Canal+ Chief Maxime Saada on Why He Owes Netflix So Much

Canal+ Group chairman and CEO Maxime Saada, who was honored at Mipcom with the Variety Vanguard Award Monday, underscored how the experience of the past informs the company’s future strategy, which includes an emphasis on aggregation and a ramping up of in-house production. He also explained why he believes his company “owes so much to Netflix,” but fears Amazon and YouTube.

“If you want to talk about the last seven or eight years you have to think about the history of Canal+ because it has driven a lot of our actions. And one of the key elements regarding Canal+ is that it’s a company that has almost died several times,” he told Cynthia Littleton, Variety‘s co-editor-in-chief in an on-stage conversation.

He explained that the company, the first pay-TV operator in Europe, launched in 1984, and that initial success was rapidly followed by “a gigantic failure and for a while it was on the brink of disaster.”

Other such moments of “disaster” followed, including the two years preceding the year Saada joined, 2004. He said that such experiences honed the company’s “survival instincts.” “And so, a lot of my actions have been driven by my obsession for the company to survive,” he said.

“It was a very tough times for us when I was appointed [CEO] because we had to do very significant cost reductions, close to 20% of our cost base,” he said. The company also lowered the cost of subscription “to find some growth,” and it expanded overseas, which he described as “very risky.”

All of this, however, he views as a strength in the long run. “When you have survival instincts, you’re really at your best when you’re in the toughest situation,” he said.

He explained that “at that time Canal+ was a very French company, and very dependent on a few rights.” One of those was French soccer rights, which they lost in 2018, igniting another crisis for the company. “At the time, our research was telling us that half of our subscribers will probably leave if we didn’t have those rights,” he said. “We were so dependent on those rights. And, you know, it’s a fixed cost base, so if you lose half of your subscribers, again, you’re dead.”

For Saada, this crystalized his view that the company could not have all its eggs in one or two baskets, and that led Canal+ to sign deals with the Hollywood studios, and a rising star, Netflix. “My personal obsession was to reduce all our dependencies. We were too dependent on the French market. How do we go overseas and reduce this dependency? We’re too dependent on French soccer, so we expanded into motorsport, Formula One, rugby, the Champions League… And we signed up for deals with all the Hollywood majors, and then we signed a very significant deal with French cinema. And then, you say, ‘Okay, how do we reduce that dependency,’ and that’s when I went to see [Netflix chief] Reed Hastings at Los Gatos.”

He added: “I had a very long conversation with him and tried to convince him that we were not necessarily competitors; we were on the same side because we were both trying to convince people to pay for content.”

This prompted a move towards aggregating content. “We started integrating the platforms into our offer: Netflix and then Disney+, and then Lionsgate, and finally Apple TV+,” he explained.

Saada credits Netflix for showing companies like his how to transform their businesses. “We owe so much to Netflix, because they showed us the way. They showed it was possible to have shows and movies travel to build scale like they did,” he said.

He added that Netflix showed them the way in other ways too, and he was helped by the fact that although Netflix were already a success in the U.S., it was a while before the streamer launched in France, “so I had a head start,” he said. He saw that they were enabling binge watching in the U.S. by dropping all episodes of a season at once, so he did the same in France, starting with the show “The Tunnel,” a co-production with U.K. pay network Sky.

Speaking about Canal+’s expansion geographically, Saada focused on the opportunities in French-speaking Africa, with the growing middle-classes there, which has given the company more than 8 million subscriber in the region. “We see that as potentially the greatest opportunity for Canal+ in the near future,” he said.

He sees opportunities in Africa for his production and distribution arm, Studiocanal, as well. “Everyone is looking for the greatest story to tell, and in Africa, we believe there are billions of stories that have not been told. And as soon as you ramp up the production capabilities and the production values and you give these voices the ability to tell their stories, we really believe there’s an opportunity there,” he said.

Canal+’s investment in content is substantial and a huge proportion of that is on acquisitions. It spends 3.5 billion euros on content a year, and its production arm, Studiocanal, spends about 300,000 euros, less than 10%. “One of the greatest challenges for us,” he said, was to reduce the company’s dependency on third-party content, and ramp up in-house production, although he said the company was open to selling its films and shows to third parties itself. “We’re very open,” he said. “I always say: My competitors are also my partners.”

He added that the companies that are “probably the biggest threat to Canal+ are Amazon and YouTube because they’re so big, and very efficient at what they do. And their main business is not necessarily our business, so that’s a danger as far as I’m concerned.”

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