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13 February 2020

Salto to arrive two years too late – stifled by French obstinacy

Salto, the perpetually delayed French SVoD platform backed by local broadcasters, has again pushed back its launch date, this time from Q1 to late Q2 2019. While initial plans were thwarted by regulatory confusion, this latest delay appears to be all Salto’s own making in another example of a clueless OTT video strategy.

As Faultline reiterated in summer last year upon reporting on Salto’s slow start, there is a problem with French intransigence and obsession with US invaders in general, and Netflix in particular, which is leading broadcasters to bang their heads against a wall rather than seeking opportunities to mingle competition with cooperation over content creation to take advantage of the additional investment available. After all, Canal+ has actually tried to make a virtue out of slashing its content budget to the bone at a time when Netflix has been increasing spending on French original content.

Joint owners TF1, France Télévisions and M6 first revealed Salto plans in June 2018 and so the debacle means the service will arrive over 2 years late.

A fundamental mistake is that Salto should have made launching in France before the arrival of Disney+ an absolute priority. Its tardiness simply translates to a huge missed opportunity and a resultant mountain to climb to catch the established SVoD rivals, three months behind new entrant Disney+.

But even Salto’s June arrival will only be half-baked, launching on a trial basis in select regions before expanding country-wide later this year around Autumn time.

Already, the deficit is vast. Netflix numbers vary – with some claiming the US giant surpassed 5 million subscribers in France this time last year, rising to approximately 6.7 million subscribers there today, while other projections have Netflix on a more modest 3.3 million as of summer 2019, reaching 4 million today. Our research arm Rethink TV puts Netflix somewhere in the middle on around 5 French subscribers today.

Either way, the point is that by the time Salto arrives to market later this year, it faces a very different marketplace to when plans were first laid out for the service. Two years is a very long time in television.

So, who’s to blame? Well, Salto was first passed to the European Commission, which then in March 2019 handed it down to the French authorities to adjudicate on the grounds it had limited bearing on competition outside the country. Despite fervent campaigning from French operators, namely Free, Salto was eventually approved by regulators in August 2019.

Salto’s GM Thomas Follin told French newspaper Le Figaro that Salto will “recruit very eclectic programmers, personalities, influencers, who will make their own recommendations. It is a question of going beyond the standardization in which the algorithms enclose us.”

Follin revealed that Salto will cost between €5 and €10 a month and is actively pursuing set top integrations deals with tier 1 operators including Orange, Bouygues Telecom and Altice. He added that 15,000 hours of programming is the initial target and the group aims to increase this to 20,000 hours by the end of this year, promising the addition of “several new programs each month.”

However, Follin did not comment on Salto’s plans for concessions, which have included placing a 40% limit on how much non-movie content can be supplied exclusively from the service’s three parent broadcasters. While this specific concession remains unconfirmed, what we do know is that Salto is unable to ink exclusive carriage deals with linear DTT channels and the three broadcasters must make all DTT channels and associated services available to third-party distributors.

Meanwhile, Vivendi’s Canal+, broadcaster and pay TV operator, has resurrected its Netflix competitor as Canal+ Series. This came after failure of its first SVoD service CanalPlay which predated Netflix’s arrival by three years and so was prey to that event rather than posing as predator.

CanalPlay was fatally wounded and took four more years to be killed off by its owner to spare further suffering, raising the question of why its successor should succeed. Canal Series is a much more slimmed down and focused venture distributing just series, including both local and international content, and so in a way is going even more directly against Netflix. However, Canal+ CEO Maxime Saada insisted that lessons had been learned to complement Netflix by offering different local content, albeit with the same model around a low-cost subscription. The decision to stream just series was also motivated by the fact that French streaming rules are much more permissive for those than movies.

In keeping with other vendors, Canal+ has sought to exploit Netflix’s recent price hike and set the price just lower, charging €7 a month to stream in HD and 4K on one screen at a time, or two screens at €10 and four screens €12. Netflix in France costs €8 for the basic package, €11 for HD and two screens, and €14 for 4K and four screens.

Of course, it comes down to content and if many consumers see Netflix as essential and Canal+ as a nice to have extra then the lower pricing may not count for much.