“SMAD” decree: Establishment of financing obligations for video-on-demand platforms
As the industry and the public prepare for the atypical Cannes Film Festival in July 2021, the entire audiovisual ecosystem is on high alert as the reforms progress.
This Wednesday, June 23, the decree n°2021-783 of June 22, 2021 on audiovisual media services on demand (SMAD for services de médias audiovisuels à la demande) was published in the Journal Officiel. The text, which comes into force on July 1, 2021, specifies the obligations of platforms in the financing of French works. The CSA underlines “the major step that this text represents in the modernization of the system of financing creation, in a context of deep mutation of the audiovisual sector”[1].
What is an on-demand audiovisual media service (SMAD)?
This term includes subscription, paid or free video-on-demand services, as well as catch-up television services: Netflix, Amazon Prime Video, Disney+, etc. The decree of June 22 is applicable both to SMADs under French jurisdiction and to foreign SMADs targeting France.
New financing obligations in French and European creation
A major contribution of the decree is the obligation of foreign video-on-demand platforms targeting France to comply with the rules of contribution to the financing of the production of cinematographic and audiovisual works, just like the services established in France.
Subscription services will have to dedicate at least 20% of their annual revenues in France to the development of the production of European or original French cinematographic and audiovisual works. This rate will be increased to 25% when they offer one or more films each year less than twelve months after their release in France. The distribution of this contribution will be determined by the agreement concluded with the CSA, without the share for audiovisual or cinema being less than 20% of the total contribution[2].
This contribution may take the form of purchase exploitation rights, investments in producers’ shares under certain conditions, funding for writing and development work, adapt to people with disabilities or finance dubbing, subtitling, promotion[3], etc.
A significant part of the contribution will be support independent production: three quarters of the contribution for the development of independent [4]film production and two thirds for independent audiovisual production[5].
The decree also includes provisions to ensure diversity among the works financed. In the audiovisual field, this diversity is ensured by genre [6](fiction, animation, creative documentaries, etc.[7]).
This decree continues to make the American giants react but also the European Commission. Indeed, the latter had expressed several reservations about the SMAD decree in an opinion issued on March 19. The platforms also retain the possibility of appealing against the decree, putting forward the observations they had made to the Commission. Netflix had especially requested that its productions benefit from CNC aid and the tax credit.
The events to come in the next few days, such as the current negotiations on the media chronology and the CNC’s treatment of programs financed by American platforms, will be decisive.
Our audiovisual and media law team has conducted an in-depth analysis of the details of the reform: producers’ and broadcasters’ rights on productions and co-productions, impact of Brexit, etc. We prepare for our clients and friends our analysis of every aspect of the “audiovisual Big Bang“.
Decree No. 2021-793 of June 22, 2021 “SMAD”
Source
[2] Article 14 of Decree No. 2021-793 of June 22, 2021
[3] Article 12 of Decree No. 2021-793 of June 22, 2021
[4] Article 21 of Decree No. 2021-793 of June 22, 2021
[5] Article 22 of Decree No. 2021-793 of June 22, 2021
[6] Article 18 of Decree No. 2021-793 of June 22, 2021
[7] See e.g. article 16 of decree n° 2021-793 of June 22, 2021