ARP Film Forum 2012

A number of burning issues are bound to arise at the three-day confab hosted by ARP, the French guild repping writers, directors and producers, which is headed by Oscar winner Michel Hazanavicius, helmer of “The Artist.”

Officially known as Rencontres Cinematographiques de l’ARP, the event will gather some 600 industryites and screen four anticipated French releases, including Valerie Donzelli’s “Main dans la main” and Costa-Gavras’ “Le Capital.”

Filmmaker Robert Guediguian will serve as honorary prexy of the 22nd edition. In attendance will be Aurelie Filipetti, France’s culture minister; Canal Plus managing director Rodolphe Belmer; Eric Garandeau, topper of French film org CNC; and Aviva Silver, head of Gaul’s Media Program.

Topics for discussion include the role of VOD platforms in film financing, independent films’ access to theatrical screens and the impact of cloud storage on the the rights of authors and producers.

While France boasts one of the largest VOD markets in Europe, local on-demand players haven’t fully ventured into financing the way they have in the U.K. and the U.S. — owing largely to a number of conflicting interests and regulationsThat’s not for lack of trying. French film guilds, institutions and rights-holders have been lobbying to get local sites (including FilmoTV and CanalPlay Infinity) and multinational VOD platforms (like iTunes and Google) more involved in the money game.

“As our model is shifting from traditional terrestrial channels to multi-platform distributors, the role of on-demand operators in financing and pre-financing content should logically grow,” says Garandeau.

In the U.K., where the VOD market is thriving, Amazon’s Lovefilm has been making significant investments to acquire exclusive content. And elsewhere in Europe, sites with fewer resources have tested different models to acquire exclusive content. In Spain, Jose Antonio De Luna, who heads leading indie platform Filmin, said he “decided to integrate producers and distributors as shareholders in order to avoid paying minimum garantees.” Filmin shareholders include Spanish shingles Pedro and Agustin Almodovar’s El Deseo and Alta Films.

But could such activities take place in a market as heavily regulated as France? Canalplay Infinity, the VOD site run by pay TV giant Canal Plus Group, is the only large-scale platform with the financial resources to become a key partner in film funding; but since July, the government’s antitrust body has forbidden the company from buying exclusive VOD rights for its service as part of a ruling on its merger with TPS Star.

Because of that exclusivity ban, Canal Plus’ film acquisition topper Manuel Alduy told Variety that “(CanalPlay Infinity) won’t pre-finance any content and invest significantly if we can’t have a window of exclusivity.” The company has appealed the antitrust ruling.

The antitrust board argued the decision would prevent Canal Plus from holding a monopoly over content and open up the market to international operators with low subscription rates. “If we want a local platform to resist a giant like Netflix, it doesn’t make sense to forbid that service from getting windows of exclusive rights,” says Hazanavicius.

For the past three years, heated discussions over amending some of the regulations, such as the value-added tax (VAT) rate or release windows, have been unproductive.

In January 2011, French broadcast authorities imposed the same regulations on subscription VOD services as the ones applying to pay TV networks, with investment obligations (SVOD platforms are required to invest 21% of annual revenues in French and European films) and quotas (on-demand sites must dedicate 50% of their catalog to European films and 35% to French films.)

France isn’t the only country in Europe where local VOD sites must fill content quotas. Poland and Spain, for instance, have some, but they’re minor compared to Gaul’s, where homegrown pics — driven by “Intouchables” — repped a 37.5% market share in volume from over 9,000 titles during the first half of 2012.

But although VOD sites share many of the same obligations as TV channels, they don’t have the same advantages. For instance, the pay TV window is at 10 months and the free-to-air one is at 22 months. Subscription VOD is way behind at 36 months. Plus, unlike DVD publishers and theatrical exhibitors, French VOD operators are not eligible for CNC’s automatic support fund, even though they contribute to it via the VAT they pay.

French and European VOD players fear that multinational VOD sites will squeeze them out and take over a big chunk of market shares without being regulated by media authorities.

As FilmoTV CEO Bruno Delecour points out, “multi-platforms like iTunes and Google, headquartered abroad and distributing content in France, have no investment obligations or programming quotas, don’t respect the release windows schedule and pay a VAT of 7%.”

“Multi-territory platforms like (iTunes) work from countries with better tax situations and don’t create any value in the local markets since they’re almost always headquartered overseas,” explains De Luna. “In addition, thanks to their ties with global groups, these multinational on-demand sites have an access to content from U.S. studios that local platforms don’t have.”

ITunes, for instance, which is based in Luxembourg, now reps 30% of VOD sales in France, per Delecour, and is not bound to the same obligations and VAT rate as local operators.

Netflix is the service that’s worriying VOD players the most. It hasn’t announced plans for France but IHS Screen Digest’s Richard Broughton says it could roll out later in 2013.

Former Canal Plus topper Pierre Lescure is currently studying how to apply French regulations — including fiscal requirements, investment obligations and quotas — to multinational platforms and is in discussions with a broad range of industryites to re-examine the release window schedule.

Per ARP managing director Florence Gastaud, a more flexible release window would encourage European VOD players to become as active in film financing as their U.S or U.K. counterparts. Hazanavicius says premiering pics on VOD should also be allowed: “Some small-budget films can’t perform well in theaters because not enough P&A is spent, and in many cases, if they’re good, being shown first on the web will make people want to discover them in theaters.”

But lowering the SVOD window to less than 36 months isn’t to everyone’s advantage. In France, the release-window schedule favors theatrical distributors as well as free-to-air and pay TV channels because they’re the main backers of the local film biz.

“(Amending) the SVOD window will only facilitate the development of multi-territory platforms in France, and if that happens we’ll have to argue to media authorities that they can’t strengthen our obligations to finance and showcase French films because it’s very unlikely that these international platforms will respect them.”

But there’s still hope for a more level playing field: “Regulation and quotas that are imposed on local companies will increasingly be enforced on the big international services in the years to come,” Broughton predicts.

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