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That’s how they’re funded. Your new favourite Icelandic Noir drama series can’t possibly get funded by Icelandic sources alone. So they pre-sell the rights in various territories to gain the funding required. So 5% from the BBC in the UK, 5% from NRK, 10% from ARTE etc.
In return for the investment, those broadcasters get to exploit the show on their own services. This is the basis of funding for most high-end dramas and feature films. Even the BBC, which thanks to the English language and its large annual budget was largely immune from this, has had to cut back and can only move forward by pre-selling territorial rights (see Doctor Who).
Take away territorial exclusivity and you’re left with the few films and shows being made will be ones for international streamers which are American with different accents (like Sex Education or the Harlan Coben adaptations) or very tiny budget things that no-one cares for.
That sounds very solvable. I'd imagine e.g. BBC, ARTE, etc. would form a joint holding organisation that buys pre-rights and uses them as distributors. Or perhaps they still individually buy the pre-rights, and while they technically will have permission to show them everywhere, since they don't serve all the market, they don't need exclusivity. Or perhaps they all decide to grab the opportunity and start to serve the entire EU market, making them players by themselves that are able to stand up to US counterparts.