Justice Department Warns MPAA Over Rule Changes

With Steven Spielberg‘s ongoing campaign to get the MPAA to alter its submission rules to make it more difficult for streaming movie studios like Netflix to qualify for Academy Award consideration, the US Department of Justice has warned that doing so may constitute an anti trust violation.

“In the event that the Academy — an association that includes multiple competitors in its membership — establishes certain eligibility requirements for the Oscars that eliminate competition without procompetitive justification, such conduct may raise antitrust concerns,” – Makan Delrahim, chief of the DOJ’s Antitrust Division

The US Department of Justice says that should the Academy agree to change Oscar rules and make it more difficult for streaming media companies like Netflix and Amazon Prime to qualify. The result could be a textbook case for the Sherman Anti-Trust Act, which, under Section 1 of prohibits anticompetitive agreements amongst competitors, effectively targeting others. “Accordingly, agreements among competitors to exclude new competitors can violate the antitrust laws when their purpose or effect is to impede competition by goods or services that consumers purchase and enjoy but which threaten the profits of incumbent firms,” Delrahim wrote.

Alfonso Cuarón won Best Director, Cinemtographer and Foreign Language Film, for ROMA. Image Credit – NETFLIX

Currently, Academy rules state that in order to qualify for best picture consideration, a film must be in at least one movie theater for one week. Netflix followed those rules to the letter for ROMA, a film that garnered awards for Best Director, Best Foreign Language Film, Best Cinematography, and a nomination for Best Picture.

“If the Academy adopts a new rule to exclude certain types of films, such as films distributed via online streaming services, from eligibility for the Oscars, and that exclusion tends to diminish the excluded films’ sales, that rule could therefore violate Section 1.”

Delrahim added that if the Sherman Act is designed to protect outside competitors from having the consumption of goods and services impeded and therefore, profits can be diminished due to actions taken by incumbent firms. If traditional media outlets, like MPAA member movie studios can limit competition coming from disruptive and innovative distribution services, then they can limit innovation and protect their bottom lines at the expense of the competition.

Spielberg, who is an Academy Board member, has been lobbying the board to make changes when it reconvenes in April. HIs argument being that streaming services like Netflix represent a clear and present danger to the art form, and the vision of the directors, who make their films to be seen in a movie theater, not on a television.  Moreover, many exhibitors agree with Spielberg on this issue. “We consider giving three awards to Roma a devaluation of the Oscars,” said Detlef Rossmann, president of art house cinema association CICAE, in an interview with the Hollywood Reporter.

Spielberg’s goal is to make it more difficult for companies like Netflix to qualify for an Academy Award, by clearly defining what separates a film meant for the theaters, with a film designed for television, or more specifically, streaming. So, when the film’s primary distribution outlet is through Netflix, and they just do the bare minimum theatrical distribution to qualify, that qualification simply wouldn’t exist.

Netflix argues that streaming portals give movie fans access to films that they wouldn’t ordinarily be able to see, whether due to limited distribution, or the high price of movie tickets. That argument gives support to smaller films, like ROMA, which wouldn’t normally enjoy a large audience due to limited art house release. I see both points, however, Netflix played by the rules, and they earned their awards. But by adhering strictly to the letter of the rules, Netflix sought an advantage.

Though it’s clear that award winning films enjoy a “bump” in box office as a result of hype that is generated by winning an Oscar, the real question is, will not winning one impact a streaming service that charges an all you can eat monthly fee? Will it drastically affect Netflix’s bottom line for smaller or experimental films that can’t win awards due Oscar rules?  And if not, then does anti-trust truly exist? Sounds like a court case waiting to happen.

To change the rules, plays right into the Department of Justice’s anti-trust concerns, and it seems to me that the wise thing to do is nothing. The MPAA should leave the rules as it is, or perhaps expand the limit to how many theaters a film must play in. Netflix can solve this problem itself, though, by expanding the release of their films to more than just a handful or a single art house theater. If their goal is to let more people see their films, then what’s wrong with the shotgun approach?

The solution is more competition. Not less.

Hat Tip – Variety

About James DeRuvo 801 Articles
Editor in Chief at doddleNEWS. James has been a writer and editor at doddleNEWS for nearly a decade. As a producer/director/writer James won a Telly Award in 2005 for his Short Film "Searching for Inspiration. James is a recovering talk show producer from KABC in Los Angeles, and a weekly guest on the Digital Production Buzz with Larry Jordan.

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