Last week, the European Audiovisual Observatory (EAO) published a new report on film funding. The document, titled “Insights into Direct Public Film Funding in Europe” and authored by Martin Kanzler, provides high-level insights into changes in the income and activity spending of European film agencies between 2018 and 2022. These insights are derived from data samples from national and sub-national film funds.

The first key insight indicates that Europe’s national film funds’ income and activity spending increased, but at a rate lower than inflation. Specifically, the funds’ income and activity spending grew markedly in 2020 and 2021, likely in connection with COVID-19 crisis support, but growth rates declined sharply in 2022. By 2022, net income for national and sub-national funds was 16% (national) and 39% (sub-national) higher than in 2018, while net activity spending was 8% higher for national funds and 44% higher for sub-national funds. This is compared to an inflation rate of approximately 22% between 2018 and 2023, according to Eurostat.

Next, the study finds that European film funds don’t follow a standard financing model, although most rely heavily on government funding.

European film funds’ income stems from various sources, with several financing models in use across the continent. Some national funds generate income from as many as eight different sources, but most sample funds depend on one or two primary sources. Typically, these are government budgets at the state or regional level, combined with self-generated income. In 2022, 22 of the 29 national film funds in the sample obtained over 80% of their income from government budgets, while industry levies contributed over 80% for two funds, with only four funds drawing from a more diverse mix of sources.

In recent years, the role of industry levies on a pan-European scale has been waning, as national funding has increasingly relied on public sources. The share of industry levies in the funding mix of national funds decreased from 40% in 2018 to 32% in 2022.

This drop does not reflect a reduction in actual levy amounts, which were 6% higher in 2022 than in 2018. Instead, it results from a significant rise in public-sourced funds, whose share rose from 54% in 2018 to 63% in 2022. Although it is not possible to specify which portion of reported income is allocated to incentives, the strong increase in public-sourced income likely reflects expanded budgets for incentives and COVID-19-related support in 2020 and 2021. The effect of investment obligations, which could increase the share of levy financing, may only become apparent from 2023 onwards.

The third key insight finds that most direct public funding is allocated to the creation of works; however, its share has declined as incentive-based production support has increased.

The core purpose of most film funds has traditionally been to support the creation of works, and the period from 2018-2022 is no exception. National funds dedicated 62% of their direct public funding spending to the production (58%) and development (4%) of film and other audiovisual works. Sub-national funds, with generally narrower mandates, allocated an even larger share (82%) of their cumulative net activity spending to work creation, with 73% going to production and 8% to development.

However, the share of direct public funding provided by national funds for the creation of works decreased from 66% in 2018 to 62% in 2022. This drop is attributable to an increase in direct public funding being funnelled to other activity lines, not a reduction in absolute funding for work creation, which remained stable over the period. Meanwhile, incentive support amounts dedicated to the development and production of films and audiovisual works among eight national sample funds tripled over the five years in question.

You can consult the full report here.