THE STREAMING AND VIDEO ON DEMAND (VOD) MARKET IN BRAZIL: REGULATION AND IMPACTS

By Isabela Cesca and Letícia Ferraz

Streaming and Video on Demand (VOD) have become essential parts of people's daily lives. They offer practical and personalized access to a wide range of content, such as films, series, music, podcasts, games, and live broadcasts. Their convenience and diversity have transformed entertainment, culture, and the economy in many countries.

However, this reality was completely different until the middle of the 20th century, when people depended on physical video rental stores. Back then, companies like Blockbuster - voted the 13th best-known brand in the United States in 1999 - dominated the video industry. The company reached 65 million customers during its heyday and was valued at US$3 billion.

The end of the 20th century and the beginning of the 21st century marked the start of the decline of video stores and the rise of streaming. The change was driven by the emergence of the Internet and devices such as the computer and smartphone, coupled with the creation of Netflix in 1997 as a DVD rental service by mail.

However, it wasn't until 2007 that Netflix began using streaming video. In January 2007, The New York Times announced that "[...] Netflix is launching a service to deliver movies and TV shows directly to users' computers, not as downloads, but as streaming video, which is not stored in the computer's memory". Then, discussions about streaming and Video on Demand (VOD) gained popularity

Streaming is the process of transmitting and reproducing multimedia content simultaneously. According to Gartner, streaming is considered a technique “[...] that supports the continuous, unidirectional transmission of audio and/or video [multimedia] data over the Internet and, more recently, over a mobile network”.

The concept covers any type of media file, such as music, podcasts, videos, movies, TV shows, and others, that is transmitted in sequential packets of data over an Internet connection. Streaming is often compared to a stream, as "[...] video data flows continuously and quickly to the user's browser."

Streaming can also be seen as an alternative to the download approach, which requires the entire content to be downloaded and stored on the device before it can be played. It works by dividing the content into parts and transmitting them successively to the user, who decodes it in an orderly fashion without waiting for its complete delivery.

On the other hand, VOD refers only to pre-recorded videos made available on a platform for users. Thus, while streaming is used to describe the technique by which various multimedia contents are distributed, VOD is used to describe how video content is consumed.

According to the Superior Cinema Council, the main characteristic of VOD is non-linearity, which allows the user to control the order of viewing, pausing, advancing, or restarting the content. This flexibility is possible because the video is stored, unlike live streaming.

There are also three different types of VOD:

1)      1) Subscription Video on Demand (SVOD): access to a catalog of videos on demand is made available through a subscription;

2)      2) Transactional Video on Demand (TVOD): access to specific video content - a sporting event, for example - is available for a fee;

3)      3) Advertising-Based Video on Demand (AVOD): access to content is free but contains advertisements.

According to Britannica, the emergence of video-on-demand (VOD) services dates back to the early 1990s, but they gained popularity on a global scale only in the 2000s. According to projections, the VOD market is expected to reach an international market volume of US$399.05 billion by 2032, with an annual growth rate of 17%.

This rapid advance has also brought challenges, especially regarding regulating the sector. In Brazil, discussions have arisen about creating transparency, competition, and consumer protection rules. In addition, issues such as tax collection and the protection of national content are at the center of these debates through Bills No. 429/2022, No. 8,889/2017, and No. 2,331/2022.

Senator Nelsinho Trad's Bill 2.331/2022 is awaiting the Rapporteur's opinion in the Chamber of Deputies. The text provides information on the offer of VOD services to the Brazilian market and determines that streaming services operating in Brazil contribute to the development of the national film industry (Condecine).

According to the Bill, the contribution will be annual with a progressive rate - between 1.5% and 3% - according to the companies' gross turnover (art. 33, IV, annex I).

In addition, the Bill also requires streaming services to permanently make a minimum amount of Brazilian audiovisual content available in their catalogs (art. 10).  The minimum quantities are stipulated in Article 10, half of which must be independent Brazilian content.

It also requires that streaming services' mechanisms promote the visibility of Brazilian content through suggestions, searches, specific sections, and prominent displays (art. 9).

On the other hand, Bill 8.889/2017, authored by Paulo Teixeira, is ready for the plenary. The Bill also determined the payment of Condecine by streaming services but stipulated a maximum rate of 4% on the companies' net revenue (art. 9).

The text also stipulates that streaming services must include a certain number of titles produced by Brazilian producers (art. 7). This number must vary between at least 2% - for companies with annual gross revenues of up to R$3.6 million - and 20% - for those with revenues of over R$70 million - of the total number of hours in the catalog of films and series offered (§2).

Similar to PL 2.331, PL 8.889 requires cataloging and selection mechanisms to ensure that Brazilian producers' content is highlighted (art. 8). According to the document, this will be done by highlighting the works (item I).

According to the deputy, the measures aim to stimulate the proportional consumption of Brazilian content and ensure a “[...] dynamic market, with a competitive balance between the various types of services, without unnecessarily burdening VOD with administrative or bureaucratic obligations.”

Both Bills are before the Chamber of Deputies and essentially contain similar provisions on video on demand (VOD); however, the Bills also have differences and divergences.

In addition, Bill 429/2022, proposed by Rubens Pereira Júnior, requires digital platforms and streaming services to make available data relating to the technical file of phonograms and musical audiovisual works produced in Brazil.

The bill aims to guarantee citizens the right to information on provisions such as the composer's name, the musical director, the studio in which the music was recorded, and others. In the event of non-compliance, Article 3 of the text determines the payment of a fine of R$1,000.00 for each work.

Discussions need to take place as the above-mentioned bills are processed because a balance needs to be struck between the sectors and their demands. The debates are still in their infancy, even though some of the bills have been in progress for several years.

A better assessment is needed of the balance between authors' rights, the mass availability of content, for example, and the remuneration to be paid by the digital market.

            The bills currently under consideration in Congress regarding streaming and Video on Demand (VOD) need to consider the complexities of the 21st century and the various economic, cultural, artistic, social, and political aspects involved.  

In this sense, the Universal Declaration of Human Rights and international documents must be observed to promote cultural sustainability and dialog with streaming platforms and the entire digital sector.

The protection of cultural works and the promotion of technological innovation are essential in our society and need to talk to each other and align, requiring a broad debate with the participation of society.

Progress has been made in this process, but much remains to be assessed and weighed. Building a quality policy requires joint efforts. We hope that throughout 2025, our congressmen will open up space for dialog and civil society participation in the construction of a law that protects streaming and video on demand (VOD) in a more balanced, fair, and democratic way.