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The Circulation of European Films

Almost 1 billion cinema tickets are sold in the EU each year. Yet only 10% of these are for films from other European countries, reports Huw D Jones.

Each year, Britain exports about €164 billion worth of goods and services to the rest of the European Union, including €57 billion in machinery and transport equipment, €37 billion in manufactured goods and €29 billion in energy products. Meanwhile, Germany, the continent’s largest economy, dispatches €571 billion in products to EU partners, while the Dutch, ranked second, circulate €334 billion of exports.

Since 1992, cross-border trade between EU countries has grown from €800 billion to €2.8 trillion in 2011 in terms of the value of goods exchanged. Around two-thirds of EU’s trade is now done with other EU countries.

Yet there is one sector where the internal trade in European goods and services is not quite so fluid. Of the average 938 million cinema tickets sold in the EU each year, only about 10% are for films from other European countries (figure 1). American films account for the majority (64%) of cinema admissions, 24% are for domestic productions, while 2% are for films from the rest of the world.


Figure 1: EU cinema admissions by market share, 2005-12. (Source: OBS)

Over the period 2005-11 the average share of admissions for non-domestic European films ranged from 25.3% in Luxembourg to only 1.7% in the UK  (figure 2), according to data from MEDIA Salles, a cinema research agency.

But everywhere European films struggle to compete against American rivals.

Barriers to trade

Language and cultural barriers partly explain why only 1 in 10 of the cinema tickets sold in the EU are for films from other European countries. Even with subtitles or dubbing, many find foreign productions not to their taste. The Inbetweeners Movie, a British comedy about four geeky high school friends who celebrate graduation with a wild holiday in Ibiza, was a hit in the UK, selling 7.4 million tickets. However, continental audiences, unfamiliar with the Channel 4 television series on which the film was based, seemed less impressed with its cheeky British seaside humour. The film sold only 854,723 tickets despite being released in 13 European territories.

Figure 2: Average share of admissions (%) for non-domestic European films, 2005-11. (Source: MEDIA Salles)

Figure 2: Average share of admissions (%) for non-domestic European films, 2005-11. (Source: MEDIA Salles)

Other barriers are more structural. According to a 2005 research paper by Henning and Alpar, European production companies are too small and fragmented to match Hollywood. 80% of EU companies finish no more than one film per year, while the average film budget is only $3-4 million, compared to $80 million or more for many US studio productions. Similarly, European distributors, which unlike the US usually operate independently of producers, lack the capacity to handle pan-European releases and marketing campaigns.

European films which travel

Despite these barriers, some European films do successfully travel to other European countries. Of the 9,460 European productions released in the EU since 2005, 143 (1.5% of total) sold at least 1 million tickets in the EU outside their own country.

Top of that list is Harry Potter and the Goblet of Fire (table 1). The British-American fantasy adventure about a teenage wizard sold almost 32 million tickets in the EU outside the domestic UK market. Second comes the James Bond action thriller Skyfall. Indeed, the Harry Potter and Bond franchises account for eight of the top 10 most successful non-domestic European cinema releases in the period 2005-12. The only other films to make the top 10 are the Oscar-winning biopic The King’s Speech and the smash-hit French comedy-drama Intouchables.

Half of all the recent European films with over 1 million non-domestic admissions in the EU are British – and of these half again are features made with US inward investment. France was responsible for 35 out of the 143 films, Germany 12, Spain 9, Italy 7, Belgium 4, Sweden 3 and Finland 3, while Ireland and Denmark had one each. No film from Central and Eastern Europe achieved more than 1 million non-domestic cinema admissions in the EU market.

Table 1: Top 20 films in the EU by cinema admissions (excludes domestic ticket sales), 2005-12. (Source: LUMIERE)

Table 1: Top 20 films in the EU by cinema admissions (excludes domestic ticket sales), 2005-12. (Source: LUMIERE)

In terms of ticket sales, Britain is even more dominant. Over two-thirds of European films which have successfully travelled are British (of which 69% were backed by US investment). France accounts for only 17% and the rest make up the remaining 16%.

Those whose idea of European cinema is based on French or Swedish art house drama should therefore think again. Only 25 of the 143 films which have successfully travelled to other European countries have a budget less than $10 million (the average budget is $43 million). 80% were made in the English language, while action, adventure and fantasy films account for 35% of ticket sales.

In other words, the European films which circulate best within the EU are those which most resemble Hollywood movies.

US investment or European cooperation?

Perhaps this is to be expected. Governments across Europe have been keen to entice lucrative Hollywood productions by offering generous tax relief. Many also provide foreign film producers with free advice on finding locations and crews or negotiating local employment rules.

The UK has been particularly successful at attracting US inward investment, not only because it has the advantage of sharing a common language with the States, but also due to its 20-25% tax credit on local film expenditure. Others European countries offer even more lavish incentives. Ireland plans to increase its own film tax break to 32% by 2016 in a bid to draw US production away from the UK.

At the same time, European film policy seems to be pulling in a different direction. The European Convention on Cinematographic Co-Production, a treaty signed by Council of Europe members in 1992, allows filmmakers to benefit from the tax relief and subsidies available in other European countries on the condition that they collaborate with at least two foreign partners. Schemes like Eurimage and the EU’s MEDIA programme likewise provide loans and subsidies to encourage European co-production deals.

These policies have certainly increased the number of pan-European productions. But although such films tend to circulate better than purely domestic features, overall ticket sales remain low. The average foreign admissions for European co-productions (based on a sample of 4,561 films produced 2005-12) is only 18,258 – about 2% of the amount achieved by European films made with US investment.

Beyond the box office

But while it is clear that few European cinema releases are successfully exported to other European markets, it is far more difficult to establish how these perform on television, DVD and the Internet because of the limited availability of accurate public data. Even so, from the handful of preliminary studies which have been conducted, it seems the circulation of European films is only marginally better beyond the box office.

A recent EU report profiling audiovisual audiences, for example, found 14% of Europeans had watched ‘many’ films from other European countries over the last year, while 41% had seen at least ‘some’. Amongst the most Europhile film fans, 83% said they frequently saw movies on television, 63% on home video and 36% via Video on Demand (VoD), whereas only about 13% regularly visited the cinema, which implies non-domestic European films are mostly viewed outside theatres.

Another survey by the European Audiovisual Observatory on the availability of 50 leading European titles – 25 blockbusters and 25 award-winning films – on VoD services within ten countries suggests the online availability of European films is still limited. Much depends upon the country and provider, though. In Germany, for example, 36 of the 50 sampled films were available via iTunes. The French iTunes offered 60% of the films, while the British version provided 52%. By contrast, the Polish and Estonia iTunes had only 10% of the sampled films. Other platforms, such as Belgium’s VOO or Italy’s Mediaset Premium, offered even lower levels of availability.

There is of course a great irony here. In an attempt to overcome the structural barriers which impede the distribution of European films in cinemas, Article 13 of the EU’s 2010 Audiovisual Media Services Directive places an obligation on member states to ensure that “on-demand audiovisual media services provided by media service providers under their jurisdiction promote… access to European works”. Meanwhile, the EU MEDIA programme spends about €6.7 million a year supporting the online distribution of European films. And yet it is iTunes, an American firm run on a purely commercial basis, which seems to be the best online provider of European films.

As with much else in European cinema, America has the upper-hand.

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