The issues of the emergence of a single digital audiovisual market : the French case


Published in DigiWorld Economic Journal DWEJ No. 101

Interview with Nicolas CURIEN & Nathalie SONNAC

Commissioners, Conseil supérieur de l'audiovisuel (CSA) (*)

Conducted by Alexandre JOLIN  

(*) This interview only reflects the views of the contributors, not the CSA's official positions.


C&S:  Since the late 70's, the European Commission has aimed to harmonize the regulatory landscape for audio-visual in Europe. The TVWF then the AVMS directives have created a legal framework allowing the circulation of linear TV and on-demand audio-visual media services in Europe. As part of the European Commission's Digital Single Market strategy, a review of the AVMSD has begun in 2015 and legislative proposals are due to be set out in 2016. Being the regulatory body for France, as a member state, how is the CSA involved in those consultations? According to you, which issues are to be primarily resolved?

Nicolas CURIEN & Nathalie SONNAC:  Intending to bring its regulator's viewpoint and its expertise in the practice of regulation, the CSA contributed to the European Commission's consultation about the review of the AVMS directive, entitled: "A framework for the audiovisual media in the 21th century". The CSA also participated in the cross-ministerial preparation of the French Authorities' positions and it provided a contribution to the French answer to the AVMS consultation. Mostly, the CSA plays a very active role in the European Regulators Group for Audiovisual Media Services (ERGA), which was chaired, during its two first years of existence (2014-2015), by Olivier Schrameck, the chairman of the CSA. Created in February 2014, by the European Commission as an advisory body examining issues related to media services, the ERGA stands now as a key institutional innovation, pushing forward European audio-visual policy matters. For us, as national regulators, working together within this structure represents a strong opportunity to carry out an in depth future analysis of the audio-visual sector and to stimulate the emergence of common initiatives. The ERGA is in charge of assisting the Commission in the revision of its legislative instruments, as it is now the case for the AVMS directive.

The audiovisual services drastically changed since the adoption of the previous directive in 2007. The present situation, resulting from the dynamics of "convergence", was not anticipated in the first place and it calls for several substantial adjustments in order to take into account the development of on demand non linear services, of interactivity, as well as usage of associated data. Moreover, the irruption into the French and European audio-visual markets of large and worldwide OTT players, such as Netflix or Google, raises a new kind of issues, which must be solved at the European scale. As specifically regards the revision of the AVMS directive, the ERGA produced three reports, published in January 2016, respectively about the independence of national audio-visual regulatory authorities, about the possible extension of the directive to new online players, and about minors' protection. These reports include recommendations which were unanimously approved by the 28 regulators of the European Union's member States. The ERGA thus invites the Commission to incorporate its proposals in the revised directive. An additional report about the territorial competency of regulators will be issued in the course of spring 2016.

One of the proposals on the table is to apply the same obligations placed on TV broadcasters and on-demand TV-like services to online video sharing platforms as well. Is this a realistic solution to complete the existing film and audio-visual financing system?

This issue goes well beyond the particular case of video sharing platforms, as it also includes all digital intermediaries which are commonly designated under the generic term of "platforms", such as content distributors, content aggregators, providers of applications, sharing platforms or suppliers of devices; that is, all players which hold a position between content and usage, making them gatekeepers of the access to content. All actors who develop a strategy around content and/or are involved in the exposition and the promotion of content, especially through algorithms are concerned. Since these new operators do orient consumers and deliver prescriptions to them, they doubtless play an editorial role which is similar, up to a certain extent, to that played by traditional audio-visual editors. Then, it seems both sensible and in line with the driving principles of audio-visual regulatory policy to set up for new players an adapted regime of obligations. However, such a regime should not of course ignore the necessity of sustaining the pace of innovation: when contemplating a new deal and a new toolkit for audio-visual regulation, one must not at the same time slow down the growth of innovative services which largely contribute to widen the exposition of works and do constitute a major source of creativity in the audio-visual sector.

One size does not fit all and all platforms should not be subject to the same degree of regulation: namely, a small platform should not be treated as YouTube. Proportionality should thus be set as a guideline and the regulator should focus in priority on platforms which bear a significant impact onto the market. Moreover, as it would clearly prove inefficient to set local obligations to global players, a common harmonized framework has to be defined within the European Union. Achieving proportionality, within a renewed regulatory scheme designed for digital intermediaries, also requires that rules existing for traditional editors be adapted in order to reach a satisfactory matching between obligations and the specific characteristics of the new actors. More generally, traditional regulation should not be transposed unchanged onto the digital world, a world in which the speed of evolution is very high, in which some players are active at an international scale and in which the business models greatly differ from classical ones. Accordingly, an effective regulation should be based on a triptych associating public policy, users and operators and could mainly rely upon co-regulation and self regulation. Such a perspective is precisely consistent with ERGA's present undertakings, which consist in identifying audio-visual centric platforms, rather than all platforms, with the objective to align their behaviour with the traditional goals of audio-visual public policy, although under a proportionate regulatory approach. Indeed, the public policy goals, which underlie the existing obligations set for traditional actors, such as minors' protection, copyright enforcement, investment in creation, or fair competition, do still prevail for digital platforms. In the Digiworld, goals remain the same; modalities may differ!

With the rise of international OTT services and the ongoing consolidation of the European content industry, how can policymakers best safeguard and promote cultural diversity across Europe?

Reaching a critical size through consolidation is a necessary step to preserve a model of diversified content in Europe. This does not amount to geographic confining, but rather calls for a more extensive and international approach, strongly based upon European cultural specificities. This global strategy should concern production, traditional edition and new digital platforms as well. Europe holds a solid position in terms of local content production and it must derive benefit from it. However, the momentum has to be generated through a coordinated policy, as it cannot result from the separate actions of isolated national players. In this regard, regulators also are at stake and they must rapidly come towards a more inter-institutional approach.

In their efforts to promote the diversity of content, the European editors should use linear TV, which is still by far the dominant mode in consumers' practice, as a kind of "factory" in order to produce pieces of original content promised to become brands of their own and move towards non linear usage on electronic platforms, after a first lifetime spent inside the grids of linear TV in order to get some notoriety. As access through networks is a necessary condition for access to content, synergies between medias and telcos should also be considered in order to extend the scope of content distribution and to reduce its cost. Moreover, promoting diversity heavily depends on the ability of creators to finance their content and make it available to consumers. In this respect, fair access to all distribution channels, especially online platforms, stands as a key enabling factor: hence, the strong attention of regulators to the net neutrality and the content visibility issues

Today, the OTT video industry is mainly driven by non European players such as Netflix, Apple or Liberty Global, which, despite its British implantation, is controlled by a US holding company. According to you, what could be done to ensure the development of a strong European OTT players and ensuring the sustainability of the traditional broadcasting market?

This question relates in part to the issue of rights' territoriality. A right balance has to be found between the two conflicting objectives of maximizing rights' monetization, on the one hand, and extending content's exposition, on the other hand, in a fast moving context where the growth of digital platforms makes territorial enclosure unsustainable against bypass or piracy. Since reaching such a balance likely means substantial change in the present contractual arrangements, a concerted sectorial process is needed gathering together rights holders, editors and distributors.

At least, large national players should contract partnerships and launch together digital Pan-European services, with a strong identity. As already mentioned above, these developments cannot take place at a national scale, while the main international competitors, such as Netflix, do operate worldwide, do offer worldwide content, and are less and less subject to territorial constraints; it is especially the case as regards TV series available in SVOD services, such as House of Cards, exploited under a "free" regime. In this revolutionary context, where the historical category of TV channel might sooner or later be replaced by the upcoming category of brand-content, the sustainability of traditional players is clearly conditioned to their ability and willingness to co-design adaptive and cooperative ways of deriving as much value as possible from their content.

On demand video services are currently regulated in their "country of origin". Some players are denouncing this as a distortion of competition because legal obligations can differ highly from one Member State to another. As was already done for the VAT last year, would it be recommended or possible to apply a "user-centric" approach, setting the focal point on the end-user instead of the service publisher?

The country of origin's principle certainly helped to create a common audio-visual market, as it facilitated the cross-border circulation of services, warranting legal security to broadcasters. In practice, however, this principle proves insufficient to set the conditions of a fair competition across service providers, since the AVMS directive is a framework for coordination, not harmonization, and some member States chose to adopt stricter rules than those prescribed in the directive. This may lead to a particularly critical situation, whenever a service is explicitly directed towards a given State within the Union, although it is established in another one: such as they are today libelled in the directive, the present procedures do not actually allow a member State to apply its possibly stricter rules to a foreign service aiming to reach its citizens. As a consequence, a severe imbalance is potentially created across operators competing in a same local market, some being subject to stronger obligations than others. Then, in order to avoid damageable "regulatory shopping" strategies, a fair and effective competition across all European operators must be guaranteed. In this regard, it is proposed that the European regulation be modified, by introducing an exception to the country of origin's principle, which would allow a given destination country to apply its own rules to those services which specifically address its population. This proposal does not intend to abolish the country of origin's setting, which would remain the general ruling, but just to amend it at the margin, to deal with circumstances where its application would obviously result in a harmful distortion in the marketplace.

The European Commission has also made a legislative proposal to change the copyright framework to allow cross-border portability of online video services, ensuring that consumers can access content they bought when they travelled in other EU countries. Could content portability be a structural threat for national TV industries? What could be the right balance between protecting right holders' revenues and guaranteeing access to consumers?

The European ruling about portability, issued last December, is a most appropriate initiative and it brings very good news to all European citizens, who will have access to their national offers of digital content when they travel abroad within the Union. Yielding such a significant benefit to the travelling and nomadic citizens should nevertheless not threaten the principle of rights' territoriality, which remains a very important piece in the framework in order to preserve a fair remuneration of authors. The application of rights' portability should also not hinder the commercial development of European players. Therefore, the precise conditions of portability now have to be carefully designed, through a clear specification of the criteria, characterizing temporary versus permanent residence. Finally, a realistic time frame should be set, that is not too short a one, in order to ease the operational implementation by operators.

Over the last years, linear TV revenues growth has tended to stagnate in Western Europe while on demand services, mainly SVOD, have been generating increasing traffic with low monetization rate. On the other hand, traditional broadcasters currently face stricter rules than on demand video services in some areas, such as promoting European cultural works. According to you, what would be the right balance between promoting European OTT players and protecting the traditional broadcasting market?

Seeking here for a "right" balance is maybe not fully appropriate, for the consumers do not show a same and unique profile of usage. Consumption practices vary greatly indeed, especially according to age and to social class, which leads to a wide scope of expectations in terms of kind of content, modality of usage and type of viewing device: television, tablet or smartphone. Linear TV and OTT services are likely more complements than substitutes, since they don't address the same audience and are operated under different business models. Therefore, the relevant issue is less that of balancing efforts between online versus traditional supply, than that of designing tailored offers, well fitted to individual contrasted needs, and identifying efficient synergies as regards, for instance, works' circulation and cross-promotion. In this direction, a major difficulty must be overcome: market prices of online services are established at a low level, those of SVOD lying around 10€ per month, in such a way they do not enable a single player to make the substantial investment which is required to produce attractive, competitive and self viable content. Hence, a consolidation of means at the European scale appears as a necessity. Finally, demand must be stimulated as well as supply and, in this respect education to media and to European culture is a key factor of success.

Is there any need for concentration in both service publishing and distribution sectors in order to make European champions emerge? Should this solution be supported by national regulators?

A process of concentration across players located at different links within the audio-visual chain of value, or even between actors present within that chain and outsiders, may already be observed in France, just as it is in other European countries. In France, major recent examples are the fusion of Numericable and SFR, the agreement between Altice and NextRadioTV, the acquisition of Newen by TF1, the integration of Canal+ within Vivendi. Public policy should of course encourage all industrial strategies which favour a cultural rebalancing, enhance the exposition of the French and the European cultural patrimonies and increase their value. Regulators should nevertheless be most attentive in ensuring that major transformations in the audio-visual industry do not bear a threat against fundamental ethical principles, such as liberty of expression, editorial freedom and independence of information.


Nicolas CURIEN, a member of Corps des Mines, sits at the board of the French Regulatory Body for Radio and Television (CSA), since 2015. He also is Emeritus professor at Conservatoire National des Arts et Métiers, where he held the chair "Telecommunications Economics and Policy" from 1992 to 2011, before being Commissioner in the French Regulatory Body for Telecommunications and Post from 2005 to 2011. An expert in digital economics, he taught at École Polytechnique from 1985 to 2007 and is a founding member of the French National Academy of Engineering.

Nathalie SONNAC (Doctor of Economics) chaired the Information and Communication Department of Paris 2 from 2009 to 2015 and was in charge of the professional Master 2 "Media & Public". As a media economy expert, culture and digital technology, she is also the author of numerous scientific books and articles in this field. More specifically she analyses the issues of competition and regulation in the digital age, market interaction, new business models, and monetization of digital content. She was appointed Commissioner at the Conseil supérieur de l'audiovisuel by the President of the French National Assembly on January 5, 2015 for a six-year mandate.

More information on DigiWorld Economic Journal No. 101 "Towards a single digital audiovisual market" on our website

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