A new European Audiovisual Observatory study finds that the share of direct public funding in financing decreases with increasing market size and budget volume

What Do We See When We Look at the Sky? by Alexandre Koberidze, released in 2021

Last week, the European Audiovisual Observatory (EAO) published a report titled “Fiction Film Financing in Europe: A sample analysis of films released in 2021,” authored by Martin Kanzler and supervised by Gilles Fontaine.

The study is based on a data sample including detailed financing plans for 448 live-action fiction films released or slated for release in 2021 from 22 European countries. The sample is made up of both national and European-majority-led co-productions, and covers a cumulative financing volume of €1.33 billion (43% of the total number of European fiction films released in 2021).

The report aims to provide figures on “how European theatrical fiction films are being financed,” while “offering a big-picture, pan-European perspective, and complementing work done at national levels.” Moreover, it offers “unique fact-based insights on a wide variety of research questions, from the quantification of the average budget of theatrical European fiction films, to the importance of individual financing sources.”

In detail, the EAO research highlights three key findings.

The first shows that, although direct public funding remains the single most important financing source of European fiction films (26%, or €343.3 million), production incentives became – for the first time – the second biggest source, accounting for 21% of the total volume, or €275.4 million.

Other minor funding sources are producers' investments (excluding those bound to broadcasters, accounting for 18% of the volume, or €242.9 million), broadcasters' investments (17%, or €222.5 million), pre-sales (excluding those bound to broadcasters, 13% or €177.5 million), private equity cash investments (2%, or €22 million), debt financing (1%, or €19 million), in-kind investments (less than 1%, or €3.6 million) and other unclassified sources (2%, worth €22.6 million).

The second key finding indicates that the median average budget of a European fiction film released (or slated for a release) in theatres in 2021 was €2.12 million. The mean budget was €2.97 million.

Unsurprisingly, average budgets are higher in larger markets and lower in smaller ones, as national exploitation remains key for most titles. Specifically, the median budget of a European fiction film originating in one of the largest markets (in the given study, those are France, Germany, Italy and the UK) was €2.7 million, followed by those of medium-sized markets (€1.8 million) and smaller ones (€700,000).

Finally, the study finds that “both average budgets as well as financing structures differ significantly between markets.” In particular, the EAO study notes that “the percentage share of direct public funding in film financing decreases with increasing market size and budget volume.”

The report also shows that, even though it includes only 18% of total financing in the four large sample markets, direct public funding accounted for 44% in medium-sized and 63% in small sample markets. 

By contrast, the financing weight of production incentives seems to increase with market size, growing from only 3% in small markets, to 14% in medium-sized markets up to 24% in large markets (25%, excluding French films). In addition, the significance of producer investments as well as pre-sales appears to be comparatively low in small and medium-sized markets when compared to large markets.

The full document can be accessed here: https://rm.coe.int/fiction-film-financing-in-europe-2023-edition-m-kanzler/1680af8262