Film-lovers in France will soon be able to watch films through the movie streaming service Netflix, although in an attempt to avoid onerous legislation the company will base itself out of Luxembourg, sources close to the matter told Les Echos newspaper.
The launch will be seen as a big threat to the French film industry -- which is in large part financed by one of Netflix's competitor -- and as a rebuff of the government's attempts to persuade the company to operate within the country's strictly regulated film industry.
Executives from Netflix, which is based in California but which has more than 44 million subscribers worldwide, were received in Paris last week by the Minister of Culture Aurelie Filippetti.
She said after their meeting that she had "nothing against Netflix setting up in France... but they need to get used to the differences with the French market and how they can participate constructively".
However, by basing themselves outside of French jurisdiction, the channel will not be subject to quotas on the number of Francophone films they screen, nor to rules over financing which affect national television channels and in-country video streaming services.
Some in the industry also fear that the launch of the on-demand service, which is expected to happen in the autumn, will take subscribers from Canal+, which is currently the principal financier of French-made films.
Its contributions are based on subscriber numbers so any drop-off could directly hit sponsorship.
The Union of Film Producers (UPF) has written to the minister calling for her to stand firm in the face of the arrival of "direct and unfair competition".
The Film-makers Society of Writers, Directors and Producers (ARP) however, said that the streaming service would be "welcome in France", as long as it "does not sell our work off cheaply".
Netflix already has a presence in a number of European countries, including the UK, Ireland, the Netherlands and some Scandinavian countries.
According to calculations by Citibank quoted by the newspaper, it could reach as many as five million subscribers in France by 2020.
Although best-known for screening films and popular television series', Netflix recently premiered the Emmy-award winning series House of Cards, featuring American actor/director Kevin Spacey.