Industry Report: Market Trends
Current trends in international film co-production
- We see a changing in the films methods of financing. We can explain that by the blurring boundaries and the increasing number of transnational cultural agreements
Since the early 1990s, international film co-productions have been increasingly utilized to create programs for a global market. These projects reflect the continuing integration of cultural and economic activities on a global scale and provide a means to pool financial, creative and technical resources from participating countries. Governed by official treaties, they allow collaboration between two or more producers from different nations and provide access to various public funding mechanisms and increased production budgets.
Canada, for example, is one of the most active countries offering incentives, with over 55 co-production agreements worldwide, followed by France with over 30 treaties. The US has no official co-production agreements, but producers and studios work collaboratively with other countries on films and television programs under unofficial joint-venture agreements.
To qualify for a treaty co-production, co-producers typically have to commit to at least a 30% financial participation in a project. Of fundamental importance, treaty co-productions count towards domestic content for quota purposes, allowing projects access to local markets and eligibility for public funding. Co-productions entail financial and creative commitments, and the pooling of technical expertise, as more fully set forth in the official co-production agreement between participating parties. While the stated goal is the production of cultural programs that are nationally relevant to all countries involved (allowing producers access to various funding mechanisms such as tax incentives, grants and investments), it hasn’t quite worked out that way. Co-productions today reflect the globalization process, with a commercial focus that targets international audiences as consumers rather than citizens, resulting in a hybridization of cultures and their diversification.
After the 2008 global financial crisis, the growth trend in co-productions slowed due to reductions in national cultural budgets and political changes in various treaty countries instituting reductions in their funding for the arts. However, co-producers across Europe are rejoicing once again, thanks to new European Commission regulations published on November 14th, 2013 that provide for greater state subsidies for European co-productions, multimedia projects and film distribution across Europe.
The new Cinema Communication, which replaces rules set down in 2001, will allow producers of multi-territory co-productions to tap cross-border subsidies for up to 60 percent of the film’s budget, up from 50 percent previously. State support for cinema distribution has also received approval from the Commission and co-productions can receive up to 60 percent of their EU distribution costs.
In another concession to co-producers and the realities of making cross-border productions, the Commission clarified its rules regarding support for postproduction, noting that, in principle, state aid “must not be reserved for specific parts of the production value chain,” but that producers should be free to choose how and where they spend state film subsidies. The upshot: no European country can force a producer to do postproduction in its territory as a condition for receiving state subsidies.
In total, European governments spent approximately $2.8 billion (€2.1 billion) in various forms of direct cash support for European productions and an additional $1.3 billion (€1 billion) in the form of targeted tax incentives in 2013.
Additional factors contributing to a recent increase in global co-productions include the growth in number, visibility and importance of international performing arts festivals and markets, the increased membership of European and other cultural networks focusing on international collaboration and exchange, and a heightened awareness of our global society, where international citizens have shared concerns.
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