September 27, 2018 8:37 pm
September 27, 2018 8:37 pm
Netflix to Launch New European Office in Paris

Netflix is expanding its international footprint with the launch of a fully staffed Paris bureau, its third European outpost after Amsterdam and London.

The Paris office will kick off with about 20 employees, some of whom are already working for Netflix in Amsterdam, and others who will be new hires.

The French bureau won’t be dedicated to production as is the case in Spain, where Netflix recently bowed its first European production hub to make Spanish-language content. But it will be staffed with executives working across several fields, including production, acquisition, and marketing.

On Thursday, Netflix unveiled 7 new French series and film projects currently in the pipeline, including “Marianne,” a series based on Thierry Jonquet’s “Vampires” produced by Empreinte Digitale and Federation Entertainment; the documentary “Solidarité” written and directed by Stephane de Freitas (“A voix haute”); and the contemporary romance-drama movie “Paris est une fête” (working title) to be directed by Elisabeth Vogler. In total, Netflix has 14 new shows and TV series on its slate.

The announcement was made Thursday by Netflix CEO Reed Hastings, who was in Paris and met with a handful of journalists on the set of its upcoming French series “Osmosis.”

Hastings said the launch of a French bureau was justified by the rapid growth of its French subscription base since the service rolled out in the country three years ago. Although he declined to give the exact figure, Hastings confirmed the service has now over 3.5 million subscribers.

“Our international growth outside of the U.S. is 72 million and France has been a fast-growing and exciting part of that,” said Hastings.

Hastings also said that, after a month of discussions with France’s National Film Board, or CNC, Netflix has agreed to start paying a 2% tax on its annual revenues in France.

“We just wrote a first check to the CNC,” said Hastings. “It’s not as much as what Canal Plus pays, but we’re not getting the subsidized content.”

“We’ve become a good European citizen, so that we avoid the problems that other growing companies have had,” Hastings added.

He addressed the upcoming rule, in the process of being approved by the European Commission, that would obligate Netflix, Amazon, and other streaming services operating in the European Union to dedicate at least 30% of their on-demand catalogs to local content.

“The 30% we’ll have to work up to. We have some catch-up to do, but we’ll comply. It’s a tough rule but it phases in over the next two years [in France],” said Hastings.

Hasting said Netflix’s push into international content was key to thrive in the current competitive environment. “When our suppliers — including Disney — are saying that they are now going to become our competitors… it does mean we have to do more original productions, not only here but also in France, Germany, Asia… And we understood that it was likely to happen and it’s one of the reasons why we have been producing so much original content.”

Netflix previously had a small office in Paris, which only had two or three employees working in marketing. It shut down in August 2016 and relocated its employees to Amsterdam, prompting rumors that the company was trying to get out from under France’s burdensome tax regime. Explaining why Netflix had made the decision to close the office back then, Hastings said that “it was too early, and it didn’t really gel.” The idea with the future office in Paris is to replicate the model of the London office, which currently has about 50 employees.

Netflix had a rocky start in France. As it sought to access local content, the streaming giant was faced with strong opposition from the local industry, which feared that the deep-pocketed global service would squeeze out independent players and shake up the country’s strict window release schedule.

In spite of the service’s growing popularity in France, Netflix’s day-and-date release model is still a source of tension within parts of the industry, especially French exhibitors, who protested against the selection of Netflix movies in competition at the Cannes Film Festival in 2017. The backlash prompted Cannes’ board to issue a new rule obligating films competing at the festival to have a theatrical release in France. That would force Netflix to wait three years to show the films on its service in France, under the country’s release schedule.

Hastings said Netflix and Cannes were having ongoing discussions to find a solution. If all else fails, Netflix will still be at the festival to make acquisitions and be part of the market, Hastings said.

At the Venice Film Festival earlier this month, the controversy over Netflix’s model continued to make headlines as the company had multiple movies playing, including Alfonso Cuaron’s “Roma,” which ended up winning the Golden Lion.

Netflix also had “On My Skin” (“Sulla Mia Pelle”) play at the festival. It was able to release it day-and-date in some Italian theaters thanks to its partnership with local distribution outfit Lucky Red. But although it proved to be a commercially successful operation, it caused a sprawling feud between local exhibitors and Lucky Red’s chief Andrea Occhipinti, who ended up resigning.

‘It cost him (Occhipinti’s) job, and it almost cost (Cannes’ Thierry Fremaux) his!” Hastings admitted. “Right now, it’s a little tense in some countries, not only in France. And maybe over time it will get better… because if their revenues don’t go down it’ll be fine.”

Hastings said in the U.S., where over 50% of households have Netflix subscriptions, movie revenues were up this year. “We’re like a new form of entertainment, like video games… It doesn’t really change why you go to the cinema,” said Hastings, adding that the service would not budge from its day-and-date strategy.

As it expands its presence in France, Netflix will not likely be making any company acquisitions, noted Hastings.

“We’ve been running Netflix for 21 years and we’ve only made one small acquisition so (a company acquisition in France) is very unlikely,” he said. He added that Netflix wasn’t looking to make library deals in France either. “We find that it’s better to license or essentially rent (content), and develop our own shows.”

Asked about whether Netflix was still in discussions with Luc Besson’s company EuropaCorp, Hastings quipped, “I can’t possibly comment on that — that’s a ‘House of Cards’ line.”

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