Netflix silent over unpaid R1.59m SA licence fee

Netflix and chill! (AP)
Netflix and chill! (AP)

Cape Town – Netflix doesn’t want to answer questions over its unpaid licence fee in South Africa already accumulating to R1.59m since the video streaming service rolled out its service in South Africa and across Africa since January 2016.

Netflix owes South Africa’s Film and Publication Board (FPB) hundreds of thousands of rands in outstanding and unpaid licensing fees.

In South Africa, this fee must be paid for online distribution of content and by Netflix for the right to show its collection of content within South Africa. The FPB then classifies the content according to South Africa’s age restriction classification system with localised parental guidance indicators. 

According to South African regulations, Netflix is supposed to pay an annual licensing fee of R795 000 per year for this online distribution right. Since Netflix launched in South Africa in January 2016, it already owes the FPB double that amount for 2016 and 2017 – R1.59m.

Netflix also ran afoul of Kenyan authorities where the global subscription video-on-demand (SVOD) streamer didn’t pay the Kenya Film Classification Board (KFCB) last year and also here didn’t make its content collection available so that it could be classified to the East African country’s localised parental guidance standards. 

Like South Africa’s FPB, the KFCB has the authority to regulate broadcast and film content in Kenya, including on the internet. 

It’s not clear if there are other African countries with localised screening authorities, for instance Nigeria’s National Broadcasting Commission (NBC), that’s also having problems with Netflix not adhering to local video content regulations and applicable fees.

‘Netflix has so far failed to comply’

Sipho Risiba, FPB chief operating officer (COO) told Channel24 that Netflix is distributing its content in South Africa but has so far failed to comply with South Africa’s Film and Publication Act for their video-on-demand service despite several attempts by the FBP to help Netflix to comply.

“Netflix is currently distributing films through their VOD service in the South African market. The FPB Act reuires all distributors of films and games to register as a distributor with the board, pay the prescribed licensing fee and have content classified in terms of the Film and Publication Act and FPB classification guidelines and in this case Netflix is included,” says Risiba.

“The FPB has engaged with Netflix several times to try and asssit them to comply with the Film and Publication Act for their VOD service.

“Unfortunately both parties could not agree to some fundamentalaspects of compliance. We have since sought legal advice on how to resolve the issue”.

While other SVOD services that have sprung up the past two years in South Africa are also not paying their licensing fees, Naspers ShowMax that is Netflix’ biggest rival, told Channel24 in response to a media enquiry last week that it has paid its required fee.

Risiba said that because of confidentiality clauses with distributors he can’t name non-compliant distributors.

“The R795 000 is an annual licensing fee. Currently the distributors have the option of submitting each title for classification prior to distribution, [but] this is not feasible for distributors with a huge catalogue and all VOD distributors that we have engaged with, have agreed to this and most opted for the annual licensing fee,” says Risiba. 

“The agreements help us to co-regulate the content with the distributors, while they exercise control of when and what time to make content live with appropriate consumer advisories.”

Netflix: We have nothing to add to the story

Sipho Risiba says the FPB is currently reviewing its tariffs “that will be fair and justifiable for our economy as well as new and small entrants to the market” and that the tariff review was the FPB’s initiative.

“The process is currently on the last phase, we already had round table discussions and interviews with online and physical distributors”.

Netflix was asked last week why it has not paid the FPB licence fee required in South Africa and if it can give background on the matter from its perspective. Netflix wants South African consumers to use its service but didn’t want to answer Channel24’s question.

Netflix was also asked whether it is negotiating with the FPB regarding the issue of a payable, localised licence fee but Netflix declined comment, saying it has nothing to add to the story. 

Netflix didn't want to respond when asked if its wants to explain its side of the issue, and if Netflix sees the R750 000 annual fee as a type of extortion.

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