Major VOD services must invest in Dutch productions starting January 2024

At the end of October, the Senate approved the law requiring major VOD services active in the Netherlands to invest 5% of their Dutch annual turnover in domestic audiovisual productions such as series, films and documentaries starting 1 January 2024.

In two previous Law-Now articles published in 2023 and 2022, we discussed the introduction of an investment obligation for Dutch cultural audiovisual products for video on demand (VOD) services. The investment obligation is expected to apply to a dozen major VOD services active in the Netherlands, such as Netflix, HBO Max, Amazon Prime and Disney+. The concerned VOD services are obliged to invest 5% of their annual Dutch turnover into Dutch productions. They are allowed to invest in all types of Dutch productions except sports. At least half of the amount must go to Dutch films, series and documentaries and at least 60% of those productions must come from independent producers.

Exceptions

The investment obligation only applies if the relevant Dutch turnover per fiscal year exceeds EUR 10 million. According to the Dutch government, the size of the Dutch market for audiovisual productions makes EUR 10 million an appropriate threshold to exempt small providers from the investment obligation while creating a level playing field for other providers. A turnover of EUR 10 million per financial year represents an estimated 1.2% market share.

The Dutch Media Authority can also exempt streaming services from the investment obligations if application would be impracticable or unjustified due to the nature or subject matter of the VOD service in question or the use of innovative formats. It is likely that the Media Authority will publish a guidance to substantiate this exception.

Reporting requirements

VOD services must report to the Media Authority. When the investment obligation takes effect on 1 January 2024, VOD services must provide their investment figures in Dutch cultural audiovisual productions from that date. They are not obligated to disclose figures from previous years.

Concerning the documents that VOD services are obligated to submit to the Media Authority, the law offers the possibility to determine further requirements by ministerial regulation (e.g. an auditor's report). The Authority will check the requested documents and, if necessary, request additional information or supporting documents (e.g. how much a given VOD service invested in a production). They can do this by submitting agreements to the Media Authority. These can be agreements with independent producers and must give insight into the costs of a particular production.

Further ministerial regulations

Once the investment obligation comes into effect, ministerial regulations will address the consequences for streaming services who fail to comply with their investment obligations. This may be the case, for example, when an agreement with a producer is not fulfilled or has been dissolved, or when production is stopped in-house. 

Evaluation

The implementation of the legislation will be monitored annually. After three years, an evaluation will be carried out by an independent consultancy firm. This evaluation should provide insight into how the investment obligation works in practice. Specific points of interest include the total amount of money invested, the productions in which the companies in question have invested and in what way the investments have been made.

Video platforms such as YouTube and Facebook are not covered by the investment obligation because they are not VOD providers. When discussing the bill in the Senate, the minister promised that during the evaluation it will also be examined whether the investment obligation should also apply to video platforms.

Conclusion

Like other European countries such as Belgium, France and Germany, the Netherlands will introduce an investment obligation for major VOD services regarding Dutch cultural product by  1 January 2024. However, practical matters still need to be worked out in more detail through ministerial regulations and regulations of the Media Authority.

For more information on investing in TV and film in the Netherlands, contact your CMS client partner or these local CMS experts.