The European Audiovisual Observatory (EAO) has released a report analysing the financing of European live-action fiction films, based on data from 713 productions that were either released or scheduled for release in 2022. The study provides insights into how theatrical fiction films in Europe are funded, highlighting the financial sources that sustain the industry across different market sizes.

One of the key takeaways is that direct public funding continues to be the single most important financing source for European theatrical fiction films, contributing 27% of the total financing volume. This category includes public funding from national, regional and local film bodies, as well as contributions from minority co-producing countries and supra-national sources, such as the European Union. Production incentives ranked as the second-largest financing source, making up 20% of the total financing volume for the second year running. These incentives encompass both national and foreign tax rebates, grants, and cash rebates that bolster local and international productions.

Broadcaster investments also play a crucial role in film financing, accounting for 18% of the total budget structure. This category includes direct co-production investments from television networks as well as pre-sales agreements with broadcasters in the co-producing countries. Producer investments, which exclude broadcaster contributions, accounted for 16%, while pre-sales excluding broadcasting rights made up 15%. Other funding sources, including VoD platform investments, private equity, debt financing and in-kind contributions, represented a negligible portion of overall financing.

The report also identifies notable variations in financing structures across different market sizes. A clear trend emerges: the reliance on direct public funding decreases as market size increases. In the four largest European markets examined – France, Germany, Italy and the UK – direct public funding represented only 19% of total film financing. In contrast, it accounted for 46% in medium-sized markets and reached as high as 58% in smaller markets. This suggests that films produced in smaller countries depend more heavily on national and regional film support schemes, whereas those in larger markets have greater access to alternative sources, such as production incentives, pre-sales and private investment.

Conversely, the role of production incentives appears to grow with market size. In smaller European markets, production incentives constituted only 8% of total financing. In medium-sized markets, this figure rose to 14%, while in large markets, it reached 23% (24% when excluding France). This trend reflects the increasing availability of tax-rebate schemes and other incentives designed to attract international productions to countries with robust infrastructure and competitive financial conditions. Additionally, producer investments and pre-sales appear to be more significant sources of funding in larger markets compared to smaller ones, where financial risk is often mitigated by securing a higher percentage of state support.

The report further examines the budget structures of European theatrical fiction films, revealing a significant disparity between market sizes. The mean budget of a European fiction film released in 2022 was €3.03 million, while the median sample budget stood at €2.19 million. However, budget levels vary widely across countries. In large markets such as France, Germany, Italy, Poland and the UK, the median film budget was €2.7 million. In contrast, films produced in medium-sized markets had a median budget of €1.9 million, while those originating from small markets had a median budget of just €0.9 million. This discrepancy highlights the correlation between a country's market size and its ability to sustain higher-budget productions. Larger markets typically offer greater domestic box-office potential, making it easier for films to recoup production costs through national distribution.

The data sample used for this analysis is based on detailed financing plans for European-majority live-action fiction films, covering a total financing volume of €2.16 billion. The study represents an estimated 56% of all European live-action fiction films released theatrically in 2022. The report is the result of a collaboration between the European Audiovisual Observatory and the European Film Agency Research Network (EFARN).

Download the full report here.