Media Bill - Impact Assessments – VOD regulation

United Kingdom

In part four of our seven-part series on the draft Media Bill (which can be found here), we summarised the proposed changes to the regulation of video-on-demand (VOD) services. In this article, we will cover the Government’s impact assessments in relation to the above (click here for the overarching impact assessment and here for the specific impact assessment on the updates to VOD regulation).


As a reminder, Part 4 of the Media Bill seeks to increase regulation for certain VOD services available in the UK. Currently, regulation for VOD services is less stringent compared to regulation for linear channels, and some hugely popular VOD services that are available to UK audiences are not regulated in the UK at all. Given the rise in on-demand consumption, the proposed changes aim to ‘level the regulatory playing field’ with traditional TV. However, certain large VOD services have expressed concern with the draft Media Bill and noted that the Bill is not suitable for global platforms and, as a result, such platforms may be forced to pull titles.

Impact on VOD services

Requiring large VOD services to comply with enhanced regulation (i.e. a new VOD code) will create costs for such services, both in respect of initial setup and ongoing compliance. Broadcast VOD services (i.e. those operated by PSBs) will likely incur significantly less costs compared to non-broadcast VOD services given they already largely comply with similar rules, at least in respect of their linear offering. Similarly, smaller VOD services will not be caught by the enhanced regulation, meaning that they will continue to be bound only by existing regulation, and will therefore likely not see any increase in costs.

For the large non-broadcast VOD services, the impact assessment considers that a “primary driver” of these costs for compliance with the new code will be the “review of content across their existing catalogue, and ongoing monitoring of new content”. Although based on incomplete data, the impact assessment estimates that the total one-off cost for major VOD services could reach £13m-£16m.

In terms of specific audience protection measures (e.g. age ratings and PIN codes), it was determined by the Government that VOD services already generally provided adequate measures in this area and therefore (according to the Government) such provisions are unlikely to result in significant costs to VOD services. Nevertheless, Ofcom could in theory use its new powers to require VOD services to improve or amend their existing measures.

With respect to the accessibility requirements, large VOD services will be impacted by the costs in the setting up and rolling out of accessibility technology for existing and new content. The impact assessment predicts that the largest cost will be ensuring existing content contains the relevant features. This cost will be felt most across the first four years, given this is the period of time that services will have to “fill the gap” between their current offering and the new targets. The largest ongoing cost will be related to ensuring new content is sufficiently accessible, however VOD services will also need to consider costs incurred by reporting obligations.

Impact on Audiences

The impact assessment predicts that audiences will benefit the most from the enhanced regulation.

The fact that large VOD services based outside of the UK (but that target the UK) are to be brought into the scope of UK regulation is also arguably beneficial for audiences. Indeed many broadcasters argued that it is reasonable for UK viewers to expect a consistent standard of safety and accessibility across all major VOD services, and the level of protection and availability of content shouldn’t be determined by where the service happens to be based.

With regards to the accessibility targets, the Government estimates that there are 5.8 million people in the UK with hearing impairments who may use subtitles, a further 930,000 with visual impairments, and 87,000 who use sign language as a first language. Requiring the largest services to make their content accessible therefore has significant and obvious benefits to these people who will enjoy a greater range of viewing, and who may also see health benefits from reduced social isolation and loneliness.

It is possible that the costs incurred by large VOD services in complying with the new regulations may, in part, be passed onto customers through, for example, increased subscription costs. Equally, it’s possible that VOD services decide to remove certain content from their offering to minimise any risk of the content falling foul of the enhanced regulation. In theory, this could therefore lead to a reduced offering for audiences.

Impact on Ofcom

For both the enhanced code and the accessibility requirements, Ofcom will need to become familiar with the legislation and then draft, consult on and implement the new code and associated guidance. In addition, Ofcom will then be responsible for ensuring ongoing compliance of in-scope services. This will all come at significant financial cost to Ofcom, which we understand will be recovered by levying fees on in-scope VOD services. As the extent of Ofcom’s regulatory duties are still yet to be fully scoped out, the predicted financial cost to Ofcom in carrying out its role is still to be determined.

Impact in other areas

In addition to the main areas of impact outlined above, the impact assessment considers that the enhanced VOD regulation will benefit PSBs by removing the current regulatory imbalance between the regulation of PSBs and large VOD services.

The new regulations could potentially impact the imports or exports of large overseas VOD services that ‘import’ into the UK, as these previously unregulated services will now be caught by the enhanced regulation. However, as part of the consultation and engagement process, no service provider suggested to DCMS that the proposed changes would affect their ability or willingness to trade with, or invest in, the UK.