Small European Film Markets: Portraits and Comparisons

Comparison with Larger Markets / Large markets' outlook on competitiveness and export

Large markets' outlook on competitiveness and export

The six large markets we studied – France, Germany, Italy, Spain, the UK and Poland – offer strategic perspectives related to competitiveness and export that may be valuable to CresCine markets. Unlike most of the CresCine markets, the European ‘big five’ markets analyse and assess export performance of domestic films through different indicators and factors that drive exports. This involves analysis of sales performance across different modes of distribution – cinema, VoD, and sales to foreign broadcasters. Additionally, the assessment in some markets encompasses a genre-based analysis of film exports, considering the varying success of different film genres across international markets, the export potential of high-grossing movies, and the comparative performance of arthouse versus mainstream films. Another aspect is the involvement of public and private financiers in films with international sales, and the degree of their contribution. From the large markets we analysed, the Polish film fund largely overlooks the economic dimension of film exports, focusing its analytical efforts on the international acclaim of Polish cinema at film festivals.

Isolating the factors that affect competitiveness is not straightforward. The relative success of films from different markets can be attributed to different factors, from policy traditions, geo-linguistic characteristics, and cultural and industrial factors to the commercial dynamics within the film industries.

Despite many differences identified in our market analysis, most of the large markets converge on the following strategic points to enhance export and commercial investments in film:

Identifying established and emerging export markets where domestic films achieve success. Analysis of export performance in the European ‘big five’ includes examining market trends through various indicators and identifying drivers of export, as outlined in the Profiles of large markets. 

Increasing co-productions and collaborations with other markets. The ‘big five’ in Europe consider co-productions to be important in enhancing the global circulation of their domestic films. Without co-productions, French cinema would be weakened (CNC and Unifrance, 2023). In Italy, co-productions are seen as one of the drivers of export.

Adapting production incentives to be globally competitive in attracting inward investors. The importance of continually refining production incentive schemes to stay globally competitive in securing inward investments is a recurring subject in studies. Our analysis suggests that large markets often benchmark their production incentives against those of rival markets to assess their global competitiveness. The German Federal Ministry of Culture presented a plan to introduce a tax incentive model intended to strengthen Germany’s competitiveness, as part of a major reform of the film funding system (see Federal Ministry of Culture, 2024).

Creating new innovative financing strategies to complement existing models. For example, in France, there is a recognition of the need for inventive financing strategies that serve as complements to established models and drive growth.

Strengthening the capacity to produce and distribute films with a broad international appeal. This involves supporting the growth of domestic production and distribution companies to compete on a global scale.

Expanding digital distribution of both recent film productions and heritage films. Large markets often analyse the distribution of domestic films in VoD catalogues in other markets to identify key export territories.

Strategic planning which involves boosting the screen ecosystem as a whole, i.e. developing local industry as a ‘hub’, such as the Spanish plan ‘Spain, Audiovisual Hub of Europe’ for boosting investment and development in the audiovisual sector. Another example is the ‘France 2030 investment plan’, which aims to make France a leader in films, series, and video games production. The objective is to create industrial dynamics that would also strengthen the production sectors.

In Italy, export is considered to be driven by three key forces: co-productions, global SVoD providers, and international distribution companies (Anica, 2023). Between the periods 2017-2019 and 2020-2022, co-productions saw a 51% increase, along with a rise in the diversity of collaborating countries – from an average of 16 countries per year to 25. This figure is highlighted due to co-productions being a principal catalyst for the international distribution of audiovisual works (both film and TV titles) (Anica and APA, 2023). In France, approximately 75% of the films produced in 2022 were co-productions, with an average involvement of two countries per film, drawing from a pool of 76 foreign partner countries.

When assessing the export performance of French films, Unifrance’s reports take into account several strategic components. The first component is the number of French films that have crossed the threshold of 1 million admissions. The key export markets are the second element. Europe is outlined as the leading geographical area for theatrical exhibition of French cinema. Additionally, the sales performance of French productions in broadcast schedules forms the third element in assessing export performance. According to Unifrance’s analysis, French productions rank second to English content in broadcast schedules in markets like Germany and Australia, with Poland emerging as an important market for French film and audiovisual exports.

The success of specific genres in foreign markets also plays a crucial role in analysing export performance. For example, animation, showed exceptional growth in 2022, recording the highest increase in admissions among all film genres. Some genres are particularly well-received in specific export markets, as seen with the popularity of French thrillers in Italy. Additionally, the success of the French arthouse films in export markets is another component. Finally, the share of films in video-on-demand catalogues holds considerable importance. The analysis shows that France made up 4% of the catalogues of SVoD offerings in July 2023, based on analysis of more than 100 SVoD platforms in 53 territories, excluding the domestic market (Unifrance, 2023).

The assessment of German film exports focused on the turnover they generated in different territories, with the European market emerging as the most important (78.7% of the total turnover), according to a report by German Films Service and Marketing. The Asian market was the second largest (5.7% of the total). Within Asia, Japan was the leading market, while the combined markets of Australia and New Zealand represented 4.4% of the overall sales.

The potential for films to be exported is strongly linked to language as a factor. The international success of French cinema is often powered by English-language films with a global audience in mind, with Luc Besson playing a key role in a number of films with global appeal, e.g., Lucy (FR, DE, TW, CA, US, UK 2014), Taken 3 (FR, ES, US 2014), Valerian and the City of a Thousand Planets (FR, CN, BE, DE, UAE, US, CA 2017). Of the top 10 most successful French films (produced between 2014-2022) in the North American box office by admissions, only one is in the French language (see France’s profile).

It is also observed that large markets are focusing on attracting global streamers’ investments. The UK and Spain are leading production hubs for global streamers – they jointly contributed to 37% of international streamers’ spending on European original content in 2022, as indicated by the EAO’s figures. France, Germany and Italy appear next on the top 10 list (EAO, 2024). Denmark and Ireland were the only CresCine markets to appear on the top 10 list of countries by global streamer spending on original content.

Netflix has disclosed that, since 2020, its yearly investment in films and TV series in the UK has averaged around €1.38 billion ($1.5 billion). In France, streaming services including Netflix, Disney+, and Prime Video contributed €21 million to 17 French films in 2023, accounting for 7.5% of the total investment made by free and pay-tv channels and streamers. It is important to note that France imposes investment obligation on global streamers to invest in local productions.

In 2018, Netflix chose Spain as its European content production hub. Madrid Content City, the location of the European Netflix Hub, has grown to become the second largest production studio in Europe, behind Pinewood Studios (part of Pinewood Group) in the UK. As a part of its ongoing dedication to the UK’s creative sector, in 2019 Netflix established a production hub at Shepperton Studios (also part of Pinewood Group), which includes 14 sound stages, workshops, and office spaces. In 2021, the streamer doubled the size of its base at Shepperton Studios. Amazon Studios also signed a deal with Shepperton Studios in 2022, as did Disney in 2019.

Poland became Netflix’s Central and Eastern Europe (CEE) hub in 2022. Most global streamers also have offices in the bigger European markets.

The scale of the larger markets investigated undeniably gives them an advantage compared to smaller CresCine markets. However, even with their larger sizes, these markets encounter many challenges that parallel those in the CresCine markets.

Italy, for example, perceives a competitive challenge due to the prevalent number of films produced with budgets under €2.5 million (see Italy’s profile). According to data published by the National Association of Film and Audiovisual Industry (Anica), 75% of Italy’s initiative titles produced in 2022 had a budget ≤ €2.5 million while 25% were > €2.5 million. The study makes comparison with France where 52% of titles are > €2.5 million and 48% have a budget of ≤ €2.5 million (Anica, 2023).

Several challenges associated with capital for film financing have been identified throughout the qualitative analysis. In France, the vulnerability of production companies and a shortfall in capital are seen as key challenges. There is a concern that public funding might not make up for reduced private investment in film production, given state budget restrictions, a lack of new tax incentives, CNC’s financial prognosis, and EU public funding limits. There is an immediate need for new and innovative financing approaches in the cinema and audiovisual sectors to supplement traditional models and drive growth. At the macroeconomic level, the production sector’s current state of fragmentation does not provide a sufficiently dynamic industrial environment to sustain resilient, independent companies adept in adapting to the dynamics of French and international markets. In Italy, studies have identified a scarcity of risk capital, particularly in the animation genre. Polish film producers acknowledge that challenges in accessing financing and the absence of instruments like capital credit constitute one of the most significant barriers to industry development.

Another set of challenges relate to the question of strengthening the international sales capacity of the production and distribution sectors. In Spain, the tendency of most production companies to focus on making a single film is recognized as a weakness, indicating an atomization of the film production process. A well-recognised challenge in Italy is that the distribution sector lacks large and strong companies that can compete at global scale. Despite having a similar number of companies as France, the distributors in Italy lack size and strong concentration of revenues compared to those in France. Moreover, the film production sector in Italy predominantly consists of SMEs, with about 86.6% dedicated to producing a single film.

The strong dominance of US films in the domestic box office constitutes another challenge. The US productions comprised almost 80% of cinema admissions between 2016 and 2022 in Italy. In the UK, the low national box office share reflects a strong dependence on Hollywood.

A potential challenge is also increased dependence on inward investments from a single market. For instance, in the UK inward investments in 2023 contributed to 77% of total film spend at €1.2 billion (£1.04 billion), a 40% decrease on 2022. This illustrates the substantial effects of strikes on Hollywood film productions, which have an impact on the UK’s inward investments. In the context of financing from global streamers, markets such as Germany observe a growing trend of production companies engaging with these players, thereby establishing financial linkages and dependencies. Inward investments driven by production incentives are also linked to the challenge of talent shortages.

The distribution of public funding raises challenges that may affect film exports. In Germany, for example, 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.