How a Russian Decree on Online Streamers Could Hit Netflix, Hollywood

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Netflix is also to be affected, although it is not yet clear how fast the measure will be enforced.

Russia's culture ministry has introduced a requirement of mandatory exhibition licenses for all movies and television series offered by online video services in a move that industry representatives fear will hurt the online video streaming business and Hollywood alike.

While online stores selling movies, such as iTunes and Google Play, are exempt from the requirement, all online video services operating in Russia, including Netflix, will have to comply.

A spokesman for Netflix declined to comment on the issue.

Until now, exhibition licenses were required only for theatrical exhibition, but the culture ministry's requirement comes as a game-changer for the segment, which has been showing growth over the last few years.

The culture ministry hasn't yet made any practical steps to enforce the regulation, but local online video services are not waiting for fines or warnings to be issued.

As a result of the requirement, Russian video services are expected to cut back on the acquisition of content, much of which is Hollywood fare, possibly reducing Hollywood's revenue from a lucrative segment.

The future of services like Netflix is already uncertain, as a large proportion of their content, specifically television series, don't have exhibition licenses.

"Saying that a requirement of that kind is killing the online video industry in Russia would be too mild," Marina Surygina, general director of online video service TVzavr, told The Hollywood Reporter. "To function normally, all rights holders providing content for online video services, social networks and video hosting services, will have to pay 3,500 rubles ($60) for every single item and wait for, probably, 10 years to obtain the exhibition licenses as the culture ministry just won't be able to cope with that number of applications."

TVzavr has begun requesting exhibition licenses from the rights holders whose fare it is offering, Surygina said.



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