German producers are cautiously welcoming local streaming requirements aimed at revamping the country’s ailing production sector.
Long debated and awaited, terms of an agreement signed by coalition government partners were finally outlined yesterday. Realistically, it wasn’t the news the likes of Netflix, Prime Video and HBO Max – or local broadcasters and streamers such as Joyn – wanted.
Global streamers and domestic TV stations will be required to invest at least 8% of their annual net turnover on European content that support the German production sector. We understand this applies to both film and TV production.
If they hit 12%, they will be exempt from the more complex regulations – potentially allowing them to film in English, for example. This could, in turn, make Germany a more viable production hub for non-German shows. The move has been seen by some as an olive branch to streamers, though it does not appear to have been taken as such.
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The agreement also includes financial support for films of €250M ($295M) on an annual basis, which nearly doubles the current amount. Streamers will also will have to give up rights to producers, a very contentious point.
Local media suggested Culture Minister Wolfram Weimer had stepped up efforts to get the measures over the line ahead of the opening of the Berlin Film Festival next week, with Munich-based newspaper Süddeutsche Zeitung joking he had wanted to attend the opening ceremony “without being lynched, at least with looks.”
In a statement, he said: “This is not a symbol, but a real investment stimulus: For jobs, value creation, and creative excellence.”
Unsurprisingly, the body for streamers and commercial TV businesses, VAUNET, slammed the announcement, saying it was “a bitter disappointment for the media industry” that “abandons the possibility of a quick and unbureaucratic solution.”
Streamers have been arguing against quotas and rights sharing with indie producers, suggesting many of the ideas debated as “outdated.”
The laws apply to both global and local streamers operating in Germany, where most productions are supported by increasingly stretched state and regional funds. This week’s news shows the government believes the solution is for more private funding.
Weimer said the system would provide a sustainable foundation for production in Germany, and allowed the government to another commit €120M from the federal budget. This means funding for commercial films will hit an annual €250M.
Producers had been hoping for bigger local quota contributions, but individual sources we’ve spoken to are cautiously optimistic. One senior producer welcomed the announcement but questioned the lack of detail. “It seems oddly complicated,” they added.
Michelle Müntefering, CEO and spokesperson for the executive board at German production body Produktionallianz, hailed the announcement, saying: “The German film industry has been waiting a long time for this signal – because good stories need not only creativity, but also reliable framework conditions so that ideas can become tangible productions.”
Müntefering added that the clause allowing for rights retention “is of particular importance,” and “lays a solid foundation on which new productions can be created and long-term prospects can develop.”
She noted that producers had hoped for a “stronger contribution through the investment quota,” but added: “The current plans ensure stability while simultaneously allowing room for further development.”
One production chief who has worked on some of Germany’s biggest shows and films said the feeling was one of “relief” that brings to an end “a time of unnecessary insecurity.”
They added that the 12% threshold should be a boon to streamers and local players, as it could lead to more international and globally-focused titles produced in Germany.
“It is fantastic,” they added. “It stabilizes the market and the idea of having more freedom for the platforms if they surpass 12% creates an interesting opportunity, especially for us and international partners.”
However, another said the percentage scale system was “hard to grasp.” Many are expecting pushback from the streamers before the system is implemented.
Germany’s historic studio complex Studio Babelsberg also welcomed “the long-awaited agreement” and release of the €250M for film, saying it sent out “strong signal” for Germany as production location.
“This is a very good day for Germany as a production location,” said the complex’s CEO Jörg Bachmaier. “The agreement on the investment commitment and the doubling of film funding to €250M provide a strong boost. German studios, producers and service providers now have a positive outlook and long-term planning security.”
“This strengthens Germany’s position in international competition, secures skilled jobs, and stimulates investment. Studio Babelsberg has already been able to attract several international and German productions to the location as a result of the increase in the funding rate to 30 percent,” he added.
‘So-called “investment pact”‘
VAUNET has criticized various elements of the announcement. “The so-called ‘investment pact’ is a decidedly poor starting point for finding such a compromise,” the body said in its statement translated into English. “The requirement of an investment quota above the European average, combined with a number of high sub-quotas, and especially the provisions regarding rights sharing, raise many questions about legal admissibility and market conformity.”
VAUNET suggested the government’s announcement was a “political decision” that needed further work to “minimize the negative impacts and reach a genuine compromise.”
The statement questioned the 12% threshold and the function of an investment obligation. “It is not yet clear to what extent the so-called opt-out and opening clauses, intended as a compromise, will contribute to simplification and proportionality,” said VAUNET.
“Only a sustainable support system, such as a tax incentive model, would have provided a true incentive for increased investment in Germany. The framework now chosen must address significant constitutional and European legal concerns and avoid serious infringements on entrepreneurial freedom of decision-making, program design and supply.
“Consequently, the implementation of an investment obligation must be aligned with the European average in terms of amount and largely dispense with sub-quotas and rights-sharing requirements. Market logic, as well as observations from other countries, demonstrate that rights-sharing – if it is implemented at all – belongs to support systems or tax incentives.”
It’s fair to say some of VAUNET’s concerns are shared by producers, albeit from a different vantage point. Primarily, there is still plenty of consternation around how the rules will be implemented, with one source saying: “How will these announcements actually come into effect?”
All in all, however, German producers are celebrating this morning. “Together, we can now show that Germany remains a vibrant place of storytelling, a place where cultural diversity is visible,” said Produktionallianz’s Müntefering. “German film has a future.”
Melanie Goodfellow contributed to this report.