When Netflix is expected to launch in France this fall, it won't be basing its operations in the City of Light or environs, but in the Grand Duchy of Luxembourg.

Why Luxembourg? To begin with, the principality is home to the company's European headquarters, and over the last few years, the streaming service has become available in Ireland, the Netherlands, the U.K. and Scandinavia.   

But according to a report from French business daily Les Échos, while Netflix CEO Reed Hastings met with culture minister Aurelie Filippetti and technology minister Fleur Pellerin, France's film and media industry regulations played a significant role in where Netflix has chosen to set up shop.  

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Being based out of France would require the company to put some percentage of its revenue into French and European content. For example, VOD service Canalplay Infinity -- which is run by Canal+, a French distributor and studio -- pays 12 percent of its yearly revenue into locally-made films and 15 percent into European movies.   

Additionally, the promotion of French films could extend to changing the algorithm Netflix uses to recommend titles to users, which the service reportedly wanted to sidestep. By 2020, the company could count 5 million French customers among its global users.

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