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Netflix eyes French market despite protectionist hurdles


Text by Tony TODD

Latest update : 2014-03-25

US-based movie streaming service Netflix, which is looking to further expand its European operations, is set to launch in France “this autumn” despite tough rules intended to protect French culture from Anglo-Saxon dominance.

Executives from the popular American web service on Monday met French Culture Minister Aurélie Filippetti who said Netflix was “interested in the French model” despite the challenges of the market.

“I’ve got nothing against Netflix setting up in France,” the minister told French daily Le Figaro in an interview published Tuesday.

“We are absolutely not going to close the door to them, but they need to get used to the differences with the French market and how they can participate constructively.”

France has some of the world’s toughest rules for protecting its home-grown film and music industries, and none of these will make it easy for a foreign service like Netflix to make a serious dent in the market.

The company will face higher taxes than it is used to, including 19.6 percent VAT, as well as obligatory investment quotas from its profits.

“Subscription Video on Demand” (SVOD) services based in France with annual earnings of more than 10 million euros are required to hand over 15 percent of their revenues to the European film industry and 12 percent to French filmmakers.

Meanwhile, France insists that 40 percent of mainstream broadcasters’ content must be in French, while existing SVOD providers – including Canal Plus’ “Infinity” and Wild Bunch’s “Filmo TV” – are currently forced to wait 36 months after a film’s cinema release before they can stream that content online.

Veto threat over ‘Cultural Exception’

These rules - the so-called "Cultural Exception" - mean that France retains a healthy film and music industry despite fierce competition from the Anglo-Saxon world.

And while some commentators have said this model is outdated as ever-increasing numbers of people get their audiovisual entertainment online rather than from more traditional TV and radio media, France is nevertheless continuing to do all it can to protect its homegrown industries.

In June 2013 France refused to back down when US negotiators objected to French insistence on ringfencing the Cultural Exception from US-EU free trade talks (which are due to be finalized this year).

The French position was upheld by the EU after France threatened to veto any agreement that did not protect its audiovisual industry.

France has also introduced legislation to punish Internet users who illegally download pirated content from the Internet, although in practice this has led to very few convictions while the rate of downloading in France remains high.

And in November 2013 a Paris court ruled that French telecommunications firms and Internet search engines were told to cut off access to 16 websites offering access to illegal copies of copyrighted videos.

While courts have previously ordered Internet access providers to block targeted websites before, this was "the first time search engines have been ordered to de-list pirate websites and it is a crucial step towards respecting the law on the Internet,” a group of bodies representing film producers and distributors said in a statement.

Date created : 2014-03-25