It is an upheaval in the audiovisual world. From July 1, video-on-demand subscription platforms, Netflix in the lead, will be forced to spend part of their income in France on the creation of European films and series. This is the consequence of the decree on on-demand audiovisual media services (known as SMAD), published this Wednesday, June 23 in the Official Journal.
This new regulation will change the way in which streaming platforms, which have taken an important place in the media and cinematographic landscape, work with the audiovisual sector in France. And this will also have some consequences for subscribers to Netflix, Amazon Prime, Salto or even Disney +.
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What is the purpose of this new regulation?
“The aim of the decree is to bring on-demand services into the economy of creation financing,” explains Philippe Bailly, president of the NPA Conseil cabinet. The idea is to impose obligations on streaming platforms similar to those of television channels, free and pay, which must already donate part of their turnover to audiovisual creation (series, TV films, documentaries notably) and cinematographic.
“This is very good, it is a fantastic and unexpected advance for the audiovisual industry and French cinema”, believes Marc Le Roy, doctor of public law and specialist in film law. “This would inject up to 200 million euros annually into the sector. It would still be necessary to have risen with the left foot to say that it is a bad thing.” Of course, platforms like Netflix or Amazon Prime Video already finance films and series produced in France, but they do so on their terms. From now on, constraints will be imposed.
How is the amount to be invested by the platforms calculated?
The government has established a fixed share of turnover that platforms will have to invest in creation, whether they are established in France or in another country of the European Union (as is the case with most platforms American). This rate is set at 20% of the turnover achieved in France, less several taxes. For platforms wishing to broadcast films less than a year after their theatrical release (we will come back to this point later), a larger contribution will be requested: 25% of turnover.
For Netflix, whose only activity is to offer films and series, the entire turnover of the company should be taken into account. But for others, the math should be more complex. Amazon therefore offers its Prime Video platform as part of a subscription that provides access to other services (express delivery, downloading ebooks, online music, etc.). “The question is ‘what part of the subscription corresponds to the delivery service, the music part and the Prime Video part’”, asks Philippe Bailly.
Marc Le Roy believes that “it shouldn’t be that difficult”. Indeed, “Amazon is already liable for the video tax, which falls under the Ministry of Finance.” The two parties have reached an agreement on how much of Prime’s revenue goes to movies and series.
For the financing obligations which come into force in July, it will be up to the Superior Audiovisual Council (CSA) to find a similar agreement with the e-commerce giant. But Marc Le Roy believes that “this will not represent much, given the price of the subscription”. Indeed, Amazon Prime only costs 49 euros per year or 5.99 per month, we are below what Netflix (between 7.99 and 15.99 euros per month) or Disney + (8.99 euros per month) offer. ). Amazon Prime however has a large number of subscribers, estimated between 9 and 11 million depending on the source, which should translate into significant investments.
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Projections revealed last October suggested that Netflix would invest a little less than 200 million euros per year, Amazon around 15 million and Disney + around 10 million. But these amounts are set to increase as the number of platform subscribers grows.
What is the money going to be spent on?
To direct the expenses of these giants towards projects which benefit as much as possible to the actors of the tricolor creation, many rules are enacted. Already, the platforms will not only be able to support the cinema or the audiovisual sector. The share of the two sectors must represent between 20 and 80% of the investments. Then 85% of the investments must go to French works. The rest may concern programs produced in other European countries.
Finally, several types of expenditure will be eligible. The text provides that the majority of investments are made in the pre-purchase of rights, that is to say the acquisition of broadcasting rights before a film or series is shot, in the investment in production shares. works, or in the financing of writing or development of films and series.
But part of these investments could be in particular in the restoration of works. Netflix announced in January that it was going to finance the restoration of Abel Gance’s film “Napoleon”, which dates from 1927, as part of a partnership with the Cinémathèque française.
The most important point is that among the pre-purchases and production shares, 75% of investments in the cinema and 66% in the audiovisual sector will have to be made with independent producers. “They are the big winners of this new regulation, analyzes Philippe Bailly. They will receive a significant amount of money ”to produce the films and series on the platforms. The platforms will only have limited rights to these works and they will only be able to keep their exclusivity for a defined period (1 year for cinema, 3 years for series or other audiovisual productions).
For Netflix, it will also be necessary to question its film distribution model a little. These new rules oblige the platform to finance works of cinema. However, by definition, according to the legislation, a cinematographic work must be released in theaters.
And the chronology of the media – the agreement which fixes the periods of exclusivity of the various media and broadcasters – requires that a cinema film can only be available on a subscription streaming platform 36 months after its theatrical release. A reform of the chronology should take place soon and this period could be reduced to 12 months, under certain conditions.
12 months remains an eternity for Netflix, however, whose model is based – in other countries – on offering its exclusive films in streaming at the same time as in theaters (or a few weeks afterwards at most). In France, the platform will find itself financing films that it will not be able to make available to its subscribers for a year. “That must have been the hardest part to swallow at Netflix,” said Marc Le Roy. “It’s all new to them.”
The precise specifications to be respected by Netflix have not yet been decreed, but the lawyer thinks that this should concern only a limited number of films, “up to a few tens of millions of euros” of investment.
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What consequences for users?
This new media timeline should be the most visible consequence of this new legislation for platform users. Thus, if Disney + complies with the obligations, it could offer the new Marvel or Star Wars films more quickly to its subscribers. A good point for the platform, which made the availability of the studio’s latest blockbusters after a few months a selling point when it was launched in the United States.
There is, however, one aspect that could work against platforms in the proposed new media timeline. “The free channels negotiated as a common front,” explains Philippe Bailly. “TF1, France Télévisions and M6 have well protected their position. They should be able to broadcast the films 20 to 22 months after their theatrical release ”, like today,“ but with an exclusive window of 14 months ”. During this period, the films will therefore have to disappear from the Netflix or Disney + catalog.
This can be a problem for the readability of the offer. A Disney + subscriber might not expect a recent movie added to the platform several months ago to disappear from the catalog. For Philippe Bailly, however, this is not a problem. “The promise of Disney +, especially since they added the Star universe, is to offer originals or exclusives from the United States.”
The only problem is that this new chronology must result from an agreement – which has not yet been found – between the players in the sector.
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