French Telecom Giant Orange Won't Offer Netflix on Cable Boxes at Launch

DOWN: Reed Hastings

Netflix posts a $5 million quarterly loss -- its first since 2005 -- even as the company's subscriber base grows to 26 million and CEO Hastings' pay jumps 68 percent to $9.3 million for 2011.

Orange CEO Stephane Richard says the company will not provide the subscription VOD service to its cable customers via set-top boxes.

PARIS – French cable provider Orange won't offer Netflix's video streaming service through its set-top boxes when the company launches its subscription VOD service in the country in September, Orange CEO Stephane Richard said Tuesday.

“Netflix still poses a number of questions for us,” Richard said in an interview on news network BFMTV. “The first question is how Netflix will participate in financing the infrastructure it uses to deliver its content. Netflix accounts for 30 percent of U.S. fixed networks at peak times. It’s huge and it raises the issue of economic relations between telecom operators and content providers.”

The 10 million subscribers of Orange, which bundles TV and Internet services, will still be able to access the website.

The lack of carriage through the set-top box is not anticipated to affect the launch of the streaming behemoth, which only started being carried through cable set-top boxes late last year after partnering with the U.K.’s Virgin Media, and later Sweden’s Com Helm and Denmark’s Waoo! pay TV service.

The second sticking point, according to Richard, is how the streaming service will participate in the French film financing system and cooperate with French laws while operating from outside the country.

PHOTOS The Best Costumes of Comic-Con 2014

“The other question that arises is how Netflix will fit in the French ecosystem in audiovisual creation, media chronology and obligations required in France,” he said.

French cable and television networks are required to contribute to the film financing fund, and currently there is a 36-month waiting period window from theatrical distribution before a film can be made available on SVOD. 

Culture minister Aurelie Filippetti has said she will seek to shorten the SVOD window to 24 months; in the meantime, Netflix has said it will abide by the waiting period within French borders. However, operating from the Netherlands, it will not be subject to the French participation rules that require funding cultural creation including French- and European-based content.

Netflix has said that it will launch with a roughly 80/20 split between American and local content, as it has done in other markets, and a French program is said to be in the works to air next year. While still under wraps, rumors have placed the production in Marseille, while Netflix CEO Reed Hastings has joked they will produce House of Versailles.

PHOTOS Meet 12 of Emmy's First-Time Acting Nominees

Orange has 10 million subscribers in France, and is said to be working on its own Netflix rival that will incorporate the programming of its Orange Cinema Series, which includes HBO series and Warner Bros. films.

In a speech earlier this month, economy minister Arnaud Montebourg said that he wants Orange to become the French rival to Netflix, and to be “the flagship carrier of our digital revolution” to combat what he termed the "Anglo-Saxon offensive." The former France Telecom rebranded as Orange last year after privatizing in 2004, but the government still owns roughly 13 percent of the company.

Richard said that negotiations are still underway between the government and Netflix, and that he may reconsider carriage after Netflix's launch in France. A Netflix spokesperson declined to comment.