Investment obligation proposed to spur production of Dutch films and series

On 19 December 2019, Dutch Minister of Culture Ingrid van Engelshoven proposed a new plan to strengthen the production and visibility of Netherlands-produced films, series and documentaries. According to van Engelshoven's proposal, cinemas, streaming services and broadcasters should invest a percentage of their Dutch annual turnover into the production of new cultural and audiovisual content.

Investment instead of tax

The Minister chose an investment obligation instead of a levy due to developments in the international media landscape and the outcome of studies conducted in 26 European countries. France, Spain and Germany already have financial-investment obligations for broadcasters, and research has revealed that investment obligations are more effective than levies in expanding production.

Furthermore, the growth of new international players offering audiovisual content and the changing viewing behavior of consumers (who are opting for streaming services over traditional TV) are the main reasons for this development.

As a result, the Minister reasoned that successful Netherlands-based producers have the resources and motivation to invest in Dutch productions.

Major operators to be targets of support

The investment obligation, to be included in a legislative proposal, applies to four types of operators:

• Cinemas
• Linear audio visual media services (AVMS), such as traditional TV;
• Non-linear AVMS providers including:
  • Transactional video-on-demand (TVOD) providers: on-demand media services that have an advertising or pay-per-view model, such as iTunes;
  • Subscription video-on-demand (SVOD) providers: on-demand media services that use a subscription model, such as Netflix.

Package providers (cable and telecom operators) and video platforms are excluded unless they offer SVOD or TVOD services. The investment obligation includes TVOD, SVOD and broadcasters located in other EU countries if they focus their services on the Netherlands.

Specifically, the obligation requires cinemas and TVOD providers, who are not involved in production, to invest 3% of their annual turnover. Broadcasters and SVOD providers that produce content will be required to invest 6%.

There will be an investment threshold of EUR 1 million for companies with a smaller turnover. If a smaller player's turnover exceeds this threshold, only those earnings over EUR 1 million will be included in the calculation for investment. Since the turnover of smaller movie theaters is unlikely to exceed the threshold, these small, often independent exhibitors will be exempt from the investment obligation.

A catalyst for production

To sum up, the new incentive and the legislative proposal is an investment obligation for movie theaters, linear AMVS and non-linear AVMS providers. Since this plan still needs to be elaborated into a bill, which must then be approved by the Senate, it is not clear when these measures will enter into force.

Those media companies affected by this proposal, however, are encouraged to make plans for this obligation in Europe's dynamic and changing media landscape. CMS Netherlands will keep you informed of new developments.

For more information on this proposal and opportunities in the Dutch media sector, contact the local CMS experts: Dolf Segaar or Tim Wilms.

This article is written with the assistance of Elly Besterveld, Julia van Leeuwen and Tsjessie Spijkerman.