France Eyes Shortened SVOD Window for Films Ahead of Netflix Launch

House of Cards Ratings Mystery - P 2014

House of Cards Ratings Mystery - P 2014

UPDATED: With the streaming giant set to launch in the country from neighboring Luxembourg, it won't be bound by the current three-year window, which the government is planning to shorten to two.

PARIS – With Netflix's Monday confirmation of its September launch in six European countries, including France, the government here is preparing to change the distribution rules to strengthen the access of French online video companies to content. 

The Netflix "invasion," as it's being billed by media here, is coming from the Netherlands, where the California-based streaming video company is setting up its operations in Amsterdam. It originally had planned to base itself in Luxembourg in what some initially saw as a possible way to circumvent French online distribution windows and required contributions to the French film financing fund.

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Currently, subscription VOD services in France must wait 36 months following a theatrical release before they can offer a movie. Netflix, however, has agreed to honor that timeline.

Culture minister Aurelie Filippetti this week announced that she will seek to shorten the window to 24 months though, saying that "the public must be able to access movies more quickly."

The change aims to promote homegrown competition and "develop excellent French actors in the field of video on demand," she said. Filippetti also hopes the move will combat piracy, which has surged in France. "We must facilitate access to legal online offers, working on their visibility and availability," she said.

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Earlier this year, Netflix was in talks with the government of president Francois Hollande, but ultimately decided not to operate from France.

Among existing players, shortening the period to 24 months will mainly benefit the CanalPlay SVOD service of Vivendi's Canal Plus, which is currently the main such service in France, with nearly 450,000 subscribers.

CanalPlay has laid the groundwork to compete with Netflix and in fact owns the rights to the first two seasons of Netflix original House of Cards in France. It has nearly 9,000 programs in its catalog, one-third of which are series, and offers a premium and a more limited, low-cost subscription option that targets younger viewers.

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Orange also launched a VOD service in May of this year, priced at one euro less than Netflix as a preemptive strike. It owns first rights to HBO series in France.

Wall Street analysts have increasingly focused on Netflix's growing international business and how it affects subscriber growth and financials.

"Recently launched markets are ramping to profitability faster than expected," Janney Montgomery Scott analyst Tony Wible said. "However, projected third-quarter losses are greater than expected, implying that launch costs for new markets are significantly higher than our prior estimates."

He explained: "This is likely driven by the size of the new countries — France and Germany — and the market-specific initiatives. This lowers near-term estimates, but should accelerate sub growth."

Correction: This article originally stated that Netflix would operate from Luxembourg, but the company has decided on the Netherlands instead. The original version also failed to mention that Netflix has agreed to adhere to release window rules in France.