The unintended costs of Germany’s new streaming quota

Germany is preparing one of Europe's most ambitious interventions in the streaming market. Under plans approved by the federal government, streaming services such as Netflix, Amazon Prime Video, and Disney+ would be required to invest a share of their German revenues into local audiovisual productions. 

Supporters argue that the measure will strengthen Germany's film industry and ensure continued investment in domestic content.

But while the proposal is being framed as cultural policy, its implications extend far beyond film and television. The measure raises important questions about competition, consumer choice, and the future of digital trade.

Relying on public funds exposes the cinema industry to political whims

European streaming platforms already operate under significant regulatory obligations. The EU's Audiovisual Media Services Directive (AVMSD) already requires at least 30 percent of catalogs to consist of European works.

Germany now wants to go further: according to the draft Media Services Investment Obligation Act approved by the federal cabinet in May, streaming services targeting the German market would be required to invest at least 8 percent of their German revenues into European audiovisual works, with additional requirements regarding German-language productions and independent producers. 

Rather than simply requiring the availability of European content, the proposed law would compel streaming services to spend a portion of their revenues on specific types of productions. In practice, this transforms private entertainment platforms into vehicles for achieving public cultural policy objectives.

While such an approach may appear attractive to policymakers, it sets a concerning precedent for anyone who values open and competitive digital markets. Not only does it negatively impact consumers, fair competition, and potentially trade, but it also creates an industry highly vulnerable to political shifts. For example, the French film industry, which relies heavily on state subsidies and revenues from foreign platforms, now finds itself exposed to instability due to potentially shifting political priorities in the future.

Risks to consumers

Streaming services do not operate in a vacuum - every new regulatory obligation increases costs, whether through direct investment requirements, compliance expenses, or administrative burdens. Those costs are ultimately absorbed through higher subscription prices, reduced investment flexibility, or fewer resources available for innovation and new content.

At a time when European policymakers regularly express concern about affordability and consumer welfare, adding new costs to digital services appears counterproductive.

Risks to fair competition

Some questions on fair competition also remain: Germany already maintains one of the largest publicly funded media sectors in Europe through mandatory broadcasting fees (which collect nearly 10 billion Euros annually in fees) and extensive film subsidy programs.

At the same time, Berlin is increasing direct film support. The annual federal film funding with the ‘cool’ name FILM-BOOSTER will rise to €250 million while the new investment obligation is introduced. 

The proposed streaming mandate creates a curious situation: private platforms that already compete with publicly funded broadcasters would be required to finance additional policy objectives on top of existing support mechanisms. Rather than addressing whether current subsidy systems are delivering the desired results, policymakers appear determined to add another layer of intervention.

Risks to international trade

The proposal also raises legitimate concerns about international trade. Many of the streaming services most affected by these rules are headquartered outside Germany and outside the European Union. While the measure is formally neutral, its practical impact falls disproportionately on foreign digital service providers.

This mirrors ongoing tensions between Europe and trading partners - particularly the US - over digital services taxes and sector-specific rules that the US is often calling "non-tariff barriers”. With the EU-US trade deal (finally) nearing final ratification, measures targeting foreign digital firms risk undermining transatlantic cooperation on AI, tech policy, and digital commerce. If Europe wishes to uphold its long-standing commitment to open markets and rules-based trade, policymakers must reconsider these increasingly prescriptive national mandates.

Supporting creativity without mandates?

None of this means that supporting local creative industries is an illegitimate policy goal.

Germany has a rich cultural sector and many internationally successful creators. The question is whether government-mandated investment quotas are the most effective way to support them. 

As someone who grew up watching German television (and is happy not to do this anymore), I can tell you that the billions that went into the public broadcaster channels did not result in quality shows, and one switched to private channels with high-quality US productions.

Successful productions emerge when creators respond to audience demand, experiment with new ideas, and compete for viewers. They are far less likely to emerge from regulatory formulas designed in government ministries.

European policymakers should focus on creating conditions that encourage investment across the board: reducing bureaucratic barriers, improving the tax environment for production, and strengthening the digital single market.

The future of European creativity depends on openness and competition, not on compelling private companies to finance government priorities.

As Germany moves forward with its proposal, policymakers should remember a simple principle: cultural success cannot be mandated, and innovation rarely flourishes under quotas.