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Amazon Ready to Swoop in as Netflix Scales Back in France

Two years ago, Netflix launched in France, vowing to sign up more than 1 million customers and to turn a profit by its second anniversary. But the streaming giant has struggled to meet those goals, and its decision last week to close its Paris office has reinforced impressions that Netflix is flailing in France — just as Amazon is getting ready to roll out its video-on-demand service by year’s end.

Many analysts say Amazon is better-positioned to capture the Gallic market, boasting greater access to local content and stronger relationships with local industry figures and institutions. Netflix, by contrast, has been hampered by a flawed acquisition strategy, strict regulations on release windows, and, some say, arrogance.

Netflix won’t reveal its subscription numbers in overseas markets, but industry sources estimate them at between 850,000 and 1 million in France. That’s far short of the company’s initial goal of 1.6 million French subscribers — or 10% of all French households — in order to reach profitability in the territory within two years. Netflix declined to comment, but a company source acknowledged that France is a loss-making territory.

Netflix’s difficulties are due in large part to insufficient access to local content with mass appeal. That puts it at a disadvantage versus domestic competitors such as pay-TV channel Canal Plus and free-to-air networks.

Emmanuel Durand, head of marketing at Warner Bros. France and author of a book on digital disruption, says Netflix is looking to cut spending on catalog titles in individual territories in order to concentrate investment in prestige shows like “Stranger Things,” in the hope that those shows would drive up subscriptions worldwide.

French Figures
Neither company releases such data, but sources give Amazon the edge.
2m Amazon Prime Now subscribers
18m Visitors to Amazon.fr in Q1
>1m Estimated Netflix subscribers

“Netflix is a company driven by engineers who think a good product will work across 130 markets. It’s a bit naïve, and it doesn’t work that way in France,” Durand says. He adds that it is a mistake for Netflix not to have a regional boss in France in charge of acquisitions; those decisions are handled from inside the U.S. (The Paris office was a small outpost that employed six marketing and communication staffers. Those functions will be conducted out of Netflix’s European headquarters in Amsterdam.)

“France is unique because of the prevalence of local content, and Netflix has struggled to acquire the necessary quantity, unlike in other markets such as Spain where they’ve been able to provide a wealth of local content and leverage it in Spanish-language markets,” says Richard Cooper, an analyst at London-based consultancy IHS.

Netflix’s only French-language series, “Marseille,” earned mixed reviews, but the company has commissioned a second season.

France’s strictly timed release windows, which make streaming services wait 36 months to offer a title after it debuts in cinemas, has been another challenge for Netflix. For example, French film “Divines,” the Cannes Camera d’Or winner for which Netflix acquired worldwide rights, will be available to the company’s subscribers in France roughly three years after almost every other market. Discussions between the French industry and authorities to cut the waiting period in half have stalled.

Amazon will have to comply with the same 36-month wait before offering a new title to subscribers of its streaming service. But, unlike Netflix, it offers the option of pay-per-view, under which a movie can be available just four to six months after its theatrical release.

Aside from “Divines,” Netflix’s other French acquisitions, such as Sacha Wolff’s “Mercenary” and Sébastien Betbeder’s comedy “Journey to Greenland,” are perceived as too low-profile to boost subscriptions.

“Netflix hasn’t been aggressive enough,” says an executive at a prominent film company who asked not to be identified. “France is dominated by free-to-air and pay-TV channels that still spend big bucks on content, and Netflix hasn’t been able to rival the money they put on the table.”

Charles Gillibert at CG Cinema, the company behind Olivier Assayas’ “Personal Shopper” and Deniz Gamze Ergüven’s Oscar-nominated “Mustang,” finds Netflix’s focus on video releases problematic. “Netflix is all about VOD, but that’s not attractive to many filmmakers and producers because it locks films in secondary markets without giving them theatrical exposure.”

Amazon has earned a reputation as being more filmmaker-friendly than Netflix. Amazon Studios had five movies at Cannes in May, and execs Ted Hope, Bob Berney, and Scott Foundas have been cultivating ties with French industry players. “Amazon has a much more qualitative approach than Netflix,” says Gillibert. “They’re interested in auteur cinema from around the world, value theatrical, and people we interact with at Amazon are true film lovers.”

Amazon has been in touch with French institutions such as Unifrance and the National Film Board. At Cannes, Amazon’s head of worldwide film, Jason Ropell, attended a panel hosted by France’s Culture Ministry on the financing of French creative work. Netflix, which was also invited, was MIA — and people noticed.

“Netflix has made some communications faux pas that have been interpreted as arrogant,” Durand says.

And while Netflix’s early jump into France allowed it to seal deals to put its service on the set-top boxes of all but one major French telecom operator, Amazon doesn’t need as much access to those boxes; it has a built-in consumer base in France through website Amazon.fr, which launched 16 years ago. Amazon.fr had an estimated 18 million French visitors per month during the first quarter of 2016.

Meanwhile, Amazon Prime Now, which bowed in the spring, already has about 2 million subscribers, according to an industry source. Those subscribers will automatically have access to the Amazon video service when it debuts — instantly giving Amazon more customers than have signed up with Netflix in the past two years.

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