Market Insight

French regulator CSA proposes changes to local film windowing

January 07, 2014

Fateha Begum Fateha Begum Associate Director, Connected Devices & Media Consumption

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The Conseil Supérieur de l'Audiovisuel (CSA), the French regulator of radio and television, has proposed several major changes to movie windowing in France which could potentially have a significant impact on the local development of the video market.

The main proposals include the shortening of the windows between the theatrical release of films in cinemas and their availability on a transactional VoD basis from the current four months to three months and their availability on a subscription video-on-demand (SVoD) basis from 36 months to 24 months post-theatrical release.  The CSA justifies the change in part as an anti-piracy measure as well as highlighting other potential positives for the French video sector at national and international levels, in particular the new windowing system making it more attractive to new entrants in the transactional and subscription video sector.

The CSA has also proposed a move to levy an additional tax on online video sharing sites such as YouTube and DailyMotion which are increasingly being used by broadcasters and content owners as a VoD platform. The tax will be imposed on profits gained from professional productions on websites based in France. 

Across most developed markets, movie windows follow a standard structure for Hollywood and major local studios; usually, theatrical release is followed by retail release via physical (DVD/Blu-Ray discs) and digital (online outlets such as iTunes) formats, followed shortly afterwards by rental availability (increasingly concurrent with retail availability), then the first subscription window on pay TV platforms (for instance, BSkyB or Canal Plus),  then by other country- or company-specific windows (typically either a free-to-air window with broadcast availability, or another exclusive subscription window).

In France however, longer windows are put in place compared to other Western European markets. This is mainly due to the local industry and regulatory pressures that historically have focused on creating more opportunities for local French productions. The windowing structure has been designed to protect the local entertainment industry, as well as finance the production and distribution of local films.

At the moment, the first window appears four months after theatrical release, allowing retail and rental service providers to exploit films. The first pay TV subscription window occurs at 10-12 months and free TV at 22 months, while the transactional VoD window is closed through the pay TV and free TV windows (though EST is still available). At 36 months, the SVoD window opens, alongside a re-emergence of the transactional VoD window. To-date, this chronology has helped to protect the theatrical sector, pay TV channels and the transactional VoD market from SVoD competition - service providers such as Netflix and Lovefilm have historically been absent from France - partly as a consequence of this windowing structure.

Though physical retail and pay TV have been significant contributors to the French film industry historically, their aggregate contribution has been declining in the past few years as digital outlets increase in popularity, piracy takes its toll, and consumer preferences for content have shifted. Despite this, the French VoD market also experienced a downturn in 2013, though this has largely been due to economic woes. As consumers' relative willingness to spend on a pay-per-view basis declines as a result of a number of factors, SVoD becomes a more attractive option, as has been evident in the US and across other Western European markets. By now moving to open up the SVoD window, the French market will ultimately see greater uptake of SVoD services among consumers. The transformation allows the regulator to create favourable conditions for new market players, which is particularly significant given that major international players such as Netflix are widely understood to be considering the French market as a launch target.

The French online movie SVoD segment is currently small, generating €8 million in 2013 in consumer revenues, compared to nearly €120 million in the UK over the same period. The main factor which has slowed SVoD development has been the lack of major services, which have avoided expanding into France - partly due to the long SVoD film window. The main SVoD players currently include Canal Plus Infinity (the standalone service from Canal Plus) and subscription services for TV series from M6 and smaller players such as Filmo TV. 

If the new plans are introduced and companies such as Netflix enter the market, existing players will be prompted to expand their services to compete with the new entrant(s), impacting  local content acquisition positively, at least in the short-term. However, new entrants and existing companies should not underestimate the market power of incumbent pay TV channels such as Canal Plus, which remain the main source of premium movies in France and continue to retain the majority of premium rights from both Hollywood cinema and French cinema in the pay TV window.

In addition, the French pay TV sector is almost unique in Europe in that telecoms companies enjoy a very strong market position, albeit at the lower-spend end of the market. IPTV, which covers nearly half of French TV households could therefore potentially benefit from the regulatory moves. As well as carrying premium movie channels such as Canal Plus, ISPs are in a strong position to take advantage of a newly rejuvinated SVoD window. This could be through direct content acquisition - both Free Telecom and Orange have created their own content propositions in the past. But telcos could also act as deal-brokers for new SVoD entrants looking to expand rapidly, and entering into partnerships such as that seen in the UK between cable TV operator Virgin Media and Netflix, could allow them to generate new and unique selling points - a critical factor in the highly competitive French triple-play sector. SVoD services would be well advised to consider the opportunities offered by such partnerships - the scale that the IPTV services offer could make all the difference during the formative period of their growth.

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