What next for White Lotus? Content rules may change HBO’s streaming plans
It is no secret the world’s most popular streaming services would prefer the federal government didn’t regulate how much they spend on Australian programs.
For the past two years, major US entertainment companies including Netflix and Disney have warned the government against introducing quotas on local content, arguing it could put pressure on the production sector and would lead to cheap, poor-quality television shows.
The federal government may have made a major streaming decision more simple.Credit:HBO
It’s a view shared by media companies Nine Entertainment (the owner of this masthead and streaming service Stan), Paramount, the owner of Network 10, and Foxtel, which are already governed by rules through their ownership of commercial television and cable tv assets.
Despite their best efforts, they couldn’t convince arts minister Tony Burke to stop his plans. Burke last week announced plans to introduce rules that would force streaming services to spend a certain amount of money – about 10 per cent of local revenue – on local production by mid-2024. The rules, introduced as part of the new National Cultural Policy, will mean more cash for Australia’s production executives and more local programs on your streaming service.
But it could also have a major impact on one of the biggest content deals to take place this year. The world’s most popular entertainment studio, HBO, is still deciding the future of its popular shows like Succession, White Lotus and House of Dragon. Executives at parent company Warner Bros Discovery have spent the last few years observing the international streaming sector and deciding to launch a streaming service locally. Burke may have inadvertently made that decision simple.
HBO is widely considered the jewel in the entertainment crown: it has transformed the television industry through popular hits such as The Sopranos, The Wire, Game of Thrones. Its programs attract millions of viewers all over the world.
Locally, its shows including Euphoria and House of Dragon are available on Foxtel and streaming service Binge under an exclusive deal that expires later this year. Binge, which launched in 2020, now has more than one million subscribers, owing much of its success to the programs it has under the agreement.
When senior US executives visited Australia last year, they had not decided whether they should launch a standalone streaming service locally, or continue to partner with a local provider such as Foxtel or Stan (though Foxtel boss Patrick Delany said publicly they would go direct to market). If the executives were unsure whether launching a service was a good idea then, they’d be more uncertain now.
The federal government has not decided which streaming services will be forced to abide by the new rules, but it is expected to be determined by scale. Whatever way you cut it – the number of subscribers or revenue – HBO is so popular it will almost certainly be forced to comply. This means they – like others – will need to spend a certain amount of money they make in Australia on local programs.
For a company making millions in Australia with minimal effort, the new rules aren’t appealing. In fact, they only cast further doubt over the benefit of entering the market alone.
Warner Bros Discovery chief executive David Zaslav last year unveiled plans to combine streamers HBO Max and Discovery + into a single paid service. It planned to roll out the new service in the Asia Pacific by mid-2024. But launching a new streaming service costs millions and generates losses until it reaches scale. If you combine that with a legal obligation to invest in local programming, the business case becomes thin.
Foxtel and Stan would be quietly hoping this is the case. The two companies fought for months against one another for access to HBO’s content slate back in 2020, driving up the cost of the content.
If there is an opportunity to gain exclusive access to the content slate instead of losing subscribers to a new service that runs HBO content, they would fight again. That fight will drive up costs again (as was the case last year with the battle for NBC Universal’s content). Foxtel won’t hesitate to spend big – if the last 12 months is anything to go by, it will do everything it can to secure the world’s best content for its subscribers.
That would be a win for HBO and for Foxtel or Stan, securing exclusive access to some of the world’s best content would also be significant.
Three years ago, major entertainment companies were solely focused on growing subscribers for their new streaming services. But now they want to make money. And if the dollars will come in regardless, a licensing deal may be their safest bet.
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