Source: EURLEX
Language: en
Format: md

*|*

# 52014DC0272

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS European film in the digital era Bridging cultural diversity and competitiveness /\* COM/2014/0272 final \*/**

  

COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

European film in the digital era
Bridging cultural diversity and competitiveness

The
audiovisual sector has substantial cultural, social and economic significance.
It shapes identities, projects values and can be a driver of European
integration by contributing to our shared European identity. The sector
contributes to growth and jobs in Europe and is a driver for innovation.

The
audiovisual sector is also noteworthy for being more regulated than other
creative sectors and heavily reliant on public funding[1].

Europe’s
film industry is diverse and creative. Its film heritage draws worldwide praise
and has inspired several generations of filmmakers and their works.[2]
However, while Europe is good at producing a high number of diverse feature
films, most European films do not reach all their potential audience in Europe
and even less so in the global market. For the most part, films stay on
national markets but, even there, some never reach the cinema screen or fail to
secure any other distribution channels.

This
is a missed opportunity for spreading the diversity of European cultures
worldwide, for improving competitiveness and for addressing the existing trade
deficit with third countries, in particular with the United States.

The
digital revolution offers more possibilities and flexibility for distribution
and is having a fundamental impact on audience behaviour. It is essential
therefore to adapt to the digital era and use its potential to keep existing
audiences and reach new ones, and to build bridges between cultural diversity
and competitiveness. This comes with challenges: for the industry, in testing
new business models and audience development strategies; and for public
policies at regional, national and European levels.

Transnational
policy cooperation and a structured dialogue with the sector at European level
are therefore crucial.

This
Communication is embedded within the strategic
framework presented in the Commission’s Communication on promoting cultural and
creative sectors for growth and jobs in the EU[3]
and is in line with the Digital Agenda for Europe[4].

The
Communication provides a stocktaking of recent developments in the film sector
and   identifies current challenges in
public policies impacting the film sector. It also highlights existing EU
instruments that could contribute to the process of adaptation to these
challenges.

In all the areas covered, the Communication aims at
improving the complementarity between the Member States and the Union policies.
It promotes common directions to better embrace the opportunities and address the
challenges related to the digital shift while taking account of cultural and
linguistic diversity and the varieties of the national audiovisual landscapes,
stressing the need for a joint effort to strengthen the global efficiency of
existing funding tools for the competitiveness and diversity of the European
film sector.

1.
State of play of the European film sector

1.1.
Film production versus audiences: a
growing gap?

Looking
at the European film sector, there is an imbalance between production and
distribution & consumption, i.e. between the number of films produced and the
number of films that actually reach their targeted audience. There are
substantially more European than US and Canadian productions[5] but
European films are distributed on a smaller scale and have difficulties to
reach a wider audience in non-domestic markets, including within the EU.

Success
cannot be measured by market share and box office revenues alone. Films may
target niche audiences; this can result in lower market shares at national / EU
and worldwide level. Nevertheless these films may succeed in reaching their
targeted audience and forming an important part of cultural diversity. From an
economic point of view, the relative success of a film must also be looked at
in terms of profitability, i.e. the ratio between the investment in
development, production and distribution and the revenues generated[6]. For a
significant number of films produced in the EU, however, the cinema release
remains limited or even non-existent, especially outside of the domestic
market. Moreover, they do not seem to achieve a better audience through other
forms of distribution.

The
situation and related figures may differ across the different forms of
distribution (cinema, broadcasting, DVD, VoD[7],
etc.) and there may also be significant differences between Member States.

As
regards cinema theatrical exploitation, the main trends are as follows:

·
In the EU, European films represent on average
62.52 % of releases and account for 32.9 % of admissions[8]. Box office receipts and admissions of European films fall far
behind those of US productions. In 2012, US productions had 19.84 % of
releases and 65.11 % of admissions in the EU[9]. Admissions to non-national EU films on the EU market are stable at
around 12 % on average[10].

·
Only a small minority of European films are
released in cinemas outside of Europe (8 % in 2010) where they reach a
non-negligible albeit modest audience in terms of market share at the box
office[11]. In fact, over 19 % of total admissions (and 16 % of box
office takings) of European productions were generated outside Europe in 2010[12].

The
situation of European films in cinemas — illustrated above — is mirrored for
other viewing platforms.

Television
is still the most widely used platform for watching films. In 2011, 41 %
of the almost 122 000 feature films shown on TV in Europe were of European
origin (7.7 % were national productions, 14.5 % were produced in
other European countries and 18.7 % were European co-productions either in
whole or in part)[13].

While
DVD is declining, VoD is a relatively new form of distribution expected to grow
significantly in the coming years[14].
In 2012, the VoD market recorded a growth rate of 59% in Germany and 14.7% in France[15].
Many VoD service providers offer their services and use their brand only in one
territorial market while only a few providers offer their activities under the
same brand globally. While VoD theoretically offers an unlimited capacity for
distribution (in contrast to other outlets), there is little data available
about the availability and market share of European films on VoD platforms.
First studies indicate that most of the revenues generated by VoD platforms may
come from non-European films similarly to the DVD market[16]. As
regards the presence of European films, available data shows that a global
player (present in 26 countries of the EU) proposes, in the main national
stores, more EU blockbusters and European Film Awards winners than national VoD
providers[17].
In light of these considerations, there is scope for a higher level of
distribution of European films — both within Europe and beyond — across all
distribution channels.

1.2.
Potential audiences and changing
behaviours

According
to a recent survey conducted among Europeans aged 4-50[18], 97 %
of Europeans watch films of all origins, and 54 % even watch every day[19]. Some
27 % of film viewers are ‘heavy’ film fans who say they watch more than 11
films per month[20].
While cinema attendance has remained stable in recent years[21], the
survey reveals that people go to the cinema less than once a month and that 39 %
never go to the cinema[22].
Apart from in cinemas, Europeans watch films on free TV (79% of the
population), on DVD (67 %) and through on demand services (56 %)[23]. Home
or mobile viewing therefore represents an important market especially as
viewers increasingly expect to watch content anytime, anywhere and on every
device. The study acknowledges however that illegal content is also being used
and that beyond viewing, a fraction of the public increasingly wishes to
interact with the content and to participate in its creation or its programming
e.g. through apps or social media.

Concerning
the time spent on media, TV still remains the most used medium to watch
audiovisual content with viewing times still around 4 hours a day across the EU[24].
These figures are overall stable in the EU and at times decreasing as regards
the viewing of linear content by younger generations.[25] On
the other hand, average video online viewing per viewer, while still relatively
low in the main EU markets, increased between 155 % and 200 % over
the period 2008 to 2011[26].

1.3.
Structural weaknesses of the European
film sector in reaching potential audiences in the European Union and globally

The
situation of the audiovisual sector varies considerably from Member State to Member State. Not only do the size of the sector, the production volume and
the linguistic environment differ, but also the ways in which films are
financed, the amount and structure of public film funds, the implication of
broadcasters or other stakeholders in the financing system and the strategies of
national and regional film policies.

As
each film is a unique prototype, any attempt to model success factors runs the
risk of over-simplification. It is however clear that some structural
weaknesses have a significant impact on the ability of European films to reach
their potential audience both at home and abroad.

·
 Fragmentation of production and financing

The
European film sector is composed mostly of small and micro enterprises relying
on limited intangible assets. They face growing difficulties to raise
significant budgets and rely largely on public financing.

The
average production budget varies considerably from Member State to Member State. In the UK it stands at EUR 10.9 million, in Germany and France around EUR 5 million and in Sweden EUR 2.6 million. In contrast, in Hungary or Estonia films are produced with a budget on average of EUR 300 000[27].
According to the Motion Picture Association of America, the average budget for
US-produced films is USD 15 million[28].
As regards US films produced by the major film studios the latest figures
available indicate that the average budget was USD 106.6 million in 2006.

Given
the high level of costs required in film production, high revenues particularly
from the box office remain necessary to achieve economic viability. Despite the
high level of market share of US productions, several recent US blockbuster films had difficulties to pay back the high investments. While some European
films — with their lower budgets — could reach the break-even point even with a
relatively small number of admissions, the limited data available shows that a
large majority of European films are not profitable and do not recoup their
investments[29].
This makes it difficult for European companies to become more stable, to move
away from a single project approach and to grow.

The
complex film production financing system is being challenged by changes in
distribution and consumption, triggered by digital technologies. TV revenues
might be affected by the multiplication of channels and fragmentation of the
audience; while online revenues are in dynamic growth, they do not yet
compensate for the loss of DVD revenues[30].
Also, it appears that on both TV and VoD, TV series including European
productions are especially popular for the audience, achieving high viewing
figures[31].
Cinema distribution faces the costs of digitisation of cinemas and changes in
audience behaviour. New players (e.g. VoD platforms, telecommunication
operators) have an increasing role in distribution but are not significantly involved
in film production or financing.

·
Limited opportunities and incentives to
internationalise projects and to target several markets

Only
a limited number of European film producers operate in more than one market.
More generally, the film sector does not mobilise appropriate finance for
projects with an international focus or appeal whether from public subsidies,
from investors in the traditional value chain, or from new investors. A
significant part of financing often comes from national or regional public
subsidies and supports the production of projects with a national or regional
focus. Only a very small share of public funding comes from supranational funds
(e.g. in 2009, EUR 1 919 million came from national and
sub-national funds in Europe, compared to EUR 144 million from
supranational funds)[32]
Projects therefore tend to target domestic audiences. This is apparently
reinforced by an insufficient attention to the development phase when the
potential audience of a production can be effectively identified and optimised.
Furthermore, while co-productions circulate better than purely national
productions[33],
it appears that they tend to be used essentially to ensure financing, notably
in countries with a low production capacity. The potential of co-production to
increase the outreach of a given film can be better exploited; too many
co-productions still lack a clear strategy for distribution in the countries
concerned and beyond.

·
Focus on production and limited attention to distribution and promotion

The
focus of film policies on support to production is not matched with efforts
related to delivery to the audience. The current state aid system is
predominantly supporting film production without sufficient emphasis on
distribution. In 2009, European public film funding bodies spent on average 69 %
of their budget on creation of works, while only 8.4 % was spent on their
distribution and 3.6 % on their promotion. Funds operating at a
supranational level tend to give distribution a higher priority (33.6 % in
contrast to 35.7 % spent on creation) than national (7.4 % for
distribution, 70.4 % for creation) and sub-national funds (3.5 % for
distribution, 75.5 % for creation). However, as already indicated above,
only a very small share of public funding comes from supranational funds. In
the US, considerable budgets are devoted to the marketing of films[34], but
this is generally not the case in Europe.

The
focus on cinema release and broadcasting, fundamental for recouping investment,
overshadows the potential of distribution across all possible platforms. The
current system of release windows[35]
is under increasing pressure from changes of audience behaviour[36].
Rigid rules in this area and the tendency of incumbent market players to
preserve the status quo may prevent the development and use of new, innovative
release strategies and business models. This may also prevent the small, niche
productions — which struggle to get access to cinema screens and are shown
there only for short periods of time if at all — from reaching their audience
through other distribution platforms, e.g. VoD[37].

VoD
offers great potential but requires an adapted investment and the development
of new skills. In making films available on VoD platforms, operators face new
technical and transactional costs. Costs associated with encoding digital
masters and preparing different language versions (dubbed or subtitled)
represent an investment for each film. Transactional costs are especially high
in Europe in view of the fragmentation of rights and the low development of
activities of aggregation[38]
in the film sector. This limits the attractiveness of European catalogues for
new actors. Besides, once the films are accessible on VoD, they require
additional investment in editorial activities and well-designed tools of
promotion and discoverability. Altogether, all these costs can only be recouped
through a significant number of viewings and therefore a possibly long period
of time. Financing tools should ensure efficient spending by taking these costs
into account.

As
regards European film heritage, Europe is lagging behind in terms of
digitisation, which is a precondition for digital access. Only 1.5 % of
film heritage has been digitised[39].
This is explained by a lack of funding and high costs — both in money and time
— for clearing rights. The simplification of rights clearance could facilitate
the process including through a reduction of costs.

·
Shortcomings in entrepreneurial skills and
cross-sectoral partnerships

Initial
training for cinema professionals often fails to deliver the necessary
entrepreneurial and business skills. Relations between film schools and
business are weak and training is still not offering sufficient opportunities
to gain an international perspective and contacts.

The
European film sector does not substantially involve or cooperate with potential
partners, such as advertisers and the ICT sector, who could provide a vital
contribution to maximise the audience for their productions on VoD.

2.
Current challenges

A
concerted effort at all levels would be needed in order to overcome these
structural weaknesses. The following areas would need to be tackled to make the
rich diversity of European films accessible and appealing for a wider audience
and to make European films and film companies more profitable.

2.1.
Reviewing the financing environment

A
successful European film industry needs a rebalancing of spending between
production, distribution and promotion of films, including progress in the
following three areas:

·
Public funding schemes

Domestic
support mechanisms for the production, development, and distribution of films
have — directly or indirectly — an impact on the structures and practices of
the industry and on the type of films produced and distributed. European
support can only complement such mechanisms at national level but not set the
fundamentals. In the light of changes brought about by the digital environment
and changes in audience expectations, public support schemes, in compliance
with state aid rules[40],
need some rethinking. Overall, the challenge is not to increase the level of
public support in this sector but rather to optimise its overall added value as
well as to maximise complementarity between instruments and policies at
different levels.

The
following questions deserve particular interest in this context:

–
Putting more emphasis on the development phase
to increase quality and profitability of funded projects. Ensure that the
project is developed in such a way as to reach its targeted audience, taking
into account the specificities of the particular project, domestically but also
at EU and global level.

–
Finding an appropriate balance and developing
more efficient links between support to production and support to distribution
and promotion. For example, ensure that publicly funded projects are
accompanied by a well-designed distribution and marketing strategy or provide
incentives for producers and production companies to put more emphasis on the
delivery to wider audiences.

–
Ensuring that films that benefit from public
funding are effectively exploited and made accessible to the public.

–
Increasing transparency regarding the results of
films that benefit from public funding. For example, it could be a requirement
to provide data about the viewing figures for such films across the different
distribution channels. This would enable the publication of viewing data across
all distribution platforms for each film that is publicly supported.

–
Reinforcing overall complementarity and
coherence of public support to increase its overall efficiency. This would
encompass regional, national and supranational levels of funding and involve
funding across the different activities (development, production, distribution,
promotion & marketing).

–
Empowering producers and other operators to move
from project-based approaches to enterprise growth strategies.

–
Ensuring contractual deposit of funded films and
developing mechanisms to facilitate their educational use after their
commercial life, in compliance with intellectual property rights[41].

Within
the new Creative Europe programme, the MEDIA
sub-programme will build on the experience of the MEDIA 2007 and MEDIA Mundus
programmes. It will support development, distribution and theatrical
exploitation but also support the sector in exploring opportunities in the
digital environment, in particular reaching out to the audience. It will also
focus on areas of clear EU added value and complementarity with Member States
instruments. It will in particular support on demand services committed to
particular efforts in terms of availability and prominence of European films,
operators engaged in the constitution of editorialised packages of European
Films ready for on-line exploitation as well as new forms of synergies across
exploitation platforms.

·
The involvement of newcomers in the value
chain

With
the emergence of new distribution forms, in particular VoD, one of the key
questions regarding the changing media landscape is how the current financing
model will evolve and which role new players will play in financing new
content. There is a trend for global VoD platforms like Netflix to invest in
original content — primarily in series but also increasingly in other genres
like documentaries and stand-up comedies. It remains to be seen whether such players will in general develop a
commercial interest to be more involved in the production of other types of
audiovisual content, including cinematographic works. The dynamic rise of VoD
services and the current contribution of broadcasters to the production of
European works in certain countries — including legislation imposing such
obligations — have given rise to discussions in those Member States concerned.
In some instances this raises issues of application of domestic legislation
regarding players established in other Member States or outside the European
Union.

·
Access to private financing through EU financial
instruments

The
special risks and uncertainties linked to film production often make it
difficult for enterprises from the sector to access bank loans[42].
Financial engineering instruments (in particular guarantee funds) have
demonstrated their ability to open up access to private funding. The raising of
capital for infrastructure projects (e.g. cinemas, heritage, and new
technological platforms) could also benefit from such a guarantee instrument.
At the same time, raising the general competitiveness of the European film
industry is essential to unlock access to loans in that area.

As
from 2016, the Creative Europe guarantee facility for cultural and creative
sectors will contribute to this process. It should facilitate access to private
financing in the form of loans. The film sector will also have recourse to more
horizontal instruments for business development (SME policy instruments within
the COSME Programme[43]),
investments (Cohesion Fund, financing instruments in COSME and Horizon 2020
Programmes), content creation and delivery using new
technologies, social media and convergence (LEIT in Horizon 2020)[44]
and fostering the innovative reuse of film archive material[45].

2.2.
Designing an innovative business
environment

The
regulatory framework plays an important role in shaping the business
environment for the film sector. The copyright framework and media and content
regulation are particularly important in this respect.

Copyright
is both the main stimulus for investment in films and the basis for the revenue
of all the contributors in the value chain, starting from the authors. Films
are often financed through the selling of exclusive rights for limited
territories, a business practice which then makes more difficult and more
costly licensing for multi-territory on-line services within the digital single
market. In this respect, alongside the now closed “Licences for Europe” dialogue with stakeholders[46],
the Commission is carrying out a review of the EU copyright framework as
announced in its Communication on content in the digital single market[47]. This
debate will be of particular relevance for the film sector.

Rapid
developments in the sector call for sufficient flexibility to allow operators
to experiment and to test new approaches and business models. Flexibility is
particularly needed on release windows[48]
to enable the testing, developing and use of alternative release strategies
adapted to different types of films and maximising complementarities of
different platforms to reach out to audiences. The testing and developing of
exploitation paths in response to changed audience expectations will help
viewers to have rapid access to films once they become aware of them. This could
secure additional audience share for those European films that are more suited
for new distribution methods, e.g. via VoD. This could also maximise the effect
of marketing efforts and be an effective tool in fighting piracy by increasing
the legal supply. Simultaneous or more coordinated release in cinemas across
borders or more rapid access for online services could be explored.

The
question of setting down specific timescales for each type of window for
showing a cinematographic work is primarily a matter to be settled through
agreements between the interested parties or professionals concerned. In this
respect, rules on release windows could be reviewed in the light of market and
technological developments. This would enable rights holders to develop and use
new and innovative strategies for promoting and distributing their films,
including the possibility of simultaneous or near-simultaneous release in
cinemas and on VoD.

Concerning
this issue, the results of the ongoing preparatory action on circulation of
European films — concerning the combination of different release windows — will
be shared with the sector in spring 2014[49].
The experiences and data of the funded projects can contribute to develop more
innovative release strategies and business models.

The
Audiovisual Media Services Directive (AVMSD)[50]
which governs EU-wide coordination of national legislation on all audiovisual
media, both traditional TV broadcasts and on-demand services, sets down a
minimum set of common rules. It allows audiovisual media services to circulate
freely within the EU, while protecting important policy objectives. The Green
Paper preparing for a fully converged audiovisual world: growth creation and
values[51]
launched a public consultation on a broad range of questions related to the
ongoing transformation of the audiovisual media landscape. It seeks feedback on
whether the current AVMSD requirements provide the best way to promote the
creation, distribution, availability and market appeal of European works in the
digital single market.

2.3.
Strengthening the creative environment

Europe
needs to nurture talents and develop professional skills in the European film
industry. This is imperative for the quality, diversity and originality of
European films and are crucial assets for attracting audiences and
strengthening competitiveness.

Cooperation
among European film schools (on curricula or mobility) and creative
partnerships between schools and businesses are to be encouraged. The objective
should be to promote a better match of training and skills with the needs of
industry (including entrepreneurial, ICT, advertising and marketing skills). It
should also aim to bring a more international and global audience perspective
to the creative part of the industry.

Creative
cooperation should also be encouraged between the film sector and other
sectors. This should be not only with neighbouring sectors (e.g. TV fiction,
video games and cross media) or players in the digital environment (e.g.
telecommunication operators or consumer electronics manufacturer), but also
with other creative sectors or with education.

Beyond
the Creative Europe programme, notably its cross-sectoral strand, that will
contribute to this objective, the ERASMUS+ Programme
will support cooperation and mobility in initial training, and knowledge
partnerships and skills alliances between the film education sector and
businesses.

2.4.
Accessibility and audience development

Together
with the creative input, the audience — whether mass or niche — must be at the
heart of film policies at all stages, from development to exploitation. This
requires — as in other cultural sectors — the development of strategies and
tools that increase both the possibilities of access and the demand for
European films, especially non-national films. Engaging with audiences in all
phases of creation and distribution is crucial. Information on audience
preferences and consumer behaviour could help to better identify and target
factors that can contribute to the success of a film. The development phase could
profit from such information.

There
is also a need to promote the visibility and discoverability of European films,
and to engage with audiences. Approaches have to be adapted to each project,
but clearly the exchange of experience and the development of common tools
(e.g. apps or web service, branding events and activities) can strengthen the
efficiency of efforts to better identify and target European cinema’s audience.

Existence
of audiovisual media services offering legal access to a diversity of European
films at an acceptable price depends on a number of factors. Aggregation of
rights and a more coordinated approach to mastering and management of
linguistic versions could significantly cut the transaction and technical costs
which may otherwise constitute entry barriers to VoD services. For example, for
each film, a unique reference digital master of a sufficient quality to then
derive all specific versions appropriate for different VoD services could be
made available. This would avoid the need to fund as many acts of mastering as
countries covered or VoD platforms concerned.

Film
education also constitutes a major investment for tomorrow’s audiences.
European films tend to use a complex visual and narrative grammar, the richness
of which can only be fully appreciated with some analytical skills. The
audience is interested in film education[52]
and the film sector should invest in this process.

Activities
of audience development are also central within the Creative Europe programme.

The
”Licences for Europe” stakeholder dialogue[53] has also led
to important results that are relevant for the film sector and that will need
to be followed up[54].
In particular, representatives of the audiovisual industry have issued a joint
statement affirming their willingness to continue  working towards the further
development of cross-border portability of subscription based online services
and, in the area of film heritage, film producers and authors and heritage
institutions have agreed on a set of principles and procedures for facilitating
the digitisation of, access to and increased interest of European citizens in
European cinematographic heritage works. Discussions also touched upon the
question of how to improve the availability of more or all language versions of
films in a given country.

3.
Conclusion

The
European film industry needs a stimulating environment to reach its full
cultural and economic potential. Creating this environment requires the
mobilisation of those involved at all levels: in the sector itself and in the
Member States, from the local to the national level. In full respect of the
principle of subsidiarity, the European Union can also contribute to this
process.

Beyond
existing networks of public funds and regional partnerships e.g. among Nordic
countries, the outline above illustrates the breadth of contributions that the
EU can bring to the joint objective of meeting the challenges of cultural
diversity and economic development in the film sector. However, it is clear
that the main responsibilities and the most powerful tools lie with public
authorities in the Member States and with the operators and stakeholders in the
sector themselves.

In
the face of rapid evolution in the sector, there is a need to promote a
European debate and open a dialogue with all stakeholders — public authorities
and private sector — about film policy in Europe. It should focus on the shared
objectives of making the rich diversity of European films more accessible to
the audience and making the film sector more competitive and more profitable.

To
this end, the Commission intends to launch a European Film Forum, a process
building on existing instruments, aiming at promoting the exchange of
experience and practices, and the studying and sharing of knowledge on issues
of common interest. The main focus of the Forum should be to debate public
policies for the film sector. This process will seek to involve — on a
voluntary basis — interested parties at the European level and will be
conducted in full transparency to the benefit of the whole sector.

[1]               EUR 2.1 billion of support is provided annually
by European film funds (European Audiovisual Observatory, Public Funding for
Film and Audiovisual Works in Europe - 2011).

[2]               Recent films like ‘The Intouchables’ have attracted
audiences across the world for their originality and have also become box
office successes and returned a profit.

[3]                      COM(2012)
537 final.

[4]                      COM(2010)
245 final/2

[5]               The number of feature films produced in the European
Union increased from 1159 in 2008 to 1336 in 2011. In the same period, US and
Canadian productions rose from 773 to 818 films (EAO Focus 2013).

[6]               It is estimated that "The Intouchables" had
a box office of 309.189.989 € worldwide with a production budget of approx. 7
million € while "The Artist" box office is estimated at 96.718.509 €
worldwide for a production budget of approx. 11 million €.

[7]               Video on demand.

[8]               Period: 2008-2012. Data does not include Malta. Source: European Audiovisual Observatory.

[9]               Period: 2008-2012. Source: European Audiovisual
Observatory.

[10]             Source: European Audiovisual Observatory Yearbook 2012
vol.2 page 234.

[11]             For example, in 2012, EU films were hardly present on
the US market, achieving barely an 8 % share, whereas US films covered
over 90 %. Source: European Audiovisual Observatory, database Focus, 2013.

[12]             Source: European Audiovisual Observatory — study on
‘Theatrical export of European films in 2010’, covering the following
countries: Argentina, Australia, Brazil, Chile, Colombia, South Korea, Mexico,
New Zealand, United States & Canada, Venezuela. Over the same period, US
productions generated 66 % of their box office abroad.

[13]             Source: European Audiovisual Observatory: Yearbook 2012
pages 150-155

[14]                    Unlike
DVD, VoD is covered by the AVMSD and its provisions aiming to promote European
works.

[15]             In 2011, consumer spending on audiovisual content
through digital and online platforms and services rose by 20.1 % to a
total of EUR 1.2 billion, while European consumer spending on DVD fell by
10% for the seventh consecutive year to a total of EUR 9.4 billion. For the
foreseeable future, a continuing growth is expected in digital and online forms
of delivery for the European video sector. For example, total revenue generated
by provision of VoD over proprietary networks (so called walled "garden
services") prevail over distribution on the internet. In Europe such
revenues are expected to grow from EUR 850 million in 2011 to EUR 1.5
billion in 2017. Spending on DVD/BD (Blue Ray Disc) is predicted to decline.
Sources: European Audiovisual Observatory, Yearbook 2012; Screen Digest
database 2013.

[16]             IPTS Study: ‘Statistical, ecosystems and
competitiveness analysis of the media and content industries — the film
sector’, Sophie de Vinck, Sven Lindmark, 2012, point 3.4.3.

[17]             Source: European Audiovisual Observatory. In Germany, iTunes offered 36 films out of a sample of 50 films composed of the top 25
European Film Awards winners (1988-2012) and the top 25 European blockbusters
(1996-2012) while national VoD services offer a maximum of 29. In France the figures were 30-21 and in Italy 2-8.

[18]             The survey covered 4 550 European consumers aged
between 4 and 50, in 10 countries: A profile of current and future audiovisual
consumers, Final Report, EAC/08/2012, p. 10.

[19]             A profile of current and future audiovisual consumers,
Final Report, EAC/08/2012, p. 55.

[20]             A profile of current and future audiovisual consumers,
Final Report, EAC/08/2012, p. 77.

[21]             See European Audiovisual Observatory Yearbook 2012 —
Vol. 2, p.222 (966 million in 2011). Attendance however decreased in some
Member States like France, Italy, Spain, Portugal, Bulgaria, Slovenia and Slovakia.

[22]             A profile of current and future audiovisual consumers,
Final Report, EAC/08/2012, p.60.

[23]             This last figure also covers ‘free’ streaming or
downloads, a majority of which is probably accessed through illegal platforms.

[24]             Green Paper preparing for a fully converged audiovisual
world: growth, creation and values referring to the Yearbook of the European
Audiovisual Observatory, Volume II, page 171.

[25]             In the UK a recent analysis suggest that linear
television viewing time for generations 16-24 has decreased from 168
minutes/day in 2010 to 142 minutes/day in 2013 and are foreseen to further
decrease to 119 minutes/day in 2020; for the generation 25-34 the viewing time
has decreased from 200 minutes/day in 2010 to 183 minutes/day in 2013 and are
foreseen to further decrease to 148 minutes/day in 2020. Enders Analysis, Where
have all the young viewers gone? January 2014.

[26]             In 2011 online viewing in UK amounted to 20.5 minutes
per month. Data for France and Germany were 15 min and 22 mn respectively.

[27]             See EAO Yearbook 2012 — Vol. 2, p.206.

[28]             Motion Pictures Association of America: http://www.mpaa.org/Resources/3037b7a4-58a2-4109-8012-58fca3abdf1b.pdf,
page 21.

[29]             See
the study ‘Rentabilité des investissements dans les films français’ O. Bomsel
and C. Chamaret, 2008. This study reveals that of 162 films
produced in France in 2005, only 15 recouped their production and distribution
spending. http://crg.polytechnique.fr/fichiers/crg/perso/fichiers/chamaret\_728\_RentabContango2.pdf.

[30]             Consumer level video market contracted by 1.1 %
overall in the main 17 European countries in 2012 compared with 2011 while
digital video and walled garden VoD (TV VoD) increased sales by 71 % and
26 %, respectively. Source International Video Federation, Yearbook 2013,
pages17 and 18.

[31]             Statistics covering the 100 programmes with the most
audience in the ensemble of 6 MS (UK, DE, FR, IT, ES and PT) indicate that the
TV series were the most popular genre in December 2012 with a cumulate audience
of 62%. Source: lesaudiencestv.com; http://www.lesaudiencestv.com/categorie-12499478.html.
European productions of series are gaining ground in national and international
programming, e.g. Real Humans (Sweden/Denmark/Finland) will soon be adapted in
the UK, and has already been exported to 53 territories. Source: Médiamétrie,
Scripted Series Report 02. October 2013"

[32]             Source: European Audiovisual Observatory, Public
Funding for Film and Audiovisual Works in Europe, 2011.

[33]             European Audiovosual Observatory: " The
circulation of European co-productions and entirely national films in Europe 2001
to 2007" 
http://www.coe.int/t/dg4/cultureheritage/culture/film/paperEAO\_en.pdf

[34]             In the US, the average budget was USD 106.6
million in 2006, comprising USD 70.8 million in production costs and
USD 35.9 million in marketing costs. Sources: Motion Picture Association
of America, Theatrical Market Statistics 2007.

[35]             System whereby films are released in different exploitation
platforms successively. Such windows or schedules differ across Member States,
but the standard sequence for a feature film, for example, would be cinema
release, video/DVD/Blu Ray, VoD, pay-TV and finally free-to-air TV.

[36]             See point I.2 above.

[37]             It should be noted that many of the European films that
are a success in their domestic markets tend also to become niche in some other
countries.

[38]             Services of intermediaries whose purpose is to
negotiate with rights holders of different films in order to create a catalogue
that is attractive for VoD platforms ; this activity may be supplemented
by an active editorial component (curatorial activities)

[39]             According to an estimate of the European Association of
Film Archives (ACE).

[40]                    It
should be noted in particular that the Communication from the Commission on
state aid for films and other audiovisual works adopted on 15 November updated
the state aid criteria used to assess Member States' support schemes; it covers
state aid for a wider scope of activities, highlights the principle of
subsidiarity in the area of cultural policy and the respect for internal market
principles, introduces a higher maximum aid intensity for cross border productions and caters for the protection of and
access to film heritage.

[41]             As happens, for example, in Denmark, Spain, Sweden and Latvia. See the Third Implementation Report on the Film Heritage Recommendation,https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/swd\_2012\_431\_en.pdf.

[42]             See "Study on the Role of Banks in the European
Film Industry", Peacefulfish May 2009, 
http://ec.europa.eu/culture/media/media-content/documents/about/filmbanking.pdf

[43]             COSME is the EU
programme for the Competitiveness of Enterprises and Small and Medium-sized
Enterprises (SMEs) running from 2014 to 2020

[44]             Horizon 2020 is the European Union Research programme
running from 2014 to 2020. LEIT forms part of the Horizon 2020: Leadership in
Enabling and Industrial Technologies.

[45]             Societal Challenge 6 in Horizon 2020

[46]             http://ec.europa.eu/licences-for-europe-dialogue/en/content/about-site.

[47]             COM(12)789 18/12/2012

[48]             In particular on the sequence of releasing films via
cinemas, pay-TV, home video sale, home video rental, free TV, and video on
demand.

[49]             C(2012)1890 27/3/2012

[50]             Directive 2010/13/EU, OJ L 95, 15.4.2010, p. 1–24

[51]             COM(2013) 231 final

[52]             A profile of current and future audiovisual consumers,
Final Report, EAC/08/2012, p. 72 f.

[53]             http://ec.europa.eu/licences-for-europe-dialogue/en/content/about-site.

[54]             See document « Ten pledges to bring more content online
», http://ec.europa.eu/internal\_market/copyright/docs/licences-for-europe/131113\_ten-pledges\_en.pdf

[Top](#document1)