Why Netflix isn’t paying the FPB: We don’t have to

2017-10-23 12:31

Cape Town – Netflix – on why it isn't paying the licensing fees for its content made available in South Africa to consumers as required by the South African Film and Publication Board (FPB) – has a quite blunt response: "We don't have to".

Netflix says the global video streaming giant doesn't believe that it has to pay South Africa's FPB anything.

Netflix has so far refused to register with the FPB since it launched in South Africa and across Africa in January 2016. It "owes" the FPB more than R1.59m in unpaid licensing fees.

The FPB screens and provides an age restriction and parental guidance system to content as part of its content classification system.

MultiChoice for its DStv satellite pay-TV service including DStv BoxOffice, and Apple iTunes are paying their FPB licensing fees.

So are the subscription video-on-demand (SVOD) services like Naspers' Showmax and PCCW Global's ONTAPtv.com.

The South African Film and Publication Board recently released a draft review of its licensing fee tariff scale for online distributors in South Africa, suggesting adjustments that will end up costing Netflix even more to have its content be available in South Africa.

The South African government is furthermore hell-bent on "regulating" global online video services like Netflix and YouTube.

The department of communications will shortly release a draft Audio-Visual and Digital Content Policy for SA in parliament for public comment.

Other African nations likewise want Netflix as a global video golden goose to pay up in terms of license fees or be gone.

The Kenya Film Classification Board (KFCB) for instance has threatened to ban Netflix over its refusal to be "properly licensed" in Kenya and called Netflix "a threat to moral values and national security" in the East African nation.

'We're not a broadcaster'

On Wednesday Netflix spoke to South Africa media and answered questions from the press at its first Netflix House SA media event in Cape Town and Channel24 asked Netflix why it isn't paying the FPB licensing fee as required.

"We're an over-the-top (OTT) service, we're not a broadcaster; we're not licensed spectrum, or granted specific wavelengths to broadcast on," said Yann Lafargue, manager for technology and corporate communications at Netflix for the Europe, Middle East and Africa (EMEA) region.

"We're also not linear television where we have obligations to have certain content, with regulations and content quotas. We're omnipresent, so basically it's a different ball-game – and we don't have to pay those fees."

Lafargue said "some of them argue that we should, and we are in contact with them. We do believe that we do not have to do that. And that's the same case in many countries in the world where they have content regulation and there's questions about ratings, or censorship."

"There's always a wish from a regulator to try to get power from things like video streaming services, and we're trying to move away from that because we do think that the content matters and we try not to censor content in general."

"If we have to pay a fee and its legally binding, we always respect the laws of a country where we operate. Right now, we don't have to."

"To be fair, the amount we should pay isn't necessarily big, but it's the question of why pay something if you don't have to?"

"We will rather invest the money in a local Netflix original show or content, like a Trevor Noah stand-up show rather than just put money where we don't have to."

'We don't want a cumbersome system'

When Channel24 asked if Netflix doesn't believe that something like the South African Film and Publications Board should set local parental and age restrictions for films and content that's suitable for South Africa's unique socio-demographic and cultural circumstances, Yann Lafargue said Netflix self-regulates.

"In some cases where there's something different we will have a discussion with the ratings board, and in some countries they are stricter than others. Like in Singapore for instance, or South Korea, they are very stringent."

"You can have a 12 [parental guidance] for something and then it's going to be 18 for that somewhere else. We're trying to make sure that we're empowering customers based on the country."

"There's no point in us forcing something down your throat if we think we're not ready. So we're open to discussion," said Lafargue.

"What we don't want is to have – imagine, we have thousands of titles on Netflix – is to have a cumbersome system where you have to give them the content, and they need to watch it and decide whatever, and to then be consistent. It's complicated."

"It's a bit messy so we're trying to do things by ourselves. But what we're doing in some markets is we're trying to show them, and ask 'For those shows, what would be the ratings?' And we try to self-right ourselves to close the discrepancy."

"So we're trying to understand, and to be a good company and good corporate citizen in general."

"If someone thinks that if there's violence or nudity, automatically it needs to be [age restricted] above 16 we'll do it, we have no issue with that," said Lafargue.

"We want the freedom to regulate ourselves. When there's layers of complexities it's never good; it's just slowing the technology; everything."

"Imagine if you have that [process of screening] and then you need to wait 6 months because they don't have the capacity or the bandwidth to watch all the content of 650 shows – not even talking about the licensed shows we have there, then you become again a second-ranked citizen because of your own regulator. And then there's again the issue of piracy."   

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