Netflix and Other Streamers Avoid Proposed Spanish Tax Until 2023

Netflix, HBO Max, Amazon Prime Video and other U.S. streaming video operations in Spain will reportedly avoid being subjected to a proposed 5% tax on revenue generated in the country until 2023.

Under the government’s “Digital Spain 2025” initiative, foreign streaming services generating at least 50 million euros ($56.7 million) would be levied the tax, with the funds used to support independent Spanish cinema and public television network RTVE, among others.

Reuters reported that at least 6% of the streaming platforms’ content must be in Spain’s co-official languages: Catalan, Galician or Basque. The requirement is part of a broader European Union mandate requiring foreign streamers produce at least 30% of their original content in Europe.

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The tax proposal, introduced this year in the Spanish Parliament, was shelved for a year until regulators obtain the streamers’ 2022 local tax returns — a contentious issue as many platforms are officially based in tax-friendly countries such Luxembourg and Ireland.

The EU has upped efforts to enforce regulatory measures on U.S. tech/media giants such as Google, Amazon, Netflix and Disney, which it claims often take steps to avoid paying regional sales taxes.

Spain last year passed a law imposing a 3% tax on internet behemoths Google, Apple, Facebook and Amazon, with individual global revenue of at least 750 million euros ($850 million) and 3 million euros ($3.4 million) in Spain.

Netflix Questions New Proposed Italian Content Spending Mandates

Netflix Italy is questioning new proposed localized content requirements that could see over-the-top video distributors required by 2025 to spend 25% of net revenue on Italian and European programming. Current European Union rules stipulate streamers like Netflix spend 12.5% annually on localized content.

SVOD pioneer Netflix has more than 210 million subscribers globally, including 68.7 million subs in Europe, the Middle East and Africa. Netflix does not breakout individual country subs, but reportedly represents a majority of Italy’s 5 million SVOD subs, according to a recent study by Ernst & Young.

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“The feeling is that you have an iniquity,” Eleonora Andreatta, VP of Italian original content, told Italian media outlet Il Sole 24 Ore. “And this leads to more-difficult investment decisions. You trust a country if you are treated fairly and understand the logic of government decisions.”

Andreatta said the Italian government is looking for the local video market to help spearhead the country’s economic comeback following the pandemic. To jumpstart a “Revolution of Cinecittà,” the government is looking at tax credits to local production companies — fiscal assistance funded in part by taxing foreign media companies.

Stefano Ciullo, director of institutional relations of Netflix Italy, said the streamer spent €300 million ($356 million) on Italian content productions from 2017 to 2020 — up from an initial investment of €200 million ($237 million). Ciullo contends there remains time for OTT video distributors and the government to hash out a compromise ahead of the Set. 16 Parliament deadline.

“The hope is to arrive at corrective measures because there is the possibility of a short-term benefit for producers, but we have strong doubts that it will benefit competitiveness.,” Ciullo said. “And this thing concerns everyone, us as well as traditional broadcasters.”

Disney+ French Launch Delayed to April 7

The Walt Disney Co. March 21 confirmed it is delaying the previously planned March 24 launch of Disney+ subscription streaming video service in France to April 7. The SVOD service will bow as scheduled in other European countries on March 24.

The move came after the CEO of French telecom Orange — one of the country’s largest ISPs — suggested Disney delay the launch. The company is also joining Netflix, Amazon, YouTube reducing streaming speeds 25% to limit the service’s impact on local and national high-speed networks.

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In France, deaths related to the virus have risen to 562, according to the French Health Ministry. There are more than 14,400 infections, with 6,172 in hospitals and 1,525 of them in intensive care.

“In line with Disney’s longstanding commitment to act responsibly, we are responding to the request of European Commissioner for Internal Market Thierry Breton to work together to ensure the smooth functioning of the broadband infrastructure,” Kevin Mayer, chairman of Direct-to-Consumer & International at Disney, said in a statement. “In anticipation of high consumer demand for Disney+, we are proactively instituting measures to lower our overall bandwidth utilization by at least 25% in all of the markets launching Disney+ on March 24.”

Breton earlier in the week had called on streaming platforms, telecom operators and Internet users having a joint responsibility during the pandemic that has infected more than 300,000 people globally and 13,000 deaths.

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“[We need] to take steps to ensure the smooth functioning of the Internet during the battle against the virus propagation,” Breton said.

French Telecom Asks for Disney+ Launch Delay; Apple TV+, Amazon Prime Video, YouTube Throttle Streaming Speed in Europe

With hundreds of millions of Europeans quarantined in their homes to help stop the spread of the coronavirus, the CEO of French telecom Orange has called on Disney to postpone the planned March 24 launch of branded subscription streaming video service Disney+.

In an interview with French daily Le Figaro, CEO Stephane Richard requested “a few weeks delay” for the Disney+ launch, citing heightened ISP demands throughout the country during the pandemic that has infected nearly 300,000 people globally, with the death toll around 5,000. Orange is one of four major ISPs in France.

Disney already canceled a major SVOD launch party slated for March 5 in London.

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Separately, Apple TV+, Amazon Prime Video and YouTube have joined Netflix in Europe reducing streaming bit rates in an effort to not overwhelm  local networks during the crisis. The slowdown means subscribers with high-definition access, including 4K, could be throttled as low as 600kbps, limiting resolution to about 360p on mobile devices and 670p on TV.

The move follows Netflix’s decision to reduce streaming speeds by 25% after CEO Reed Hastings met with European Union commissioner Thierry Breton — the latter requesting all major streaming video services voluntarily throttle bit rates.

“We are making a commitment to temporarily switch all traffic in the EU to standard definition by default,” YouTube said in a statement.

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Netflix Reducing Streaming Bit Rates 25% Across Europe

As one of the largest distributors of digital data across high-speed networks, Netflix has agreed to reduce its streaming bit rates in Europe over the next 30 days as the region grapples with the coronavirus pandemic that has now exceeded China in the number  of infections and deaths.

The move comes after CEO Reed Hastings met with European Commissioner Thierry Breton about Netflix reducing its strain on European networks.

“Following the discussions between Commissioner Thierry Breton and Reed Hastings — and given the extraordinary challenges raised by the coronavirus — Netflix has decided to begin reducing bit rates across all our streams in Europe for 30 days,” Netflix said in an email. “We estimate that this will reduce Netflix traffic on European networks by around 25% while also ensuring a good quality service for our members.”

With mandatory at-home quarantine in some countries, people have turned to the Internet for work and school. At the same time, Netflix has more than 106 million subscribers outside the United States. Its standard definition videos reportedly consume about 1GB of data per hour, while HD videos eat up 3GB of data per hour. Video consumption accounts for about 70% of bandwidth used across European networks.

Akamai reports its networks are experiencing 50% more Web traffic than previously used during this time period. CEO Tom Leighton told Business Insider the company’s peak traffic load in Q1 is twice what it was during the same period last year.

“I think we’ll see more acceleration due to the fact that you have so many more people working from home and you have, kids out of school and spending more time at home,” Leighton said.


Netflix’s Reed Hastings Meeting With European Union to Discuss Bandwidth Issues During Virus Pandemic

With much of Europe under quarantine due to widespread outbreaks of the coronavirus, the European Union is calling on streaming video services such as Netflix and Amazon Prime Video to curtail offering content in high definition.

The EU encompasses more than 450 million people, many of whom are home-bound as local governments and health officials battle to contain further spread of COVID-19, which has seen Europe surpass China in the number of infections and deaths.

With people turning to over-the-top video, demands on local ISPs and networks could exceed capacity, according to European Commissioner Thierry Breton, who tweeted “#SwitchtoStandard definition when HD is not necessary.”

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Breton reportedly met Netflix CEO Reed Hastings on March 18 about the issue and is scheduled to do the same today. Netflix, in a statement to CNN Business, said the service already limits streaming to network capacities, including housing content closer to subs in each country.

“Commissioner Breton is right to highlight the importance of ensuring that the internet continues to run smoothly during this critical time,” a Netflix spokesperson said. “We’ve been focused on network efficiency for many years, including providing our open connect service for free to telecommunications companies.”

By 2024, about 63 million Europeans are projected to have a Netflix subscription — up from 40 million in 2018. Netflix had 106 million international subs at the end of 2019, in addition to 61 million in the United States.

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Amazon Tops Netflix as Top SVOD Buyer of European Movies

New data from the European Audiovisual Observatory finds that Amazon Prime Video is the largest streaming video buyer of European movies.

Established by the Council of Europe in 1992, the EAO found that 16 North American, three Chinese and one Russian streaming services have the largest catalogs of European-produced movies.

Amazon topped Netflix with 3,281 unique European-produced titles, followed by Netflix with 1,816 unique titles. Russian streaming service Ivi and the Chinese services Youku, iQiyi, Tencent Video were the biggest single country services acquiring European films.

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Indian service Eros Now, Canadian service Sundance Now, Viu and CBS All Access carry from three to 31 unique EU film titles in their catalogs.


The report focused on a sample of 79 non-European SVOD services and their catalogs in 21 countries across the globe.

The majority of EU films found on SVOD services around the world are produced in five countries.

The United Kingdom is the biggest supplier of EU films with 38% of all unique EU titles, followed by France with 18%, Germany with 12%, Italy with 11% and Spain with 6%.

Together, these countries account for 85% of all unique EU film titles available on SVOD outside of Europe.

The report also found that medium-size, film-producing countries contribute significantly to SVOD services.

Belgium, the Netherlands, Austria, Sweden, Denmark, Finland and Ireland export films outside of Europe. These seven countries account for 11% of all unique film titles found in the SVOD catalogs.

“With 7,450 unique film titles, EU film titles represent 14% of film titles on offer in the 79 SVOD catalogs studied,” Christian Grece, on-demand audiovisual markets analyst, wrote in the report.


European Union Launching Movie VOD Platform Similar to ‘Movies Anywhere’ in the U.S.

The European Union is launching a platform aimed at informing consumers where they can access more than 35,000 European-produced movies on-demand across more than 150 video-on-demand services, including Netflix and Amazon Prime Video.

Dubbed “Lumiere VOD,” the platform — currently in beta rollout — is designed to support European films and filmmakers after an internal study found just 29% of feature films offered on VOD services originate from European countries.

By comparison, European VOD services feature about 50% movies originating from Hollywood studios, according to the EU.

VOD services financially backing Lumiere include Prime Video, Ampere Analysis, Apple, CNC, EuroVOD, FilmDoo, Filmin, Filmtoro JustWatch, Kino Fondas, La Cinetek, La Pantalla Digital, Le, Mediathèque Numérique, Netflix, realeyz, uncut, UniversCiné, VOD Club, and Vodeville.

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Lumiere VOD is similar to Movies Anywhere in the United States, which offers consumers a landing platform for third-party digital services selling digital movies, including iTunes, Prime Video, Vudu, Xinfity, Google Play, Microsoft Movies & TV and FandangoNow.

The EU previously passed a mandate that all streaming and VOD services operating within its jurisdiction include at least 30% localized content.

At the same time, the economic organization cited scant availability of databases promoting European movies available on VOD, despite the fact the region produced more than 18,000 films from 2007 to 2016, including 47% increase in global production in 2017.

With Digital TV Research projecting an increase of 409 million VOD subscribers by 2023 to 777 million globally, the EU decided to act.

“Europe is a major player in film production therefore we must ensure that European films and other audiovisual works attract the audience that they deserve,” Mariya Gabriel, commissioner for digital economy and society, said in a statement. “This is yet another important initiative aimed to ensure that European works of art and cultural heritage stay high on the political agenda.”

Lumiere VOD is slated to launch publicly at the end of the year.

Report: EU Local Content Quotas No Threat to Netflix

With the European Union reportedly set to vote in December on mandating over-the-top video subscription services offer at least 30% local content in each country of operation, Netflix would appear to have few concerns meeting the quotas, according to a note by investment bank Exane BNP Paribas.

Since expanding its SVOD service globally in 2016, Netflix has aggressively sought out localized original and catalog content in each country.

With the streaming service expected to spend more than $13 billion on original content this year, much of the budget is targeted towards developing local programming for subscribers in Europe, South America and Asia.

Indeed, Netflix’s Spanish production, “La Casa de Papel,” is the most-watched foreign-language content in the SVOD pioneer’s history.

“Netflix is already reportedly close to having 30% European content,” investment bank Exane BNP Paribas wrote in a note. “To comply with the rules, any service operating within the EU could merely maintain a similar ‘European’ fraction of its overall catalogue. However, specifics of the commission’s plan could add serious complications that effectively fragment both a service’s catalogue and pricing depending on the country where it’s being viewed.”

According to the bank, each country member in the EU would have 20 months to apply the law on OTT video services operating within their borders – including possibly upping the quota to 40%.

“Individual countries could also choose to require surcharges to support their national production funds,” wrote the bank. “Consequently, Amazon Video in France might require 10% French content, or Germany’s Netflix would need to raise prices to subsidize other companies’ production efforts.”

Regardless, Netflix is spending nearly $1.2 billion (€1 billion) this year on local content to comply with possible EU guidelines, Reed Hastings, co-founder and CEO of Netflix, told a film confab in Lille, France earlier this year.

“We’re building rapidly towards that [30%],” Hastings said. “There is great regulation that is very useful. It’s up to us in every country to participate and follow those regulations.”


Europeans Up On-Demand Video Consumption

As viewers continue to migrate to on-demand TV content in the United States, so too is VOD consumption changing in five European markets: United Kingdom, France, Germany, Italy and Spain.

Europeans are watching an additional two hours of on-demand content each month across all platforms, compared to the previous year, according to new data from IHS Markit.

Viewing time devoted to online platforms has increased, with an average of 10 minutes per-person per-day devoted to online short-form video content (up to 15 minutes in length), and eight minutes to long-form content (over 15 minutes in length).

Despite the rise in online video consumption, total TV and video viewing time in the top five European markets has remained relatively stable for the past six years, at an average of 247 minutes of TV viewing per-person each day, according to IHS. However, the composition of total viewing time varies across individual markets, as Netflix, Amazon Prime Video and others become more popular with consumers, particularly younger demographics.

“With the increasing volume of consumption moving away from traditional linear broadcast, monetization of on-demand and time-shifted viewing remains a key concern, as ad-insertion and tracking technology has been slow to keep up,” Fateha Begum, associate director of connected devices and media consumption at IHS Markit, said in a statement. “However, pay-TV operators are still primarily concerned with retaining subscription revenue for the time being.”

Daily linear viewing time in the U.K. declined by more than eight minutes per person in 2017, as DVR use also declined for the second consecutive year. However, on-demand viewing added five daily minutes per person, with the U.K. leading in the amount of time spent viewing non-linear content compared to the other four markets.

Online long-form consumption grew 21%, rising three minutes per-person per-day since 2016, with subscription over-the-top (OTT) services accounting for 74% of viewing minutes, compared to 69% in 2016.

In France, online long-form viewing time increased by 41.6% year over year, or approximately five additional viewing minutes per-person per-day. Netflix, the leading OTT player in France, accounted for three out of four net OTT subscriptions in 2017. CanalPlay, which led the market before Netflix launched in France, experienced subscription declines and closed their standalone OTT service in 2018.

“The shift to OTT consumption signals the need for pay-TV operators to act quickly, in order to retain their foothold in the market,” saidRob Moyser, TV and online video analyst at IHS. “Leading operators are already enhancing their current propositions and embracing OTT, to ensure they capture some of the time spent on other devices and services, so they can stay at the forefront of consumers’ minds.”