MIPTV: How CanalPlus CEO Maxime Saada Is Taking on Netflix
The head of the French pay TV giant has slashed costs and shifted the company's business model towards the on-demand world.
CanalPlus CEO Maxime Saada has had a tough few years.
After a long rule as France's undisputed premium television channel, Vivendi-owned CanalPlus has found its position under attack by the rapid rise of Netflix, which has eroded the subscriber base for the pay TV giant and cut into its profit margin.
Over the past three years, Saada has moved decisively to cut the fat by slashing €450 million ($507.5 million) from CanalPlus' budget and shuttered its failing CanalPlay streaming service, which had attempted to take on Netflix with a pricey premium offering of sports, series and shows not unlike those available on CanalPlus' traditional pay TV platform.
“We have been basically getting fit to fight the global OTT players,” says the exec, pointing to the company's cost-cutting and the shift towards leaner, lower-cost services.
The most recent move is the SVOD Canal+Series service, which combines homegrown series, including new originals Baron Noir and Hippocrate, with programs from FX and Showtime and is aimed at France's finicky younger audience.
“We launched with 150 series. That's already five years of basically anyone's life, if they were to watch every one of them,” Saada notes. “It's not a Netflix clone or competitor, but a complementary service that will compete on a quality and not quantity proposition.”
Saada has also rejigged CanalPlus' business model in traditional pay TV, offering slimmer, more flexible packages, a move that's led to a rebound in subscriber numbers and helped strengthen the company's bottom line.
With more than half of subscriptions coming from its territories outside of France — particularly Poland, Asia and sub-Saharan Africa — CanalPlus aims to hit 30 million subscribers in the next two years. “We are looking at a critical mass, which we believe is required to compete against the massive OTT platforms we face today,” Saada says.
And Saada believes CanalPlus can compete, even with the biggest names in the streaming world. He is set to roll out CanalPlus' MyCanal app to the firm's territories across Africa and Asia by the end of this year, with a planned global drop likely after 2020.
CanalPlus, at the moment, might not be a global brand, but Saada notes that Netflix reached 5 million subscribers in France without even opening an office in the country. The streaming giant has European bases in Amsterdam and London and recently opened a production hub in Spain. Netflix also plans to open a production office in Paris later this year.
“It's impressive they could reach those numbers without a single entity or person working for them in the French territory,” Saad highlights. “I don't see any reason why we wouldn't be able to do something similar and go into countries with an OTT platform." He didn't disclose specific markets that CanalPlus could target.
Amid the recent cost-cutting and subscriptions boost, the company also has the deep pockets to expand through acquisitions. “We have the necessary resources to seize opportunities and believe there are a lot of opportunities out there,” says the exec, pointing to companies that have bet — badly — on sports rights and might be prime for the picking. “We see a lot of companies in trouble in Europe and Asia,” he says. Saada, however, dismissed rumors that CanalPlus might be circling pay TV competitor beIN Sports. “That's not in the books,” he insists.
CanalPlus already outspends Netflix in Europe. The French group's $3.6 billion annual spend on content dwarfs the reported $1 billion Netflix is set to spend on European content this year, but Saada is looking to better leverage that money by retaining more ownership of the properties the company backs.
In a wide-ranging interview with The Hollywood Reporter, Saada explains why he thinks CanalPlus is now fit to fight and how the French giant will adapt to new global competitors in the form of Apple and Disney+.
Let's start in France: When it comes to in-house production, what changes are you pushing for in the French system?
That if we finance 100 percent of a series, we own 100 percent, and if we finance 70 percent, we own 70 percent. It's simple and fair. There is resistance from the producers and there's a lot of them, but I think now, industrially, we need to be able to compete with the entities across the globe. In Spain, in the U.K., in Italy, it's what's already in place. [Spanish series] Money Heist belongs to the broadcaster Antena 3, who then sold the rights to Netflix. We want to build entities that can compete across the globe. ... For example, [crime series] Midnight Sun was a co-production with SVT. We co-produced it. We don't own the rights. Lagardere's Atlantique was the producer, so they have the rights. But we co-financed it fully with SVT. So as two broadcasters united, we were really involved in everything — the casting, our teams review the scripts and give notes and everything — yet we don't own the rights.
That's why I'm a little bit frustrated. Every broadcaster that wants to turn into a platform is asking for this change. But for us, it's a bit more dire because international is a big part of our strategy. We want the international markets to substantially finance the productions we produce and distribute all across Europe and the world. Our aim is for our movies, including our French movies, to be financed more than 50 percent by international sales. No other French company has the same international stake or ambition that we have. So for us the situation is a bit more dire than for the others.
With Netflix focusing on hyper-local programming, including 15 productions in France, will there be a slowdown in pan-European co-productions?
No, I think it's the opposite. There's a stronger and stronger reaction to Netflix and its strategy of vertical integration. We're seeing a number of initiatives where the incumbents are finding that setting up alliances with other incumbents is a good way to resist. I see a lot of players across Europe frustrated because they have grown and nurtured talent that has then been signed by Netflix and so there is a defensive reflex that will lead to growing alliances between incumbents rather than less.
But I honestly think Netflix has done a lot of good, because they have made all of us move in a positive way. Netflix was, of course, a big reason for the move to digital. The other thing is that these guys are asking people to pay for content and that's why I say that Netflix is in my corner. My number one competition is piracy. My job is to convince people to pay for content and in that way Netflix is actually growing my market, and then my only ambition is to gain market share and that's easier than when you are in a market that is declining, like TV advertising. In my book, CanalPlus is in a market that is growing globally and has a lot of assets to take advantage of that growth, and in a large part that's because of Netflix.
With Amazon, Apple and others entering the market, will there be additional pressures from all sides?
There will be a lot of competition, you are right, but there will be partnerships as well. There was a lot of press about TF1 making the first production with Netflix [big-budget French-language period drama Le Bazar de la Charité], but we were actually first. We produced [the Michael C. Hall-starrer] Safe, and that was prefinanced by Netflix. We had the rights for France for a few weeks, and then it went on Netflix around the world, same sort of deal [as with TF1]. We've done a number of deals with Amazon, and we were the first non-American partner with Apple and their new service to co-produce an adaptation of a show called Calls. These guys are partners and customers and a way of growing the market for StudioCanal.
But aside from partnerships, other platforms will mean increasing competition...
There is a big movement right now to go direct-to-consumer. Every day there's a new company doing "the Netflix of this." Not only Disney, Warner or Universal, but also sports owners are saying we're going to go direct and create an app and it's going to be easy. There will be a big cycle for three to five years, and a lot of these initiatives will die because people will not subscribe to 100 offers, and the ones who resist will either be the very, very big and powerful — Netflix, Apple, Amazon and maybe Disney and others who have one strong anchor content. We aggregate our model; it's unique in that we are premium generalists with sports, series and documentaries. In the end, when you see 100 offers on the table and you want to subscribe to one or two, this model will preserve CanalPlus from that in the next two years.
You had a deal with Disney before. Will that continue once the Disney+ streaming service launches?
I don't think so, but you'll have to ask them, because, as you know, we have media chronology. If they want to [show the movie theatrically] first, the first [SVOD] window is going to be CanalPlus or Orange. An American platform is not going to be able to broadcast or use first windows. So first window is going to be a discussion. Second window, 15 months after theatrical release, they could launch an OTT offer for their movies, but they have to decide if they want to do that.
How is the change in windowing rules in France, which was just announced recently, affecting you?
We can now make movies available a shorter time frame after theatrical, starting at six months, it used to be 10, so we are moving closer to theatrical release, which makes our offer more attractive. Our subscribers are responding very positively to that.
Second, there will be a possibility for competing platforms to broadcast movies sooner than in the past. It used to be 36 months, and now if the companies are deemed "virtuous" they can make movies available as soon as 15 months. That's nine months after CanalPlus, so we keep our advantage almost a year before everyone else. [But] if they want to do that, they will have to invest 1 euro per month per subscriber in prebuying movies — not by buying already finished films. For Netflix, which has announced 5 million subscribers [in France], it would be $68 million in prebuying French cinema if they want to be able to broadcast all kinds of cinema 15 months after theatrical release. If they don't, they will probably still have to be broadcasting movies 36 months later. So for me, honestly, it gives an ability for the first time for American OTT platforms to come in with second-run movies, but the first run is protected and there's a chance to get additional financing from other companies, and I'm fine with that. We finance most of French cinema today.
Do you see Netflix or Apple becoming "virtuous"?
I don't want to speak on their behalf, but I don't have a feeling Netflix is going to do that, given their position on wanting to release movies day-and-date.
Will Salto, the proposed SVOD service from France Televisions, TF1 and M6, also be a competitor?
It's one of the initiatives I mentioned, a lot of players are taking initiatives to resist Netflix and their peers, that's one of them. I applaud the initiative. The only thing is they've said they would invest $17 million in the platform. We invest more than $113 million ... on MyCanal. It's a very competitive game. I think it's a good initiative for French players to create an alliance.
Do you think the French market in general is resilient enough to handle all the players coming in?
I don't. I think the French market is very IP-driven, so it enables newcomers to grow fast, like Netflix. But even if the value proposition is there, a big issue is piracy. … Our estimate is that we lose 500,000 subscribers a month to piracy.
Will CanalPlus begin to produce shows or content for online platform Daily Motion, similar to YouTube Premium?
I can answer definitely no. DailyMotion is ad-supported. We changed the strategy three years ago to focus on the 25-49 [demographic], which skews slightly older than platforms including Snap or Instagram and to focus on trusted sources of content. So I'm not going to be doing Twitch and showing kids playing games for three hours.
We have invested in our own monetization platform that we are finalizing now. We used to be dependent on third-party solutions; we won't be anymore and we have signed 500 new content partnerships across the globe — CNN, Vice, the NBA. We don't allow advertising on user-generated content, so we don't entice people to post content that is not high value because they won't get any money for it.
Right now everyone is talking about trusted sources. We made some bold moves, but the moves are now starting to pay off because we see more and more advertisers that want this brand-safe environment. We are onboarding platforms to buy and sell [ads]. We just signed an agreement with Google, The Trade Desk, where they connect to our platform to monetize. It has taken us 18 months to do that. So it's a long-term play, and we're very satisfied with our position and now will take the time for it to grow.
It seems there would be natural synergies between the Daily Motion platform and CanalPlus.
What I see is, at one point, probably not producing the content, but starting signing some exclusives or temporary exclusives to highlight the content from big media companies or content owners that want to promote their content with ad support. That's what we will do next when we are ready in the next 12 months. We are close to ready now.
And what about synergies with Universal Music Group as CanalPlus and Universal Music Group are both owned by French media giant Vivendi?
We have a number of movie and TV projects with Universal that are not public yet. It's an incredible source of talent. There is a lot of crossover as well of music talent that wants to go to cinema, and when you see the success of Bohemian Rhapsody or A Star Is Born, this was the year of music movies.