An overview of Europe’s film industry

EU film landscape is characterised by the strong presence of Hollywood productions  In 2013 US held a share of 70% of the EU market

What makes the major US powerful vertical integration (spanning from production to distribution)

To face the financing challenges facing EU film companies  film-support schemes from 2009 for 2.1 billion euros (excluding tax incentives and interventions by publicly funded banks and credit institutions)

European film industry is dynamic and encompasses over 75.000 companies

-The big five in EU: France, Germany, United Kingdom, Italy and Spain.

-In 2014 European Commission identified a number of structural weaknesses.

o          Fragmentation of production

o          Limited attention to distribution and promotion

o          Insufficient opportunities for international projects


Cinema was born in Europe (Lumière) Méliès built one of the first film studios in 1897

In 1900 European film companies dominated the world, also in US reaching to 60%. Pioneered both technological and content innovations.

By 1920, the situation changed à the emerging Hollywood studios started supplying the majority of films shown in EU.

This is still the case today, strong presence of Hollywood majors: Sony, Walt Disney and Warner Bros à Vertical integration, control over distribution (star system, use of film sequels)

oIn 2013 EU featured 1546 films Vs US 622 films à However, US accounted for 70% of the EU market.

Situation and trends

Character of the film industry:

Strong reliance on public funding and extensive regulation framework that accompanies it.

Weak relation between quality and the price of a ticket (we need blockbusters to be profitable)

Risk is inherent in film-making, and the industry’s main focus has been on developing strategies of control (copyright, piracy)

European film industry:

In 2013 the estimated share for EU films dropped from 28’9 to 26.2%, while US share increased.

Volatile nature of the companies on the film industry

Companies active in production, distribution or marketing (the whole value network): Pathé: Kinepolis; Constantin Film

However, EU film industry consists of nationally based companies, relatively small and focused on one segment of the value network (many of them set up to produce only a single project)

Due to lower budget à some EU films remain profitable even with small numbers. However à great majority of films do not recoup costs

Lack of large, vertically integrated groups able to compete with US

Europeans go to cinema less than once a month

Important challenges ahead, structural weaknesses

Fragmentation of production

Lack or profitability / difficulty on raising the budgets to compete on global scale

Average of EU production 11 million UK; 5 million France/ Germany Vs US 12-85 millions

Making more film instead of being selective

Limited opportunities for international projects

Minority of EU production companies have regular production rhythm à lack of sustainable productions

Due to financing from national and public bodies à audience focus is often national or regional

Co-productions circulate better than national products, however, tend to be used essentially to ensure financing and not to reach global scale

Focus on production and limited to distribution and promotion

State aid supports film production, with no emphasis on distribution

The major “release window” is cinema à However, Europeand watch films mostly on free TV, VOD or DVD.

Support schemes and incentives

Long tradition on public support à aimed to improve global competitiviness

Public funds co-exist with tax incentives

-State Aid:The EU commission has identified competition among some Member States to use state aid to attract investment form large scale, mainly US à using tax incentives to draw these productions to a country’s location and obtain in return the employment of local film companies, cast…

This practice leads to a distortion of competition, even though it could have indirect economic benefits, they do not necessarily enhance the long-term development of the industry.

In 2013 the Commission adopted new film support rules:

Aid continues being limited to 50% of production

Distribution and promotion may be supported with same aid intensity

Co-production by more than one Member State aid up to 60%

Territorial spending obligations are still allowed but can’t exceed 80%

Some Issues

-Cultural exception and TTIP

Cultural exception à EU has a legal obligation to protect and promote the diversity of cultural expressions

Transatlantic Trade and Investment Partnership (TTIP) à  free trade agreement with the US

-Copyright and piracy

Copyright – Is an incentive for producers and the basis for revenues of contributors in cinema industry value chain

Piracy – 52% of young adults (15-24) consider that buying counterfeit products is ‘a smart purchase

The place of women

Only 16’3% of films directed by women between 2003-2012

Countries with highest production volumes by female directors à medium sized production countries VS UK, Italy, Spain that are below that average.

After the age of 34 their earnings decline, unlike those male actors that remain stable even at 51.

§Roles for older actresses are limited à pressure on maintaining youthful

European Parliament involvement

Best known cultural initiatives à LUX Prize,

Since 2007, supports the circulation of EU (co)productions and aims at overcoming the language and distribution barriers

Focuses on distribution, the winner does not receive a grant, instead during the LUX Film Days, the three films are subtitled in the 24 official EU languages and screened in more than 40 cities at 18 festivals.