Why Russia's Foreign Ownership Restrictions on Streamers Do Not Affect Netflix

MOSCOW, RUSSIA -A general view of Red square and Kremlin-Getty-H 2016
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The online video giant will be able to continue to operate in the country as, according to Russian officials, it has fewer than 100,000 local subscribers.

Netflix will be not be among companies effected by from a recently enacted Russian law restricting foreign ownership of online video services as, according to government officials, it has fewer than 100,000 subscribers in Russia.

"By our preliminary estimates, Netflix doesn't have a sufficient number of subscribers to be affected by the law," a government source tells The Hollywood Reporter.

The law, enacted on July 1, stipulates that foreign ownership of online video services operating in Russia should be limited to 20 percent stakes, but the restriction only applies to services with a daily viewership of over 100,000.

Netflix hasn't revealed how many subscribers it has in Russia, and Roskomnadzor, the Russian communications watchdog in charge of enforcing the law, has not yet explained how it is going to measure viewership of online video services.

Netflix has never commented on the law or its ramification for the company.

The law is believed to be largely provoked by Netflix' launch in Russia in early 2016 as local online video services complained the U.S. streaming giant, the only major international online video service available in the country, would present unfair competition to their operations.

"The Netflix law" is similar to a piece of legislation enacted two years ago, under which foreign ownership of Russian media companies was also limited to 20 percent stakes. Its enactment led to the exit of Modern Times Group and the transfer of Discovery Communications' Russian assets to local distributors.