Is French regulation holding back the OTT market?

Pascale Paoli-Lebailly | 19-11-2013

High broadband penetration rates, pay-TV operators active in the multiscreen and over-the-top (OTT) video sectors, and, increasingly important, good prospects for mobile data: the French market has many of the necessary ingredients for a vibrant and growing OTT market, according to ABI Research.

Independent OTT platforms, including Videofutur, could even be augmented by international offerings if companies like Netflix and Amazon enter the market, ABI forecasts.

However, regulatory hurdles, such as France's relatively strict Chronology of Media, or content windowing legislation, which impacts subscription video-on-demand (SVOD) services, are reported to be putting a damper on the growth of many OTT movie services.

Due to the legislation, recent films aren't available for subscription VOD until three years after their theatrical release. To help SVOD to take off, a recent report from former Canal+ CEO Pierre Lescure urges the French Government to reduce this period to 18 months.

"In relatively strong OTT markets like North America, SVOD services like Netflix are significant revenue contributors to the overall market segment. France's strict content windowing for SVOD, however, creates a challenging environment to replicate similar successes," senior analyst Michael Inouye believes.

Yet, despite these challenges, online video services like Dailymotion, owned by Orange, and YouTube remain strong players along with offerings from broadcasters and pay-TV operators like Canal+ Group, TF1 Group, France Télévisions and M6 Group, ABI admits.

The strong penetration rate and competitive environment around IPTV video services in France have led to deployment of highly advanced set-top boxes, which contributes to content habits extending beyond linear programming.

"However, operator-owned multiscreen services are still developing at a slower pace than the US or UK markets," ABI adds. Operators do struggle to offer catch-up TV, VOD and live TV to devices like tablets and select connected CE devices like game consoles.

"The French OTT market has seen earlier and more significant developments from broadcasters and less from pay-TV operators, compared to the US and UK markets. If content windows remain an issue, original programming could become a differentiator for OTT subscription services to keep content fresh and viewers engaged. For instance, new programming like Amazon's just released Alpha House and Netflix's partnership with Disney to produce original Marvel programming could attract viewers while respecting content windowing legislation," practice director, Sam Rosen, concludes.