The source declined to specify a reason for the decision but rejected speculation that Netflix was trying to get out from under France’s burdensome tax regime, noting that the Paris office is small and Netflix is loss-making in France anyway. Even after relocating operations to Amsterdam, the company will continue to pay VAT of 19.6% on VOD sales in France.
The shutting down of the Paris office comes amid rumors of Netflix’s troubles in winning over the French market and accessing local content with mass appeal. Although Netflix managed to sign distribution deals with all but one of France’s telco operators, it has struggled to feed its pipeline with fresh local content because of the country’s strict window release schedule, which makes new titles available only 36 months after their theatrical roll-outs.
The strength of French TV networks and pay-TV channel Canal Plus has also made France a tough market to crack.
Netflix opened its European headquarters in the Netherlands in March 2015, ahead of its massive launch across Europe. The country, known for boasting advantageous tax laws and incentives, is home to the headquarters of many companies, including Amazon and Altice.
Upon its launch in France in September 2014, Netflix faced a wall of resistance from the bulk of French industry players. They feared that, by being based in the Netherlands like iTunes, Netflix would not be subject to the same tax regime and investment obligations as local streaming and SVOD services such as Wild Bunch’s FilmoTV and Canal Plus’s Canalplay.
To demonstrate good faith, Netflix met with French officials and pledged to invest a percentage if its revenue in European and French movies if its annual revenues exceeded 10 million euros ($11.3 million).
The company also decided to open a Paris office instead of conducting French operations from Amsterdam. Netflix’s only other European office away from its Dutch headquarters is in London, in the U.K., the company’s first European market. Operations for Netflix’s other European territories — Germany, Italy, Spain and Scandinavia — are centralized in Amsterdam.
One reason for Netflix to establish an office in France was the company’s need to win the trust of the French industry; to build ties with content-makers, filmmakers, producers and sales agents; and to cut deals with local telco operators in order to reach French households via set-top boxes. But the Paris office lost its managing director, Xavier Albert, to Universal Pictures France last February and did not replace him.
Although Netflix has not disclosed its number of French subscribers, it was estimated at roughly 750,000 as of last September by Futuresource Consulting.
So far, Netflix has delivered one original French-language series, “Marseille,” a political thriller with Gerard Depardieu and Benoit Magimel, which bowed to mixed reviews. Netflix has nevertheless commissioned a second season.
The company also recently acquired Houda Benyamina’s Cannes Camera d’Or winning directorial debut, “Divines” from Film Boutique, and Brazilian helmer Kleber Mendonça Filho’s critically acclaimed sophomore outing, “Aquarius” from Paris-based SBS Films.