Stumbling block for geo-blocking

24 Nov 2018 / innovation Print

Residence-based content geo-blocking prohibited

On 2 March 2018, the Geo-blocking Regulation (Regulation 2018/302 on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment) was published in the Official Journal.

Online access

The regulation will prohibit the practice of geo-blocking consumers’ online access to goods and services.

Audiovisual services are currently exempt from the regulation, which means that online audiovisual service providers can, after the regulation comes into force on 3 December 2018, continue to restrict access to online content on a territory-by-territory basis within the EU.

In the lead-up to the Geo-blocking Regulation, there was much debate as to whether the geo-blocking ban should extend to audiovisual services.

After strong lobbying from the film and TV industries, it was agreed that audiovisual services would be exempt from the regulation – for now, at least.

However, by 23 March 2020 and every five years after that, the commission will have to evaluate and report on the operation of the Geo-blocking Regulation, which leaves open the possibility that a ban on geo-blocking of online audiovisual services may well be revisited in the not-so-distant future.

The bridge

In the context of film and TV content, geo-blocking is used to restrict access to online audiovisual services (such as video on demand, or VOD) to a particular country in the EU, so that consumers outside of that country cannot access those services.

This approach facilitates the current distribution model for film and TV content, where distribution rights are typically carved up on a territory-by-territory basis within the EU. For example, a French distributor will distribute in France (and, usually, in other French-speaking countries), an Italian distributor will distribute in Italy, etc.

This approach means that producers have an increased number of potential revenue streams for their content and, in addition, distribution tends to be more streamlined, as local distributors can focus on their individual markets.

Indeed, most distribution agreements will include an obligation on distributors to take steps to prevent the distribution of content to other territories outside the territory in respect of which they are granted distribution rights, which will often include applying geo-blocking to the online distribution of that content. 

The good place

From a consumer perspective, a geo-blocking ban could lead to greater choice, both of audiovisual content and of service providers, thereby stimulating competition and reducing the price payable for access to that content or service. 

Adverse effects

However, such a measure could also have serious adverse effects on the film and TV industries. A ban on geo-blocking would significantly affect the current financing model for film production.

If a French distributor is no longer guaranteed territorial exclusivity in respect of online sales of a film in France, then this may result in that distributor attaching less commercial value to a film.

As a result, that distributor could seek to either reduce the amount of any minimum guarantee payable and/or increase their percentage share of receipts from the film, to make up for a perceived risk of reduced sales.

Potential co-producers or financiers may have less of a commercial incentive to invest in films and TV projects at development stage, if pre-sales cannot be guaranteed or are likely to be reduced.

Many critics also suggest that cross-border distribution of audiovisual works will benefit large players who can afford to buy works on a pan-European basis.  

The Haunting of Hill House

By 23 March 2020 and every five years after that, the commission will have to evaluate and report on the operation of the Geo-blocking Regulation.

It is very possible that the commission may once again raise the issue of banning geo-blocking of online audiovisual services at that time.

However, it is unlikely that a geo-blocking ban would be applied to VOD services such as RTE Player and BBC iPlayer– the EU Commission has noted that funding in some audiovisual sectors (such as television) relied on territorial exclusivity and, accordingly, geo-blocking in such instances may be justified.

The separate Online Portability Regulation (which applies from 1 April 2018 and enables consumers to access their portable online content services when they travel in the EU in the same way they access them at home) may be indicative of the shape of things to come.

Indeed, the current vice-president for the digital single market, Andrus Ansip, has voiced his dislike of geo-blocking on a number of occasions.

As such, the film and TV industry is by no means out of the woods when it comes to online geo-blocking.

Aideen Burke
Aideen Burke
Aideen Burke is an associate at LK Shields where she specialises in media law