Quebec gets its first Netflix original film amid tax, cultural content concerns

A year ago, Patrice Laliberté was on the verge of abandoning his film career and starting down a more stable path.

"I was going to work in video games or something else, I didn't know. I was thinking, 'How am I going to even pay for Christmas presents?'"

With a fistful of dollars from a commercial, the 32-year-old Montrealer decided to give film directing a final go, hunkering down to tweak a script about a group of survivalists in the frigid Quebec outback.

"It was a very desperate time. If this project didn't work, I would have quit for good,'' he said.

Ten months later he found himself meeting with a Netflix representative in a downtown Toronto hotel lobby.

Netflix is a particularly puzzling and difficult company in terms of adapting Canadian policy to actually capturing this new business model.- Rosalie Wyonch, C.D. Howe Institute

"At some point we asked, 'So, do we know when we might have a green light or not?' And she just extended her hand,'' Laliberté recalled, smiling.

"She said, 'If it wasn't 11 a.m. we'd be popping champagne.'''

Laliberté, an upstart director with no full-length credits to his name, is part of the small film-making team selected to make the first Netflix original feature film out of Quebec. It's the latest development of a pledge by the global television powerhouse to spend $500 million over five years on Canadian productions, a number Netflix recently said it will exceed.

Boon, or bust?

Welcomed by some as a boon to a subsidy-dependent film industry, the announcement in September 2017 was not without controversy, particularly in Quebec. 

Then-federal heritage minister Melanie Joly drew criticism for opting not to require the California-based company to charge sales tax on its subscriptions, as its domestic competitors are required to do.

Netflix also sidestepped the rules that apply to the country's broadcasting companies, landing outside regulations to funnel a portion of their revenues to the creation of Canadian programming.

It did agree to shell out $25 million on a strategy to develop the francophone and cultural minority market, but avoided any contractual obligations to do so.

"Netflix is a particularly puzzling and difficult company in terms of adapting Canadian policy to actually capturing this new business mode,'' said Rosalie Wyonch, a policy analyst at the C.D. Howe Institute.

Canadian Radio-television and Telecommunications Commission regulations require broadcasters to air a certain percentage of Canadian content. Netflix, however, doesn't control the amount of content that gets streamed — its subscribers determine that daily.

Whether Netflix should pay into the Canadian Media Fund, as the country's cable and satellite distributors are required to do, is similarly fuzzy, Wyonch said, since the company has claimed it would not have access to the fruits of that fund.

Ottawa launched an expert panel last June to review broadcasting and telecommunications laws, with an eye to including Netflix in cultural funding requirements. An interim report is due in June 2019.

Current rules also allow streaming services that do not maintain a physical presence in Canada to avoid collecting or remitting federal or provincial sales taxes.

The European Union, Australia and Japan have all levelled the playing field among foreign and domestic digital service providers, taxing them similarly. Quebec is on track to do likewise in January, slapping a provincial sales tax on any purchases from Netflix, Amazon, iTunes, Spotify and other online services based abroad.

"The key question is, would this movie have been made anyway, without the no-tax deal with Ottawa?'' Wyonch said. "Netflix is a global company. French is not exactly a small language.''

Netflix produces films and television shows in more than 20 countries, dubbing and subtitling them as part of a content budget of between $12 billion and $13 billion, Wyonch said. That beats HBO's expenditures several times over.

'Refreshing' alternative

Helene Messier, head of an association that represents 150 independent Quebec production companies in film, television and online, called the Quebec announcement "excellent news,'' with a qualifier.

"I hope it's an indication of many more contributions. I think that we won't know until a few years from now,'' she said. "But I think that they understand our market and what our creative people have to offer.''

For Laliberté and the six-year-old Couronne Nord — a Montreal production house whose name refers to the off-island suburbs where he and his two-colleagues grew up — the arrival of Netflix offers a "really refreshing'' alternative to the go-to sources of funding in Quebec, primarily the SODEC funding agency and Telefilm Canada.

"It's a game-changer in Montreal,'' said Guillaume Laurin, the film's 28-year-old content producer.

"Private funding doesn't exist; it's not in the cultural mindset. And the market is so small. It's not like in the United States, where everything is privately funded.''

The filmmakers aim to evoke the province's "nordicite,'' roughly translated as "northernness.''

"We're living six months a year in this, and it's rarely appearing on screen,'' Laliberté said. "For me, since college it was a dream to make films in a winter landscape.''

Laliberté, creatively inspired by the nationalist rhetoric and "end-of-the-world'' conspiracy theories mushrooming on social media, said he hopes to draw on work by directors from Terrence Malick to Stanley Kubrick to evoke the paranoid mindset and militaristic lifestyle of a survivalist camp.

"With climate change or with economic situations, people start to have fear...fear of the other,'' said Laliberté, who won the Toronto International Film Festival award for best Canadian short film with "Overpass'' in 2015.

"It's not a chill, Netflix film,'' he said, joking that the working title is just that: "Netflix film.''