Small European Film Markets: Portraits and Comparisons

Germany

Germany boasts a longstanding filmmaking tradition and a vibrant landscape of both public and private TV stations. With over 20,000 companies contributing to the film industry, the sector generated a substantial revenue of €11.6 billion in 2020, offering employment to approximately 118,000 industry professionals (German Trade & Investment).

Echoing difficulties faced by film industries across Europe and elsewhere, the film industry in Germany faced severe setbacks during the pandemic, significantly impacting both film production and cinema attendance. Projections suggest that the industry may not fully recover to pre-pandemic levels. Even before the pandemic hit, the German cinema industry was experiencing a decline, marked by decreasing ticket sales, diminishing audiences, and unchanging rates of cinema attendance (FFA, 2023).

In 2022, German films accounted for 27% of the 78 million cinema admissions in Germany, with cinema attendance remaining 34% below pre-pandemic levels in 2019, according to FFA statistics.

In 2022, German films found their largest audiences in Europe, while Asia, notably Japan, along with Australia and New Zealand, also stood out as key export markets, as reported by German Films Service and Marketing.

The German production market consists of about 900 companies, two-thirds of which are active as TV producers and one-third as cinema film producers. About 1,300 production companies are active in the field of advertising, image, and industrial film production (Goldmedia, 2022, p. 11). The production companies are concentrated in four main film hotspots. The largest among these is the Berlin-Brandenburg cluster, hosting 190 production companies in 2020, followed by North Rhine-Westphalia with 162 production companies, Bavaria with 144, and Hamburg with 66 (German Trade & Investment). Studio Babelsberg, located just outside Berlin and founded in 1912, stands out as the oldest and largest film studio.

International concentration trends are influencing the German market, with a rise in mergers, acquisitions, and global expansions. According to a report by Goldmedia, the market share of the largest production companies – those with over €25 million in revenue – increased from 49% in 2011 to 55% in 2017, despite a slight decrease in their numbers. The concentration trend is expected to persist.

In terms of investments, the production sector in general shows a positive outlook, driven by the growing demand for new content, especially through streaming services. Local content has become a crucial success factor for domestic and global streaming providers to attract audiences. Small, independent producers see new opportunities for developing and distributing their content, with Netflix significantly increasing its investment in German production. Other major investors include German public broadcasters, FranceTV, and the BBC.

TV broadcasters play a vital role in film investments, but not the point as it happens in France (EAO), often engaging as co-producers with rights linked to the first TV broadcast or digital platform commercialization. Traditionally, the ARD public broadcaster has been the largest investor in productions, directing a significant portion of expenditures to independent producers and commissioned productions. Despite the general positive trend, investments in cinema films have seen a general decline in Germany.

An emerging trend sees more production companies collaborating with major streamers, resulting in financial connections and dependencies. This has sparked criticism, particularly regarding legal and licensing issues. Numerous asymmetries between independent producers in Germany and global streaming platforms are identified, encompassing financing, marketing, commercialization, negotiation power, usage data availability, and editorial matters. As a result, the film industry faces various risks that could potentially alter the independent production landscape adversely.

Compared to other EU countries such as France, the production landscape in Germany has received less regulatory protection. The high demand for content by streamers has led to a significant need for creative, organisational, and technical professionals. Consequently, professionals can negotiate higher salaries and improved working conditions, contributing to a substantial increase in production costs. As a result, if total production budgets remain stable or experience only slight increases, the overall number of productions may stagnate or decrease.

Another noteworthy trend is the shift in volume from cinema film production toward the production of high-quality series. The time-consuming nature of series production has led to a substantial increase in the utilisation of available production capacities, impacting cinema film productions. Experts suggest that expanding the work and promotion of junior staff is crucial to alleviating the shortage of talent. However, young creative professionals face significant entry barriers and a lack of development opportunities, contributing to an industry-wide ‘war for talent’. Many independent producers find it increasingly challenging to attract sufficient talent for their projects.

Germany has emerged as an important destination for international filmmakers seeking financial opportunities.

The German Federal Film Fund (DFFF) has two specific funds for films and documentaries. Producers engaging in the production of feature films, documentaries, or animated films in Germany, with a minimum expenditure of 25% of their budget in the country, are eligible for a grant. The grant can range up to 20% of the approved costs and, in certain cases, up to 25% of the approved costs. These grants from DFFF I programme are intended for producers of small and medium-sized productions with total production costs of at least €1 million for feature films, €200,000 for documentary films and €2 million for animated films. The maximum amount per film is €4 million.

Production service providers of high-budget films can apply for a grant through DFFF II if the film budget exceeds €20 million and German production costs surpass €8 million, allowing them to obtain a grant of up to 25% of the approved costs, with a maximum amount per film of €25 million. In addition, Germany has the German Motion Picture Fund (GMPF) for high-end series and TV/VoD films. For producers of films not for cinema release with total production costs of at least €25 million per film, the maximum amount is €10 million. The objectives of the production incentives are to ensure the competitiveness of film production in Germany and support the existing infrastructure (BKGE, 2023).

The 107 projects which received funding of €50.2 million from the DFFF I scheme included 71 feature films, 33 documentaries and three animated films. International co-productions in Germany received a total of €108 million in funding in 2022 (6 million more than in 2021). The DFFF II scheme, which was introduced in 2017, provided €28.9 million in funding in 2022 for a total of six films. The GMPF budget was considerably increased 84.4 million awarded to 43 projects in 2022 (BKGE, 2023).

The cinema industry in Germany experienced a substantial blow during the pandemic. According to a report by Goldmedia, preceding the pandemic, there was already a gradual decline in the annual number of cinema tickets sold, with an average decrease of approximately 2.2% each year between 2001 and 2019. Despite this, cinema revenues exhibited an average annual growth rate of 2.1% from 2009 to 2019, attributed to rising ticket prices and increased average spending by cinemagoers on consumables.

Cinemagoing in Germany has endured severe setbacks due to the pandemic, and a full recovery has not been realised by 2022. The younger audience segment, up to 19 years old, stands out as the most pivotal and active cinemagoers. In contrast, older viewers have exhibited a lower likelihood of returning to cinemas after the pandemic. Nevertheless, the average age of cinemagoers increased from 34.5 to 39.5 years between 2011 and 2019 (Goldmedia, 2022, p. 23).

Between 2019 and 2023, ticket prices escalated by 13%, reaching an average of €8.87 each in 2021. In 2020 and 2021, only 54% of cinemas could invest in their operations with external funding, while 38% indicated an inability to invest at all. Despite these challenges, the number of cinemas and venues has generally remained stable and even experienced a slight, consistent increase over the years.

The cinema market in Germany demonstrates notable concentration, with the four largest cinema chains – Cinestar, Cineplex, Cinemaxx, and UCI Kinowelt – dominating the multiplex sub-market, accounting for approximately 90% of multiplex ticket sales, according to a report by Goldmedia (2022, p. 23).

A heightened production output of German producers has not translated into an increase in ticket sales for German productions. In 2022, US films continued to dominate German cinemas, with 15 of the top 20 most successful films originating from the US. This dominance extends to paid-VoD providers, where more than a third of titles in programming libraries came from the US in 2021. Comparatively, 13% originated from Germany, 9% from the UK, and 7% from France. When considering the distribution of titles watched by country of production on paid-VoD, the US contributes to over half of the titles viewed, according to a report by Goldmedia.

While foreign language shows and films in Germany are predominantly dubbed, there is a growing trend among young Germans to prefer watching English-language content in its original language.

In 2019, there were 144 distributors with at least one film on the market, generating a total revenue of €425 million (Goldmedia, 2022, p.21). An observable trend in the industry is the vertical integration of larger distributors, expanding their production capacities.

Video-on-Demand (VoD) has emerged as an increasingly prominent platform for film releases, with cinemas traditionally serving as the primary stage for newly released films until the onset of the Coronavirus pandemic. A few major US companies lead the paid-VoD market, with German content making up around 11% of the feature film offerings in their libraries in 2021 (Goldmedia, 2022, p.52).

A relatively small percentage of German films garner international attention, with only 10 to 20 German films achieving notable success on the global stage each year. In 2019, German films constituted merely 6% of the total worldwide admissions for European films, in stark contrast to French films, which accounted for 18%, as reported by the European Audiovisual Observatory. There persists an ongoing debate regarding whether sufficient public funding is allocated to the promotion of German films abroad, as only 1.8% of the total state funding of €450 million for the German film industry is directed towards international initiatives.

In 2022, German films, encompassing both majority and minority productions, generated a turnover of €107 million outside Germany, attracting an audience of over 14.6 million. Comparatively, French films achieved a turnover of €167 million with an audience of 27 million, according to a report published by German Films Service and Marketing. Animated films contributed significantly to foreign revenues for German films, constituting 50% of the total.

The European market emerged as the most lucrative for majority German films in 2022, accounting for almost €34.4 million in turnover, equivalent to nearly 78.7% of the total turnover. The Asian market followed with almost €2.5 million, representing 5.7% of the total turnover. Japan recorded the highest sales turnover in Asia, reaching €1.07 million, followed by Australia and New Zealand with over €1.9 million, constituting 4.4% of total sales, according to the report published by German Films Service and Marketing. 

The same reports states that in addition to Austria and France, several countries, including Italy, the UK, and the Netherlands, emerged as significant European buyers of German films abroad in 2022. Austria recorded 75 titles with €14.865 million and 1.68 million admissions, while France featured 22 titles with €7.7 million and almost 1.1 million admissions. Italy, the UK, and the Netherlands also made substantial contributions to German film exports. Regarding showcasing and advertising German films, the annual Berlinale serves as a crucial platform by contributing to their visibility and recognition on the global stage.

Germany’s film industry operates within a comprehensive state aid system, featuring a substantial level of subsidization and a decentralized structure. Germany boasts a generous funding system, allocating €380 million annually to production alone (BKGE, 2023).

The German Federal Film Board (FFA) serves as the national film funding institution, supporting various facets of German cinema. Funded through the film levy, mandated by the German Film Law (FFG), the FFA allocates its budget to projects spanning script development, production, distribution, sales, video distribution, cinema funding, preservation of German film heritage, international promotion, and film education.

Film production funding by the FFA encompasses project-based support, known as project film funding, and performance-based funding, the reference film funding. Project funding involves a committee evaluation of the script, production, and marketing concepts, while reference funding retroactively supports successful films based on admissions, awards, and festival recognition.

The FFA collaborates with European funding institutions to foster cross-border projects and co-productions. For co-production with France and Poland it has a special funding scheme.

In addition to the national funds from the FFA and the Ministry of Culture (BKM), each region in Germany operates its own film fund. Regional funding programmes often require connections to the respective region, such as local filming or spending within the region. Additionally, public broadcasters like ARD and ZDF, along with niche sources like the Berlinale’s World Cinema Fund, contribute to funding German films.

In 2022, the film industry accessed approximately €370 million in subsidies, with federal funding from the DFFF, GMPF, and FFA totaling €229 million, complemented by regional funding of €143 million. Films supported by the FFA face blocking periods to ensure exclusive cinema exploitation before availability on VoD or DVD.

The Covid-19 crisis and declining cinema attendance led to reduced film levies from cinemas, impacting funding. Consequently, the German film industry is pushing for substantial changes to the funding system, coinciding with the revision of Germany’s Film Law (FFG) effective January 2025. Producers and the German Film Academy propose an automatic 30% grant on German spending for fiction and non-fiction programmes, along with a 5% booster incentive for sustainability and diversity, inspired by Austria’s successful FISA+ and ÖFI+ schemes. The associations of producers also call for legislation mandating streamers to make direct investments in European and local productions, in addition to the existing 1.8-2.5% levy on streamers in Germany.

The Federal ministry of Culture recently announced a major reform of the film funding system. The reform of the film funding consists of three central pillars: the amendment of the Film Funding Act, the introduction of a tax incentive model and an investment obligation for streamers (see Federal Ministry of Culture, 2024). The new tax incentive model, which is expected to be in effect in 2025, would cover up to 30% of recognized German production costs in the form of a grant. The new model would replace the German Federal Film Fund (DFFF) and the German Motion Picture Fund (GMPF), which can cover up to 25% of costs of production costs executed in Germany.