‍👉 Background: Netflix was founded in 1997 as a humble DVD rental service. It was laughed out the door by Blockbuster when it offered to sell the company to them for $50 million. Now, Netflix is the world’s biggest streaming service and Blockbuster no longer exists (…who’s laughing now?!). Netflix is so dominant it claims that 77% of Aussie households have a subscription.

‍👉 What happened: Netflix Australia generated $1.3 billion in local revenue in 2024 - this was up from $1.1 billion in 2023. But, it posted a teeny tiny profit of just over $23 million profit in Australia. That’s because it paid $1.2 billion in “distribution fees” to other Netflix entities overseas. In other words, 93% of revenue was shifted offshore.

‍👉 What else: But there might be some revenge served soon… via Canberra. The Federal government has floated plans to introduce content quotas for streamers like Netflix.

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‍What's the key learning?

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‍💡Content quotas are regulations requiring media companies to produce or show a minimum amount of local content. Right now, there are content quotas on traditional broadcasters, like Channel 7, 9 and 10, but not streamers. And the Australian government wants streaming giants to invest more in local productions.

💡As part of these proposed quotas, two models have been explored:

• Subscriber-based model - where companies with more Aussie subscribers must spend more
• Revenue-based model - where a percentage of local income is invested into Australian content

💡While Netflix says it’s already spent $1 billion on Aussie content since 2019, the local industry claim that it ain’t enough. So, only time will tell if they can successfully implement these quotas. And given Netflix is barely paying any local taxes, it’s the least they could do.