Part 4 of our 7-part series on the draft Media Bill - levelling the regulatory playing field between video-on-demand and traditional broadcast linear services

In this article we explore Part 4 of the draft Media Bill, “On-Demand Programme Services”.

Enhanced regulation for large video-on-demand services

Ever since VOD services burst onto UK (and EU) screens over ten years ago the topic of VOD regulation has been something that regulators and industry personnel have been grappling with. The AVMS Directive 2010 introduced minimum obligations on VOD services (that were supplemented under the revised AVMS Directive 2018) against a backdrop where the EU noted in the 2010 AVMS Directive that:

“On-demand audiovisual media services are different from television broadcasting with regard to the choice and control the user can exercise, and with regard to the impact they have on society. This justifies imposing lighter regulation on on-demand audiovisual media services”

Fast-forward to today and very few would argue that the impact that VOD services have on society is less than traditional broadcast linear services. In fact, according to Ofcom’s Media Nations Report 2022, penetration of SVOD services in the UK is in excess of 65%. It is therefore of little surprise that the draft Media Bill seeks to increase regulation on VOD services.

Who does it apply to?

The draft Media Bill introduces increased regulation on large streaming services watched in the UK, regardless of where such services are based. This is in light of the fact that many large SVOD services are headquartered outside of the UK and Ofcom has no current remit to ensure such platforms comply with the current “ODPS rules”. Moreover, since Brexit, the UK has not been able to depend on such rules being regulated in their “country of origin” (other than in limited situations where the European Convention on Transfrontier Television applies). In fact, Ofcom has a whole page on its website dedicated to the fact that it does not regulate Netflix. 

To give effect to both “enhanced regulation” and “cross-territorial reach” the draft Media Bill introduces a new category of service titled “Tier 1 services”.

Tier 1 services, which will be subject to enhanced regulation, include:

• VOD services operated by public service broadcasters, other than BBC iPlayer, which is already regulated under the Broadcasting Code, and will remain so; and
• any VOD services specified by the Secretary of State either explicitly by name or by reference to falling within parameters as mandated by the Secretary of State from time to time. This may include both UK on-demand programme services and non-UK on-demand programme services (i.e. services that are not headquartered in the UK, and/or do not make editorial decisions in the UK but are made available to members of the public in the UK).

As noted in other articles in this series, available here, the ability for the Secretary of State to “designate” services appears throughout other sections of the draft Media Bill  and affords the Government with the ability to react quickly in the face of changes to the media environment (including, for example, new large VOD services being made available in the UK) without the need to enact new legislation.

Prior to the Secretary of State’s designations, Ofcom will be required to provide a report on the UK VOD market with such report to include details of audience figures and catalogue sizes. Although no VOD services are referenced explicitly by name in the draft Media Bill, the Government’s Press Release on the draft Media Bill specifically references “Netflix, Amazon Prime Video, Disney+” as coming within the scope of new regulation and therefore should we see the draft Media Bill become law it would be safe to assume that the services referenced above will fall within the Secretary of State’s first designations.

How will this all work?

Ofcom will be tasked with developing and enforcing a new code for the regulation of Tier 1 services, which will be binding on each such service 6 months after it becomes a Tier 1 service or after the code is first published (whichever is later). No reference is specifically made to “non-Tier 1 services” and we therefore assume that the current ODPS rules will continue to apply to them, or (in the case of non-UK services) that they will remain unregulated.

The new code must achieve a number of objectives as set out in the draft Media Bill and should “level the playing field” with the rules that currently apply to traditional linear broadcasters (i.e. the Ofcom Broadcasting Code).

The draft Media Bill notes that the new code should achieve the “standards objectives” most of which readers will be familiar with (for example, the protection of minors and the protection of the public from offensive content), however, the draft Media Bill also provides that the topical issue of “impartiality” must be addressed in the code.  

The special impartiality rules appear to generally reflect those in the Broadcasting Code that currently apply to traditional linear broadcast services, with the exception of the requirement for due impartiality in relation to matters of “major political or industrial controversy and major matters relating to current public policy”. The Government explained that this omission reflects the fact that VOD services are less likely to include programmes that are reactive to live and rapidly developing events. Nevertheless, Tier 1 services will not be able to reflect in their programmes the service provider’s views or opinions on any matters of political or industrial controversy, or current public policy.

Accessibility requirements

A welcome addition in the new Media Bill is the requirement to increase access services for on-demand services.  Ofcom will draft a code which requires Tier 1 services to ensure that their services are “accessible”. Such rules will apply from two years after which a service becomes a Tier 1 service; or when the code is published, whichever is later.

In-scope services will be required to meet targets for the percentage of catalogue hours that are subtitled, audio described and signed. For each of the first two years, at least 40% of catalogue hours must be subtitled, 5% must be audio described and 2.5% must be signed. Following this interim period, the yearly targets will double to 80%, 10% and 5% respectively.  The Secretary of State has the power to modify by regulations the percentages set out above, however, any amendments must be in consultation with Ofcom and will need to be approved through an affirmative statutory instrument. Aligning with the current access requirements that apply to regulated linear services, Ofcom will have the power to provide exemptions for these targets, taking into account factors such as the cost of compliance, technical difficulty and the extent of audience benefit.

Prior to the draft Media Bill being published, there were concerns that tough accessibility targets (which were expected in some form) may be imposed on all VOD services, thereby discouraging new entrants into the market. However, the targets appear to currently only apply to Tier 1 services and, even then, Ofcom will have the power to make exceptions in certain cases. Importantly for non-UK on-demand services, the accessibility requirements will only apply to services so far as they are made available to audiences in the UK.

Review of audience protection measures

Ofcom will also be tasked with assessing whether on-demand services’ audience protection measures adequately protect audiences from harm. This will, for example, include consideration of age ratings, content warnings and parental controls. There is no explicit references in the draft Media Bill as to the consequences where Ofcom determines “audience protection measures” are not suitable. We assume, however, that this will be a point that is addressed in the new draft code.

What is the role of Ofcom?

Unlike other sections of the draft Media Bill there is minimal reference in Part 4 “On-Demand Programme Services” regarding the scope of Ofcom’s enforcement powers, this is because Ofcom is already afforded such enforcement powers under the Communications Act and already regulates, and enforces compliance with the current rules by, registered on-demand programme services. The draft Media Bill does however provide that Ofcom will put in place procedures for handling complaints with regards to Tier 1 services that fail to observe the new code.

In addition, the draft Media Bill does provide that Ofcom has the power to request certain information from on-demand programme services, including what audience protection measures they have in place and also information to assist Ofcom in compiling its reports on the on-demand service market for the purpose of assisting the Secretary of State with its designations of Tier 1 services. Where services fail to comply with certain information requests, Ofcom will be permitted to sanction services including by imposing financial penalties (of up to £250,000) and by suspending or restricting access services.

The CMS view – surprise score 2/10

The closing of the regulatory gap between linear and VOD services has been a hot topic for some time and it is therefore of little surprise that the Government has taken this opportunity to “level the playing field”.  It is also not a surprise that large VOD services based outside of the UK, but which target citizens within the UK, will be subject to regulation. The draft Media Bill does not however do anything to close the gap between (on the one hand) linear and VOD services and, on the other, video-sharing platforms’ audio-visual content, despite such platforms increasingly becoming destinations where users consume such content.

We will be watching this Media Bill closely as it passes through Parliament, so keep an eye out for our updates on our dedicated CMS Media Bill webpage.  If you would like to discuss any aspect of the draft Media Bill or how it may affect you, please get in touch.