BRIEFER ON NETFLIX AND DICT MEETING

What are Over the Top Services?

Over the Top (OTT) services refer to any type of video or streaming media that provides a viewer
access to movies or TV shows by sending the media directly through the internet. Some of the
most popular OTT providers include Netflix, Amazon Prime Video, and Hulu.

Basically, Over the Top services use an internet connection to play TV shows and movies. Most
OTT providers have their own app, website, or page of some kind where a user can log in to
access the content available with the subscription.

What is Netflix?

Netflix is an American media-services provider headquartered in Los Gatos, California, founded

in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California. The company's primary
business is its subscription-based streaming OTT service which offers online streaming of a library
of films and television programs, including those produced in-house

What made Netflix different versus its competitors?

Over the top (OTT) viewing became popular with Netflix's sharp growth as it segued from simply
showing old movies and television shows to developing original content and distributing licensed
content more quickly.

How many subscribers does it have?

As of April 2019, Netflix had over 148 million paid subscriptions worldwide, including 60 million
in the United States, and over 154 million subscriptions total including free trials.

Regulation of OTT Services in the Philippines

The Department of Information and Communications Technology (DICT), together with the
National Telecommunications Commission (NTC) and other agencies attached to it, is the
Philippine administrative entity that has oversight and central charge of planning, developing,
and promoting information and communication technologies (ICT), including over-the-top (OTT)
TV, in the Philippines. On the other hand, The Movie and Television Review and Classification
Board (MTRCB), a filmed-content regulator, also has a role in regulating television content.
NTC Circular No. 02-05-2008, which enumerated specific services classified as value-added
services or VAS, providers of which are required to apply for a certificate of registration with the
NTC. The current range of services covered by the Circular includes virtual private network
services (i.e, the public Internet), application services delivered to/accessed by users or
subscribers (e.g., mobile banking, electronic payments, point of sale service, etc.) and content
program service (e.g., short video clips). So far, the enumeration has not been expanded to
include OTT technology or services. As a result, it remains unregulated in the Philippines for the
time being.

Thus, in the absence of regulations for OTTs, SVOD companies generally have free reign with
respect to pricing and payment methods, language, the use of URLs, and co-peering and co-
location agreements with ISPs, among others. Content-wise, there are also currently no laws or
regulations which require OTTs to deliver specific content, or which dictate what OTTs should
require from its content providers.

Can the DICT Regulate OTT?

Yes. Usually, DICT will issue a Memorandum Order containing the general policy on certain policy
directive and a direction for NTC to issue a detailed policy and regulation through a Memorandum
Circular. RA 10844 also directed the DICT to: “provide oversight over agencies governing and
regulating the ICT sector and ensure consumer protection and welfare, data privacy and security,
foster competition and the growth of the ICT sector (Sec 2.n).

ICT Sector is defined in the same law as: “those engaged in providing goods and services primarily
intended to fulfill or enable the function of information processing and communication by
electronic means. The ICT sector includes telecommunications and broadcast information
operators, ICT equipment manufacturers, multimedia content developers and providers, ICT
solution providers, internet service providers, ICT training institutions, software developers and
ICT-ES providers (Sec 3.d)

News related to Philippines and Netflix

 Jan 17, 2019- Netflix Philippines said the reported increase in subscription rates only
applies to US and select markets in Latin America and the Caribbean. Current subscription
plans in the Philippines range from P370 to P550 a month. "It is not applicable to the APAC
markets, including the Philippines,"
 April 11, 2019- From the creators of “Chef's Table,” “Street Food” explores the rich culture
of street food in some of the world's most colorful cities. Season one explores nine
countries across Asia and one of which is Cebu City.
 November 28, 2018- Filipino users are paying 28% more for their Netflix subscription than
US consumers, indicates a study conducted by Comparitech, a pro-consumer website
headquarted in the UK. The results show that with a library size of 3,835 and a monthly
subscription rate of P370 (or $6.97), Philippine subscribers pay an average of $0.00182 or
P0.0096 per title. Americans meanwhile, have a library size of 5,839 and a monthly
subscription rate of $7.99, which translates to $0.00137 or P0.072 per title.
Despite paying a bit more than the US, the Philippines is actually ranked 8th cheapest
place to consume the streaming service, at cost per month. According to Comparitech,
this is 16.8% cheaper than average ($0.00137 or P0.072 per title).