015 – the company has been reluctant to invest heavily in local productions.

Netflix’s first Australian production, Tidelands, only debuted in December while the other Australian titles bought or optioned by the company could be counted on the fingers of one hand.

One tally, conducted late last year, found that just 1.6 percent of Netflix content is Australian – less than Stan’s 11 percent and far less than the 55 percent local content requirement that continues to be imposed on commercial free-to-air television licensees.

Levelling the playing field?

The disparity has driven some industry figures to push for investment in local documentaries to be made mandatory for cashed-up overseas streaming services.

Netflix has been lobbying for access to Australian production incentives for years, arguing in its ACR submission that Australia’s incentive programs “discriminate based on distribution channel” and that opening up the incentives would improve Australia’s appeal to increasingly high-profile productions.

PwC has previously argued that increasing the tax offset for television productions – currently 20 percent – to match the 40 percent available for film productions would provide a net benefit of $103.9 million annually.

Fifield positioned the announcement of the policy change within this context, arguing that increased local production will “make Australia an even more attractive environment for screen production and provide more opportunities for the thousands of highly-skilled Australian professionals working in the industry.”

Some $718 million was spent during fiscal 2017-18 to produce 38 Australian feature films, 36 Australian TV dramas, and 10 Australian children’s drama titles, Fifield said, with Australian films posting their third-highest box office ever last year.

While the changes may incentivise more local film productions, they are one more headache for Australian networks that, Fair said, are being “saddled with a range of content obligations that no longer reflect how Australians are consuming content.”

Those obligations “are in urgent need of a complete overhaul,” she said.

“The ACR was supposed to look at how we should update these outdated regulatory settings. We are still waiting for the Government to provide a meaningful response.”