Netflix and other streaming services could for the first time be forced to make Australian programs, with a government inquiry hearing that local quotas for subscription video on demand services are under active consideration.

Representatives from the federal Department of Communications appearing before the inquiry into the sustainability of the film and television industry on Friday were asked if they had done any research into "what a responsible quota" on online content might look like.

"It's a very timely question," responded Carolyn Patteson, content head at the department. "We recognise that the system we currently have in place is probably not contemporary for our environment, and what we're really starting to grapple with is the online space."

While conceding that the department was "not well advanced on thinking how you might apply quotas" to the online space, Ms Patteson added that work had begun on the issue. The department was expected to make its recommendations by the end of the year. 

"This goes to [the question of how] do we make sure … it's platform-neutral, for want of a better description, and should there be quotas applied to the online environment."

Australia's commercial free-to-air television networks must carry 55 per cent Australian content on their main channels between 6am and midnight, with additional sub-quotas for Australian drama, documentary and children's programs. Streaming Video On Demand (SVOD) operators including Netflix, Stan and Amazon Prime have no such obligations.

They have, however, begun to commission small amounts of local content of their own accord – No Activity, Wolf Creek and a variety of comedy specials on Stan, and Tidelands on Netflix (plus Glitch and The Letdown in partnership with the ABC).

Nick Forward, head of content at Stan, told Fairfax on Friday "in the coming year we will double our output of Stan original productions".
 
He added: "We are encouraged to see the Government working to ensure the production of great Australian content remains sustainable."

Netflix declined to comment specifically on the matter, but pointed to the range of Australian content it had licensed locally from the ABC and other networks, and the fact it also distributed Australian content in foreign territories.

The Free To Air TV networks and the production sector have lobbied for change, either by way of a levy on the SVOD operators to be used to commission content (similar to the way Australian content requirements are applied to Foxtel) or through a minimum content quota.

The first approach has a good deal of support, but is complicated by the difficulty faced in taxing the Australian earnings of the foreign operators. The latter option has gained traction in the wake of the EU's move to stipulate a 20 per cent European content quota for SVOD companies operating in the region.

"We're absolutely aware of Europe moving down this path so we're going to look at what they're doing," Ms Patteson told the inquiry. "We absolutely want it to be across all platforms, and the way people consume these days.

She added that the existing provisions of the Broadcasting Services Act "means there are quotas we can apply through that and translate it in the online environment". 

Matthew Deaner, executive director of Screen Producers Australia, welcomed the fact the department was "turning its attention to these issues".

"It's important to ensure that these large global businesses are contributing to the creation of local screen stories in the same manner the domestic broadcasters have done, so successfully, for decades."

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