Films So Good

A new report of European Audiovisual Observatory (EAO) suggests that the average median budget of a European Film is € 2,01 millions. This amount excludes the very high budget films in order to be more representative for the majority of European films. Furthermore, if French films are also excluded from the sample, the amount decreases to €1,62 million, since French films tend to have above-average budgets and the higher number of productions.

Market Analysis

The report was based on an analysis of 576 European live-action films from 2017 with a combined budget of €1.85 billion. The research categorizes each country’s market based on its annual admission levels into Small (< €10 mil.), Medium-sized (€10-50 mil.) or Large (> €50 mil.). Large markets include France, Germany, Italy, Poland and U.K., while medium-sized market includes Austria, Belgium, Ireland etc.

Films of the larger markets had a median budget of €3.2 million in 2017 compared to €1.5 million for a medium-sized and €0.9 million for small markets. The fact that average budgets differed widely among countries is a result of the box-office potential that one film can have in national market. The data analysis also suggests that international co-productions averages higher budgets than 100% national films, with the median budgets of co-productions exceeding by 250.000-350.000 Euros.

Funding Options

The report also refers to the funding sources of European cinema. In 2017 the main financing tools of European films were the following: direct public funding (26%); broadcaster investment (24%); producer investment (18%); pre-sales (15%); and fiscal incentives (12%). Other financing sources include private equity, debt financing and in-kind investments

However, depending on the size of the market, different main sources of funding are noticed. For example, public funding in large markets was only 21%, while in medium-sized and small ones was 43% and 54% respectively. On the contrary, pre-sales in large markets was 17, compared to 10% in medium-sized and 6% in small markets. This means that in the large markets, there are stronger investors than in medium and small markets. Smaller box-office potentials make film investment quiet risky.

Conclusion

This EAO research covers the economic aspect of European Cinema, an aspect that hasn’t been focused enough. Even if the data sample is estimated to cover 49% of the total number of European fiction films, the results confirm the common sense we got for the European cinema; the big economies can support higher budget films and the higher audience – potential box office make less risky the film investments.