SWD IA on EU copyright modernisation – problem with access to and availability of EU AV on VOD

A first important difficulty derives from, contractual blockages generally linked to licensing practices based on exclusivity of exploitation rights and on the release windows system. They limit the online availability of AV works on VoD platforms.

A typical situation is where all the rights (including VoD rights) to a specific work have been granted on an exclusive basis to an entity who is not interested in the online exploitation of the work (e.g. a broadcaster to whom exclusivity was granted as a counterpart for the financing of the work). Another situation is when a right holder decides to hold back online rights as long as the rights for a theatrical release have not been licensed, in order to keep open its chances to get the highest revenues.

Some rightholders want indeed to keep maximum flexibility as regards exploitation rights, even if this leads to no exploitation on VoD platforms. In those cases, the online exploitation of the work remains blocked for an indefinite time. When digital exploitation occurs, rightholders often decide to enter the VoD exploitation only when revenues from other windows have been secured. For instance, broadcasters often insist upon full or partial holdbacks against either TVoD or SVoD exploitation during the period covered by their licence. In those cases, the online exploitation of a work occurs at the very end of the release windows. This may negatively impact the attractiveness of VoD offers.

Secondly, clearance of rights for VoD exploitation can be complex. It is not always easy to determine who owns the digital rights (e.g. lack of any licence from the initial author or succession issues) or whether all the rights for the VoD exploitation have been cleared. For instance, it has been reported that the rights to music included in a film had not been cleared for SVoD exploitation, leading to the impossibility for a VoD platform to include this work in its SVoD catalogue.

A third and more significant obstacle is the lack of efficient licensing model for online exploitation rights. This mainly derives from the poor return on investment linked to making the works available on VoD platforms. As regards the rightholders and distributors, the exploitation on VoD platforms is still an emerging market and, at least for SVoD, it comes at the end of the release windows. Therefore the remuneration that is collected for this mode of exploitation remains limited. The revenues will depend on the sales models and the VoD type.

Currently, revenues from theatrical exploitation largely outweigh VoD revenues. This low remuneration could by itself prevent rightholders and distributors from exploiting VoD rights, in particular if there is a risk that the availability of works on VoD platforms undermines revenues from more profitable distribution channels (e.g. DVD, Blu-ray). As regards VoD platforms and aggregators, several costs affect their ability to include more works in their catalogue. Firstly, the price of the works can prevent them from including these works in their catalogue. With limited budgets, VoD platforms have to make choices and would only pay high licence fees for highly valuable works. Secondly, transaction costs can be important, in particular when contracting with small or medium producers.