The Governance and Administration Committee has examined the Films, Videos, and Publications Classification (Commercial Video on-Demand) Amendment Bill and recommends that it be passed with the amendments shown.

This bill aims to reduce the potential for harm to consumers from viewing inappropriate content while using commercial video on-demand platforms. Currently providers of commercial video on-demand content are displaying inconsistent labels and consumer information, or none at all, for content available on their platforms. This is because of a gap in current legislation where on-demand online content in New Zealand is not subject to the mandatory labelling requirements that films for cinematic or DVD release are.

The bill would amend the Films, Videos, and Publications Classification Act 1993. It would require commercial video on-demand (CVoD) content that is made available in New Zealand to display appropriate and consistent labels. These labels would provide information about the content’s rating or classification, and a description so that consumers can make informed decisions about what to watch.

This commentary covers the main amendments we recommend to the bill as introduced. We do not discuss minor or technical amendments.

Clause 2 of the bill as introduced would bring the operational provisions in this legislation into force on 1 January 2021 while supporting provisions would commence on 1 July 2020. The intention is that, from six months after enactment, specified CVoD providers would be required to label all new content that was added to their platform. From twelve months after enactment, specified CVoD providers would be required to label both new and existing content on their platforms.

We propose amending clause 2 so that the commencement date for clause 14 would be 1 July 2020. This would enable the Office of Film and Literature Classification (the Classification Office) to approve specified providers’ self-rating systems in advance of 1 January 2021, ensuring that providers were ready to comply on this date.

Clause 4(1) would amend section 2 of the Act to insert a number of new definitions including “commercial video on-demand content”, “CVoD online rating tool” and “specified CVoD provider”.

The definition of CVoD content is meant to cover any video on-demand content that is made available to New Zealanders for a fee or other arrangement. Other arrangements would include instances where the subscription fee for a service is waived because a customer receives it for free as part of a promotional deal associated with that service or another service, such as bundled with an internet or mobile phone plan. However, the definition should not cover video on-demand services that are provided by broadcasters as a part of a pay-TV package. In these cases, the video on-demand service is an extension of, or alternate mechanism to access, the pay-TV package, rather than a standalone CVoD service.

To ensure such broadcasters are not covered by the definition, we recommend amending the definition of “commercial video on-demand content” to remove the words “whether or not it is packaged with another service” and adding a new paragraph to provide that video on-demand content made available as part of a pay-TV package is not covered, if that content has been classified in accordance with a code of broadcasting practice approved by the Broadcasting Standards Authority.

The definition of “specified CVoD provider” aims to give clarity and certainty about which CVoD providers are regulated by the bill, by listing those providers in new Schedule 4. We recommend amending the definition to remove references to a division or affiliate of companies, as these words complicate the definition unnecessarily and do not substantively add to its legal effect.

We do not think it is necessary for the bill to distinguish the “CVoD online rating tool” from other forms of approved self-rating systems. We therefore recommend removing the definitions of “CVoD online rating tool” and “self-rating tool” from clause 4. References to “self-rating tool” throughout the bill should be replaced with “approved self-rating system”. References to the CVoD online rating tool should also be removed from the bill.

Clause 4 as introduced would amend the definition of “film” in the Act so it included video on-demand content. This means that the Act’s existing requirements that apply to classifying and rating films would also apply to video on-demand content.

The inclusion of video on-demand in the definition of “film” would mean that advertisements for video on-demand content would be captured by the definition of “film poster” and would become subject to labelling obligations under the Films, Videos, and Publications Classification Regulations 1994. These obligations are designed for print advertisements and are not useful for online digital advertisements, which are the likely medium for advertisements for commercial video on-demand. For this reason, we recommend amending the definition of “film poster” to exclude video on-demand content.

Clause 6 as introduced would amend section 8(1) of the Act, which lists the types of films that are exempt from labelling requirements. The amendment would insert section 8(1)(r) to add to the exempt list any video on-demand content made available by a person who is not a specified CVoD provider. This would mean that the requirement to rate and label video on-demand content before making it available to the public would only apply to the specified CVoD providers listed in new Schedule 4.

We recommend amending clause 6 to add a further exemption to section 8(1). It would cover video on-demand content that was uploaded by a user of a specified CVoD provider’s online platform but was not commissioned by the provider.

We also recommend amending clause 6 to simplify the wording of the legislation. As introduced, in order to apply the existing exemptions in section 8(1) to CVoD content, the bill relies on a reference to section 6 in new section 46B(1)(a). We think this approach is unclear. Instead, we recommend amending clause 6 so that section 8(1) refers directly to section 46B.

Clause 7 would insert new Part 3A, stipulating the new requirements for labelling CVoD content made available by specified providers. The purpose of this Part is to reduce the risk of psychological and physical harm to people who view CVoD content, particularly vulnerable people and children. It would do this by requiring specified CVoD providers to provide better information about the content, to enable consumers to make informed viewing decisions. We recommend inserting new section 46AAA to state this purpose.

New section 46B would require specified CVoD providers to rate and label the CVoD content that they make available in New Zealand. We note that some submitters do not see a need for the requirements in new section 46B, maintaining that providers are already self-regulating content, and double regulation is not necessary. (The New Zealand Media Council (NZMC) has established a voluntary CVoD classifications code of compliance for commercial video on-demand. This code is modelled on the Pay TV Code under the Broadcasting Act.) There is a lack of consistency between how different CVoD providers label their content currently, and we do not believe that the existing voluntary NZMC regime for CVoD content is sufficient to ensure clear and consistent consumer information across all CVoD providers.

We recommend making a number of changes to sections 46B to 46F to improve the clarity and workability of the legislation. We propose deleting the reference to rating, since this is a component of the labelling processing in most cases, and does not occur when content has been previously classified. Instead, the focus would be on the key requirement that content be labelled.

We recommend that the requirements in relation to labelling should be set out in the following order: if an existing label or classification exists, the content must use that label; if no label or classification exists, a specified CVoD provider has the option to use an approved self-rating system or to submit the content to the labelling body.

New section 46C would apply if CVoD content had previously been labelled or classified in accordance with the Act. It would require specified CVoD providers to apply the existing label or classification and description to the content.

New section 46D would require a specified CVoD provider to use an approved self-rating system to label content, or refer it to the labelling body, if it has not previously been classified or labelled.

If use of a self-rating tool identified the content as potentially objectionable, the provider would need to refer the content to the Classification Office for classification.

We think this Part should describe, at a high level, what the self-rating system is to achieve, and recommend inserting new section 46DA to set out the factors that an approved self-rating system must take into account when determining a rating and description. It would indicate what the content descriptions are intended to communicate. It would serve as a reference point for specified CVoD providers about the expectations they must meet under the new regime, and for the Classification Office in monitoring compliance.

As introduced, new section 46E would allow specified CVoD providers to apply to the Chief Censor for approval of a system to rate and label CVoD content. The Chief Censor could enter into an agreement with a specified CVoD provider that set out the terms and conditions under which the provider was approved to use their own system to rate and label the content they make available in New Zealand.

We recommend that section 46E be amended so that the approval of self-rating systems, and the terms and conditions of that approval, are directed to meeting the requirements set out in section 46DA.

We recommend amending sections 46E and 46F, and inserting section 46FA, to clarify the Classification Office’s powers in relation to cancelling self-rating system agreements and suspending approvals.

New section 46F(1) would require the Classification Office to annually review specified CVoD providers’ use of self-rating systems. We recommend inserting new subsection 46F(2) to provide that the Chief Censor may require a prescribed fee for exercise of powers under section 46F. The power to prescribe fees already exists in section 149 and we recommend removing new section 46F(4) to avoid duplication.

New section 46FA would enable the Chief Censor to suspend approval to use a self-rating system if the provider is not operating the system in accordance with the terms and conditions of approval. The Chief Censor would be required to give reasons for the suspension. Subsection (3) would enable the Chief Censor to cancel approval after giving the provider a reasonable opportunity to address the concerns, if the concerns were not addressed.

Clause 11 would amend section 6 to clarify that the section applies to video on-demand content that is made available to people in New Zealand. As we are recommending amending clause 6 of the bill so that section 8(1) refers directly to the self-labelling requirement in section 46B, we also recommend amending clause 11 to insert a new section 6(3) that cross-references section 46B.

Clause 12 would amend section 9, which deals with applications to the labelling body for the issue of a label. The amendment clarifies how the section applies to CVoD content that a specified CVoD provider has already rated using an approved self-rating system.

The current wording in section 9(1) does not clearly include a specified provider who intends to make CVoD content available in New Zealand. We recommend amending section 9(1) to explicitly refer to a specified CVoD provider who intends to make the film available as commercial video on-demand content in New Zealand.

The details of how the labelling body assesses film content are currently specified in regulations. These will need to be amended to accommodate CVoD content. The proposed amendment to section 9(2) is necessary to retain options for assessment where content has already been self-labelled. We recommend that the wording proposed in section 9(2)(a) be amended so that it does not exclude content that is identical to self-labelled CVoD content from being considered by the labelling body.

Clause 13 would replace section 36(2), which deals with the issue of labels in cases where the Classification Office has examined a film. The amendment would make it possible for the Classification Office to direct a specified CVoD provider to issue a label.

We recommend amending clause 13 to insert new section 36(1A) that covers CVoD content that is referred to the Classification Office as part of the self-rating process.

Section 36(4) means that the Classification Office cannot direct the labelling body to issue a label in respect of a film that it has classified as objectionable. We recommend amending clause 13 so that section 36(4) covers specified CVoD providers as well as the labelling body.

Section 36(5) provides that where the Classification Office has directed the labelling body to issue a label for a film, any label that was previously issued for that film by the labelling body will be cancelled. We recommend amending section 36(5) to include additional labels previously assigned to CVoD content among those deemed to be cancelled where the Classification Office has directed that a new label be issued in respect of any film.

Clause 14 as introduced would amend section 77 to give the Classification Office some new functions. They are to develop, provide, and maintain the CVoD online rating tool for use by specified CVoD providers; to approve self-rating systems developed by specified CVoD providers; and to review the use of the self-rating tools.

The CVoD online rating tool has been designed by the Classification Office and will become a component of some approved self-rating systems used by CVoD providers. To reflect this, we recommend that subsection (aa) is amended to clarify that the Classification Office’s function will be to support and facilitate the development of approved self-rating systems by specified CVoD providers. We also recommend inserting cross-references to relevant provisions in Part 3A in the paragraphs setting out functions of the Classification Office.

We recommend that subsection (aab) is inserted so that another function of the Classification Office will be to provide and maintain a database of labels. We believe that the Classification Office should be responsible for the provision and maintenance of a database of all films that have been labelled under the Act, including the prescribed information for each film. We recommend amending clause 14 to include the new function in section 77 of the Act. We also recommend inserting new clause 12A, which would insert new section 11A into the Act, to set out this new function.

We also recommend that a new regulation-making power be inserted to prescribe the information to be held in the database. This is contained in proposed new clause 18 to amend section 149.

We recommend inserting clause 13A to amend section 38, which sets out requirements for the Classification Office to provide written notice of decisions that it makes on publications referred to it. This clause would amend section 38(2)(d) so that it accounts for the self-rating process in addition to the existing labelling body process. We think this clause is necessary to ensure that CVoD content is subject to the same processes and transparency requirements as other publications for which the Classification Office makes classification decisions.

We recommend inserting clause 14A to amend section 120, which outlines offences related to labelling. This amendment is necessary to clarify that offences in section 120 of the Classification Act cover CVoD content.

Section 27(5) of the Act sets out the conditions that may be imposed by the Classification Office if a film that has been classified as restricted is publicly displayed. This also includes conditions on the display of film posters for that film.

We recommend inserting Clause 12B to clarify that section 27(5) does not apply to video on-demand content. We think this is necessary as the conditions outlined in section 27(5) are not appropriate for CVoD content, which will be made available online.

Instead, we recommend inserting subsection (6), to provide for conditions that may be imposed with regard to the display of advertising material for video on-demand content that has a restricted classification. These conditions would apply to both the physical and online display of advertising material for CVoD content.

Under section 131 of the Act, it is an offence to possess objectionable publications, while section 131(5) sets out defences to the offence. A specified CVoD provider should not be liable for an offence under sections 131 or 131A where they have identified CVoD content as potentially being objectionable, and then referred the content to the Classification Office for classification under Part 3A, section 46D. We recommend inserting new clause 17 to amend section 131 of the Act and provide a defence for specified CVoD providers who have CVoD content that is referred to the Classification Office for classification in accordance with this Part.

Section 149(i) of the Act currently allows regulations to recommend the form and content of labels to be used for the purposes of the Classification Act and to regulate their display and advertising. We recommend amending section 149 to explicitly provide for regulations to prescribe the requirements for the display of labels on CVoD content, and advertisements for CVoD content, provided by specified CVoD providers.

We also recommend amending section 149 to enable prescription of procedures relating to the self-rating process. This would help make the requirements of the self-rating process clearer for specified CVoD providers.

We also recommend a new regulation-making power that enables factors to be prescribed that must be taken into account when ratings are determined by an approved self-rating system.

Finally, we recommend including a new regulation-making power to prescribe the information that must be included in the film database that the Classification Office is required to provide and maintain.

Clause 1 of Schedule 1AA refers to classifications of content made in accordance with a code of broadcasting practice before commencement of the legislation. It means that, if CVoD content uploaded before 1 July 2020 has been labelled in accordance with the Broadcasting Act 1989, that classification must be treated as if it were a rating made by the provider using the CVoD online rating tool.

We recommend that this be amended to make it clearer by providing that if content has been uploaded by a specified CVoD provider before 1 July 2020 that has been so labelled, the provider is not required to issue a label for the content under new section 46B.

Clause 2 of Schedule 1AA refers to unrated CVoD content made available before 1 January 2021. The rating and labelling requirements in the bill would not apply to this content until 1 July 2021. However, the Chief Censor may require a specified CVoD provider to issue a label in respect of this content before 1 July 2021.

The reason the bill proposes a delayed commencement date for some provisions is to allow time for specified CVoD providers to establish systems and processes to comply with the bill. As previously noted, however, we think it would be useful for the Classification Office to be able to approve specified providers’ self-rating systems in advance of 1 January 2021, to ensure providers are ready to comply on that date.

For this reason, we recommend inserting Clause 3 of Schedule 1AA to enable the Classification Office to approve specified CVoD providers’ self-rating systems in advance of 1 January 2021.

Schedule 4 sets out the list of CVoD providers who are captured in the definition of “specified CVoD provider” in clause 4 and are regulated by the provisions of the bill. This Schedule could be amended by an Order in Council, made on the recommendation of the Minister of Internal Affairs.

We note that the Schedule aims to name the legal entity that a customer enters a relationship for CVoD services with. This can be a company registered in New Zealand or elsewhere. We understand that Lightbox has been acquired by Sky Network Television Limited, so Lightbox is now regulated because Sky, its parent company, is named in the Schedule. We recommend amending Schedule 2 to remove “Lightbox New Zealand Limited, a company registered and based in New Zealand” from the new Schedule 4.

Sony Corporation is the ultimate parent company of PlayStation Video Store. It is also parent of “Sony Interactive Entertainment Europe Limited”, the company currently in the Schedule. We recommend amending Schedule 2 to replace “Sony Interactive Entertainment Europe Limited, a company registered and based in the United Kingdom” with “Sony Corporation, a company registered and based in Japan”. This would ensure that the PlayStation Video Store is covered no matter which subsidiary of Sony Corporation provides the service at any point in time.

National members of the committee thank the committee secretariat and officials from the Department of Internal Affairs, the Classifications Office and others who provided advice and engagement on this bill. A number of concerns of National Party members have been discussed and addressed through the consideration of this bill which will ensure a number of industry stakeholders will be less impacted by the proposed regulatory regime.

However, National Party members are still deeply concerned this legislation will lead to the geo-blocking or inaccessibility of content for New Zealand consumers of media on digital platforms which could lead to a material deficit in international content or a reluctance for some global content providers to operate within New Zealand’s regulatory regime. We are also concerned the mechanisms of this bill allow for the increased possibility of unauthorised or illegal content access and the decision by more consumers to use virtual private networks to avoid overbearing censorship or regulatory regimes in New Zealand.

National members of the committee believe that the legislation should be tabled for further discussion once the Government’s long delayed media sector review takes place as we feel the Government’s failure to consider this issue within the scope of that review will mean this House will have to re-ligate the topics of discussion outlined in the Bill.

In noting this, we also believe that the commencement date provisions in the bill are too immediate and the National Party will seek to introduce appropriate supplementary order papers regarding the commencement date and other timings of the implementation of the effects of the bill with the committee’s proposed changes and will vote for the bill at second reading to allow for this.