Paramount Pictures has agreed to stop seeking geoblocking restrictions “when licensing its film output for Pay-TV to a broadcaster” within the European Economic Area (EEA), according to a European Commission press release. Additionally, Paramount Pictures agrees not to enforce any existing contract clauses involving geoblocking. Geoblocking, a form of internet censorship, is the act of restricting access to something based on the consumer’s geographical location – and it is now considered anti-competitive.
The European Commission started an antitrust investigation into Sky TV’s contracts with 6 major film studios around the world last July. Besides Paramount Pictures, the EU is also investigating Disney, NBCUniversal, Sony, Twentieth Century Fox and Warner Bros for breaching EU competition rules with geoblocking. Paramount Picture’s binding decision to stop all European instances of geoblocking and refrain from seeking such clauses in the future is hopefully the beginning of more consumer friendly licensing agreements.
Including geographical limitations in video rights negotiations has long been a facet of the world of entertainment. Geoblocking is a card that big companies have been playing against streaming services such as Sky TV, Hulu, Amazon Prime Now, and Netflix as leverage in negotiations for years. Geographical restrictions are one of the pain points that has led to the current situation: stagnating entertainment libraries and lowered subscription rates. Ever since streaming services started cracking down on VPN use, which is a simple way to bypass geoblocking restrictions, the pain has only been amplified.
A brief history of geoblocking
If we dig deep into the annals of history, we find that geo-discrimination was a basic fact of life. Merchants made money by bringing goods that were only found on one side of the world to a location on the other side of the world to be sold for a profit. Whether said merchants were traveling by sea (around the Cape of Good Hope) or by land (through the Silk Road), there would be ports or trading posts along the way. The price that a merchant demanded for his silk would change predictably depending on how far away the merchant was from China. As the good, silk in this instance, made its way further from its source, the cost of transportation needs to be added to the good in order for economic incentives to still play out.
Few would actually call basic economics an instance of geoblocking, though. In the modern world of Internet connections and subscription video streaming services, the cost of transportation is absolutely negligible to the movie producer. Partitioning off broadcast “rights” to different regions, should some company in said regions be able to afford them, is something that happens because there are no regulations standing in the way. Now that the European Commission has cracked down on geoblocking within the EU, we can hope that other regions will soon follow the new example and set a new industry standard.