Local content investment obligation imposed on streaming services in Norway
On February 28th, 2025, the Norwegian Parliament adopted new legislation regulating an investment obligation for streaming services operating in Norway, in accordance with the EU Audiovisual Media Services (AVMS) Directive. The new regulations will impose an obligation upon audiovisual on-demand services such as Netflix, Amazon Prime and AppleTV, to invest directly in the creation of Norwegian audiovisual works such as films and series. Sounds good for the creative industry in Norway, but will it have the intended effects?
1. The purpose of the investment obligaiotn
The purpose and intention of these regulations of the AMVS directive is to promote and protect Europe's creative and cultural diversity, support the creation of European audiovisual works, strengthen local audiovisual markets and create local jobs in the creative sector. Further, it intended to level the playing field so that both traditional broadcasters and newer, international online streaming platforms contribute to Europe’s audiovisual culture, rather than focusing primarily on international or non-EU productions. The legislation has not yet entered into force, as it is awaiting final promulgation.
2. The new regulations
The legislation will be implemented in the Norwegian Broadcasting Act, with new sections 2-22 and 2-23: As follows from these provisions, on-demand audiovisual media services are now legally obliged to invest directly in Norwegian audiovisual works. Accordingly, Norwegian law will leave no option to instead pay a levy fee to a public fund, contrary to what seemed plausible based on the public hearing from 2022.
The investment obligation applies to "on-demand audiovisual media services" as defined in the Norwegian Broadcasting Act section 1-1. Thus, any streaming service that offer audiovisual programmes that can be watched at a time of the viewer's choice and at their request from a programme catalogue, and which are distributed to the public via electronic communications networks, is subject to the investment obligation. This means that streaming services like Netflix, Max, Disney+, Prime Video, Discovery+, among others are subject to the investment obligation.
The exceptions from this obligation, set forth in section 2-22 seem not to be applicable to the most popular streaming services in Norway, such as those mentioned above, as the exceptions only cover NRK, smaller streaming services, or service providers that do not offer feature films, documentaries, drama series, and documentary series.
Furthermore, an additional exemption rule shall capture situations which are not covered by the specific exceptions set out but where it would be unreasonable or disproportionate to require an obligation to invest. It is unclear when this will apply.
The investment amount is required to be at least 4 percent of annual turnover. The regulation defines turnover as "the service provider's gross turnover in Norway from the audiovisual on-demand service, excluding value-added tax (VAT), including turnover from subscriptions, advertising, sponsorship, and product placement".
The preparatory works of the law clarifies, however, that these examples are not exhaustive. Turnover will also include revenues from resale of the audiovisual on-demand service through other providers’ subscription-based products, for example, where a distributor makes audiovisual on-demand service catalogues or individual titles available for payment as one of several separate packages. Turnover from the sale of access to linear television content however is exempt.
Section 2-22, fourth paragraph, will however provide some flexibility as to the timing of investment. If a provider of audiovisual on-demand services invests more in an accounting year than 4 percent of annual turnover, the excess investment may be included in one or both of the following two accounting years.
What investments qualify as "direct investments" in Norwegian audiovisual works are described as investments in production, acquisition of viewing rights (licensing) and other similar contributions in Norwegian audiovisual works. Acquisition of viewing rights only qualifies as a direct investment if the work is less than three years old. "Other similar contributions" are contributions that aid the realisation of Norwegian independently produced films, series, and documentaries, but it is currently not very clear what this in fact would cover.
Section 2-23 also defines what qualifies as "Norwegian audiovisual works". Firstly, the second paragraph sets out four conditions, of which at least three must be met to qualify as Norwegian audiovisual works. These conditions include the use of an official Norwegian language, a main theme related to Norwegian history, culture, or society, the action taking place in Norway or another EEA state, and significant contributions from creators residing in Norway or another EEA state.
Furthermore, the third paragraph sets out additional conditions that all must be met. These conditions relate to the producer of the audiovisual work, which must be a production company established in Norway or another EEA state with audiovisual production as their main business, the production company needs to be registered as a LTD in Norway and key personnel in the project must have "substantial professional experience" in their field, with the latter being a rather subjective assessment.
3. Sanctions of non-compliance
As for sanctioning non-compliance with these provisions, the authorities may impose coercive fines according to section 10-4 of the Norwegian Broadcasting Act. The coercive fine may be imposed as a recurring fine or as a one-time amount.
4. Will the regulations work as intended?
The new legislation will impose a quite strict investment obligation for audiovisual on-demand services. As the legislation prescribes an obligation of direct investments, with no option to pay a levy-fee to any public fund as was to some extent expected, and yet with quite restrictive exceptions from this obligation, there is less flexibility than in several other European countries which have adopted somewhat more flexible rules on how to fulfil the AVMS obligations.
This also poses a challenge of market fragmentation across the EEA and administrative complexity, as streaming services must operate under varying solutions within the legal framework of the AVMS Directive, resulting in compliance challenges. Combined with the actual investment obligations imposed, there is a certain risk that streaming providers may exit Norway as a small market to focus on only some European countries and therefore impact consumer choice in the streaming market.
It will also be interesting to see whether the Norwegian market for audiovisual productions is large enough to justify and enable fulfilment of such a strict obligation, and how the funds will be administered, distributed and used in practice. It remains to be seen whether the rather small Norwegian creative community is ready and able to use such funds to provide sufficient amounts of quality Norwegian audiovisual works.
