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How Can Geoblocking Impact the Video-On-Demand Marketplace?

This Q&A was originally published in the Spring 2020 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.

Geoblocking technology restricts access to internet content based upon the user’s geographical location. International film distribution companies rely on geoblocking as the foundation to their core business model—pre-selling and licensing premium video-on-demand (VOD) content on a territorial basis. Copyright law, which grants rights holders with authority to designate the locations where their property is distributed, is also served by geoblocking.

Netflix, HBO and numerous other VOD sellers offer unique programming based on specialized commercial and cultural considerations. By way of example, HBO Now, the premium VOD streaming service, is only available to US consumers because it has parallel exclusive commercial arrangements with different international partners, each with its own unique programming and business framework. With geoblocking technology, the partnering distributors are able to offer their subscribers a buffet of premium but culturally tailored content at varying price points to their respective markets.

The widespread use of geoblocking is the subject of heated debate that could alter or derail the traditional VOD distribution framework. Detractors regard geoblocking as both an inconvenience and a form of internet censorship. Frustrated consumers actively seek to circumvent the technology by accessing virtual private networks (VPN), which reside on websites outside the designated territory. Resisting this practice, distributors argue that the use of online VPN services to evade geoblocking is a violation of copyright law because it infringes on the rights controlled by the content rights holder. As content owners, many documentary producers support this argument and appreciate that geoblocking preserves the value of their content.

The practice of geoblocking has received particular scrutiny within the European Union, which includes several commercially significant markets such as Germany, France, Italy and Spain. Documentary co-productions often leverage local production incentive programs to facilitate the finance and distribution of projects in development. As a unified commercial policy, the EU adopted a Digital Single Market (DSM) strategy in 2015 to create a single commercial zone free of geoblocking. Fearful that a DSM approach would undermine the traditional model for financing and distributing films, content licensors lobbied the European Commission for an exemption. Under intense pressure, the EC relented and ultimately excluded copyrighted audiovisual works from the DSM strategy mandate in 2016. This means that, for the time being, film rights can continue to be exploited on a territorial basis in the EU.

Excluding copyrighted audiovisual works from the DSM initiative is unpopular outside the established audiovisual business community. Consumer advocates encourage eliminating geoblocking so that consumers can access a wide range of content in an open, price-competitive marketplace without cultural restrictions. For example, they assert that a German consumer should not be restricted from viewing her favorite German-language documentary through a VOD service just because she lives and works in France. Proponents of the copyright audiovisual content exclusion, including the influential Independent Film and Television Alliance (IFTA), assert that eliminating geoblocking will harm the diversity of local film productions, impede state-supported co-productions, dilute the quality of content to consumers, and defy copyright law.

The stakes in the geoblocking debate are especially high for documentary producers seeking to finance and distribute their films on an international basis. Without geoblocking restrictions, the ability of rights holders to license their copyrighted audiovisual content on a territorial basis could be at risk. If the audiovisual exclusion is waived, the traditional model for financing, co-producing and distributing independent films across Europe may be compromised because pre-sales and content licenses to individual territories fuel the entire film business. While the outcome to this debate is unclear, industry stakeholders are concerned about the future of the commercially valuable territory-based marketplace

© 2021 Steven Beer