On May 17 and 18, Marché du Film at the Cannes Film Festival hosted two sessions organised by the European Audiovisual Observatory (EAO). The first, headlined “Key Trends in the Film Sector” outlined just that, whilst the second was titled “The Future Role of Theatrical Exploitation in Europe”.

The first, moderated by Gilles Fontaine (EAO), saw the participation of Matthias Bürcher (Federal Office of Culture), Manuel Fioroni (EAO), Martin Kanzler (EAO) and Susanne Nikoltchev (EAO).

According to the much-anticipated EAO Focus report, published in May, European cinema admissions grew by 18.3% last year in comparison with 2022 figures, topping 861 million. Generally, recovery rates in mature European markets are equalizing, with overall box office results growing faster than admissions due to ticket prices increasing, reaching close to 90% of pre-pandemic levels. A couple of other factors not to be forgotten here: inflation plays a prominent role, and the United Kingdom performed relatively poorly owing to the pound sterling’s unstable exchange rate.

The panelists discussed whether 2023 marks the necessary comeback to normality, but these figures need to be put into context, especially in light of the ‘Barbenheimer’ phenomenon of July 2023, the effects of which was a market anomaly. Consumer behavior is still shifting and the lower appetite for franchise films (last year, franchise admissions dropped by over 45%, whilst other films saw a 56% increase) might impact future growth. And there are other important factors to take into account: the world’s current geopolitical instability, the Olympics and the European Football Championship taking place this summer and some extreme weather conditions which may affect moviegoing in the near future and, in the longer term, over the coming years.

Production and Consumption
Not for the first time, the elephant in the room was the relationship between production and consumption. The number of films released returned to pre-pandemic levels, around 2,400 feature titles, but admissions still struggle to recover with most of these movies going unnoticed, recording little to no box office. Many debates, including this one and during other sessions held at this year’s Marche as well as other markets, keep on questioning the overabundance of the offering – especially in relation to Europe’s articulated public funding systems – and the actual audience demand, often speaking of an ideal focus on “quality.”

But what is “quality?” European players seem to postpone the problem – and for many, it’s in their interest to do so, striking while the iron’s hot – but these figures and a more problematic 2024 might make even more urgent a serious rethinking of the whole industrial system starting with a serious inquiry on how European backing should work and can be improved. For reference, Europe produced 2,400 films in 2023, including 1,460 fiction features.

In terms of market shares, there’s nothing new under the sun. American films continue dominating Europe’s box office charts gaining an all-time high 70% share, followed by European films standing at 26%.

Zooming in on single markets, performances varied. Turkey faced a problematic year and recorded a rather low recovery rate (46% up on the previous year) owing to its economic challenges; Denmark and the Czech Republic stagnated; France and Germany experienced average growth, whilst Spain and Italy experienced significant leaps, the latter driven in particular by Paola Cortellesi’s post war, anti-patriarchy drama “There’s Still Tomorrow” (“C’è ancora domani”). This film was a groundbreaking success, one that is hard to replicate in a country where family dramas and comedies (often French and Spanish remakes, such as Andrea Zalone’s “Il giorno piu’ bello” in 2022, a remake of “C’est la vie!” and Riccardo Milani’s “Corro da te” in 2022, a remake of “Tout le monde debout”) are being produced in a factory-like system. Cortellesi’s feature attracted viewers en masse, owing to the shocking recent murder of Giulia Cecchettin at the end of 2023, which sparked protests and debates nationwide for weeks.

Meanwhile, the number of screens in Europe remains essentially unchanged. The public support during the pandemic proved overall effective, yet the problem of “cinema deserts” (where the closest cinema is quite far, around an hours’ drive or so) remains, especially in many parts of Eastern Europe, with room for improvement in terms of accessibility (that is, accessibility to the cinema itself and accessibility for the hearing and visually impaired), not to mention other aspects not being surveyed by the EAO concerning the quality of the moviegoing experience. Business models also differ, whereas many European countries still rely on small or one-screen theatres.

Furthermore, the number of distributors also remained stable, with the vast majority of admissions taken by Sony, Universal, Disney, WB and Lionsgate. Smaller, usually local, firms share about 20-30% of the market.

Premiumization, Evangelization, Public Backing
“The Future Role of Theatrical Exploitation in Europe” was moderated by Fontaine (EAO) and Maja Cappello (EAO), with contributions from Kanzler, Lucia Recalde (European Commission), Sandra Den Hamer (Netherlands Film Fund), Marlena Gabryszewska (Arthouse Cinema Association of Poland), Katarina Nyman (Nordisk Film Finland), Anastasia Plazzotta (Wanted Cinema), Christof Papousek (Constantin Film) and Sophie Valais (EAO).

Papousek said how this might be a good moment for arthouse theatres as it’s easier for them to create a “safe space” for niche audiences. Poland recently saw the opening of five new arthouse theatres, thus meeting the local audience demand for smaller cinemas and event screenings (the latter being typically one-off events; a film supported by side initiatives like a Q&A, or other celebratory aspects).

Papousek makes a good point, but the ‘winning formula’ for event screenings is difficult to pin down, their business models being hard to replicate (a WWII film would require a different approach than a comedy celebrating the anniversary of a popular director, for example).

The panelists then discussed challenges on a local level. Papousek spoke about the difficulties in coordinating marketing campaigns between capital city Warsaw, the country’s larger towns and the smaller villages.

Plazzotta explained how the system in place for Italian exhibitors forces both them and distributors to program films at the last minute, often only a few days before their official release.

Nyman stated that Nordic countries are facing soaring piracy rates, which is a great obstacle to moviegoing. Supporting this is the latest Mediavision report, published early this week, which shows that there are currently 5 million pirates (400,000 more than in 2023) in the region.

Den Hamer, the interim CEO of the Netherlands Film Fund, touched on a “wake-up call” study the body commissioned, which looks at the reasons why Dutch commercial films tend to perform well, while acclaimed festival hits struggle and sometimes perform incredibly poorly at the local box office. She added: “We have to think of our audience at a very early stage of the filmmaking process. It sounds like a stupid thing to say, but we now work with audience designers, audience development coaches, and filmmakers, asking ourselves: Who will watch this film, why and why now?”

On the topic of cinematic experience, two approaches emerged during the discussion – evangelization and premiumization. The former includes all the outreach initiatives aimed to grow audiences (national cinema days, the efforts of single exhibitors or cinema chains, including special events, family-orientated sessions and affordable pricing); the latter focuses on the comfort of experience (seats, legroom, excellent video and sound technology and, for a very small niche, luxury services). The panelists agreed that both of these approaches should be implemented to increase cinemas’ overall attractiveness to customers.

Towards the end of the conversation, two more topics were discussed – Europe’s cultural and cinematic diversity, and state funding.

In the European Economic Area, the legal framework is quite diverse and there’s a growing need for harmonization. Some countries may set the example, though, with 25% of Spanish screens show European works; French exhibitors take part in voluntary commitments to protect French and European cinema and Swiss theaters receive a “diversity bonus” when they screen a certain number of diverse films (films based on diversity, equality and inclusion principles).

In most countries, the majority of grants aim to support production. A strengthened national and local backing of the exhibition sector could lead to wider premiumization and evangelization within theatres, gifting audiences with digitized, more modern places to enjoy their shows.

What We Learned
The two European Audiovisual Observatory discussions highlighted a notable recovery in cinema admissions, which grew by 18.3% in 2023, nearing pre-pandemic levels despite economic and geopolitical challenges. US films continue to dominate the market, although local hits like Italy’s There’s Still Tomorrow and France’s Astérix & Obélix: The Middle Kingdom show the potential for European films.

Challenges such as piracy, cinema deserts, and the overabundance of film offerings were also discussed, emphasizing the need for strategic improvements in production, distribution, and audience engagement. The conferences underscored the importance of both enhancing the moviegoing experience and harmonizing legal frameworks across Europe to support the industry’s growth.