Report Report

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Report Report

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RAPPORTO Il Mercato e l’Industria del Cinema in Italia 2011
Report
The market and the cinema
industry in Italy
2011
fondazione ente
dello spettacolo
In collaboration with
With the support of
Copyright © 2012
Editing and graphics: Fondazione Ente dello Spettacolo - PRC srl - Roma
Published by: Area Studi Fondazione Ente dello Spettacolo
Consultation: Redento Morii
The Report can be downloaded from the website www.cineconomy.com
by Edizioni Fondazione Ente dello Spettacolo
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www.cineconomy.com
Report
industry in Italy
2011
fondazione ente
dello spettacolo
INDEX
First part - Between innovation and development
EVOLUTION OF THE SECTOR
Chapter 1 - Which economic scene
10
1. Change of season
• The apparent regression
• That three-year cycle
• Four key points
2. The great retreat of the major companies
• Accounts
11
11
12
12
14
14
Part II - Cinema and its resources
CAPITAL EMPLOYMENT AND FLOWS
Chapter 2 - The investment cycle
19
1. The Italian film economy
2. Factors analysis
3. The value of resources
4. The financial requirements of the sector
• One’s own means
• Looking for the qualitative leap
• External financing
5. Investments of the sectors
• National capital
• Foreign investments
• Private and public resources
6. The new fundraising are
• The different stages of the processa
• Partners’ participation
• The function of tax credit and tax shelter
• Partnership and profit sharing
• Bank and financial partners’ role
• Co-participation agreements
• Joint ventures with the distribution
• Presale contracts
• Service contracts
• The product placement
7. The Public Purse
• The Single Fund for Entertainment
• Other state contributions
• Lotto proceeds
• The infrastructural fixed assets of Arcus
• How state investment changes
8. The other public purse
• The role of regions and Film Commissions
21
22
25
26
27
30
31
31
31
33
35
35
36
37
39
41
41
49
50
52
56
59
60
63
74
75
76
77
81
83
• Community aid and support
• Impact of public funds
92
97
Chapter 3 - Resources for the Italian cinema
103
1. Overview: starting points
• Reasons and evolution of the public intervention
• “private” resources
• Overview: resources available today
• Public resources
• National public resources
• Sub-national public resources
• Private resources
• “Spontaneous” private resources in exchange for communication:
product placement
• “Induced” private resources in exchange for rights:
broadcasters’ obligations
• “Induced” private resources in exchange for a profit share:
effects of the external tax credit
• Summary and values
2. Proceeds of the cinematographic products in Italy
• The perimeter
• Scenario
• Channels
• Italian film export
• Public contribution for export in Italy and Europe
• International marketing
3. Current trends and evaluation hypotheses
• Territorial specialization
• Variety of Italian products
• The protagonists of the national film market
• Video on Demand and remote market
103
104
105
107
108
110
115
117
117
Chapter 4 - Business activity
151
1. Product investment
• The business model
• Structure of uses
2. Investments of the cinematographic chain
• Investments in the sector
3. Resources distribution
152
152
154
155
156
157
118
119
120
122
122
123
127
136
137
138
140
140
142
144
147
Third part - The supply market
COMPANIES AND BUSINESS ACTIVITY
Chapter 5 - The production system
165
1. The sector map
2. Analysis of balance sheets and results
166
167
• Holding and dominant groups
• Operating companies and leaders
• The main production companies
• The largest distribution companies
• The great circuits of the activity sector
• The top industrial and service providing companies
167
171
172
178
183
183
Chapter 6 - Behind the market shares
189
1. Value of the investment choices
2. The box-office competition
190
192
Part IV - The labour market
SPECIALIST FILM-MAKERS AND ARTISTS
Chapter 7 - The professional community
203
1. Offbeat entertainment and cinema
•Employment
2. The reference universe
• Vocational qualifications
• The territorial distribution
3. A great human capital
• Employment levels and periods
• Pay scales
4. The coordinates of the sector
• Earned income
• The professional pay
• The reputational score
• Income ranges
• The professional turnover
• Youth employment and Equal opportunities
204
204
209
209
210
214
214
217
218
219
221
224
226
231
233
FOCUS ON CINEMA DIGITALIZATION IN ITALY AND EUROPE
1. 2011: the turning point in the digitization process
238
TESTIMONIALS
1. Schermi di Qualità
2. Film Commission
3. Regional funds to film production
4. Banks backing the cinema: new formulas and means of support
5. Evolution of the Product Placement
262
265
272
284
293
First part
Between innovation
and development
Evolution of the sector
CHAPTER 1
«WHILE ALL THE OTHER ARTS WERE BORN NAKED,
THIS, THE YOUNGEST, HAS BEEN BORN FULLY-CLOTHED.
IT CAN SAY EVERYTHING BEFORE IT HAS ANYTHING TO SAY»
Virginia Woolf (1882-1941), writer (from The cinema, Mimesis Edizioni, 2012)
Which economic
scene
mong its great producers, Italian cinema had Franco Cristaldi, founder of Vides,
who, when asked about his activity, answered: «Those who produce any type of
entertainment have specific obligations: being able to promote new ideas; proving
professional credibility; running a company that is both industrial and cultural.
The industrial logic pushes towards the less risky product, that is, apparently, the
product that has already been tested on the market, with positive results. But this point of
view is wrong, as it doesn’t consider the fact that today quality pays». Another important film
producer was, undoubtedly, Dino De Laurentiis who, in similar circumstances, showed his
pragmatism and his thinking big: «I don’t believe in aestheticisms and in intellectualisms. I
only believe in films people like. My idea of cinema? It is the reality of life turned into art in the
shape of entertainment. My philosophy has always been: great stories, great scripts, great
directors. But these are not necessarily characteristics of the American production…also here
in Italy films can be produced and distributed all over the world»*.
The oldest of these statements dates back to 1986, the most recent to 2000, but they both
express points of view and ideas that have always accompanied the national cinema.
The greatest record of audience and receipts in the 2010 season have been associated to a
A
* The two sentences ascribed to Franco Cristaldi (1924-1992), producer, founder of Vides, have been taken,
respectively, from Quando un produttore è anche autore, interview by Maria Pia Fusco (in «Europacinema 89»,
Rome, 1989) and from the interiew-book Le botteghe dell’immaginario by Tonino Pinto, Rome, 1986. The quote
by Dino De Laurentiis (1919-2010), producer, come from three different statements: Intervista col produttore Dino
De Laurentiis by Adelio Ferrari in «Cinespettacolo», (no. 3, March 1949, Rome); Colloqui con i produttori italiani:
Dino De Laurentiis in «Giornale dello Spettacolo», (no. 16, 12th May 2000, Rome).
new-born national popular soul of the Italian cinema, even though there had been a long
period without international artistic awards. In front of the sharp contraction in the box office
results that took place afterwards, all recriminations have been explained again through the
dangerous lack of contents different from the main genre of the national cinema, that is, the
Italian comedy, as proved by the persistent absence of of prestigious awards (the Taviani
brothers had not won the Golden Bear at Berlin Film Festival yet).
1. Change of season
It is not about referring to Cristaldi or De Laurentiis, because reality recalls the same
entrepreneurial experience of both of them. The Italian film has gone back to the levels of its
greatest box office successes, through a gradual evolution that was delineated and then
proved also through this Report, in virtue of a progressive and new making up of the productive
and artistic structures.
Once the economic and managerial conditions suitable for relatively stable and reliable new
projects were re-established, the activity started to create value again. Certain turbulences
have always existed – think about the great uncertainty that, for a long time, has marked
public contribution, which was already marked by a progressive lack of endowment – and still
do. But without an organic reference industrial and market map, Italian cinematography could
have never regained the necessary liveliness in such a competitive and open sector like the
entertainment, communication and cultural entertainment one.
The same brilliant season of 2010 illuminated this scene, like when in a dark room – where
people have been working for a long time, accumulating things and activities – an old light bulb
is changed and finally the light comes out. By turning spotlights on, it was mostly possible to
point out also those untidiness and dust that had never been cleaned away because the
conditions did not allow it. Problems related to the funding credits, to the digitalization of the
screening rooms, to the insufficient territorial coverage of the sales network, to the closing
of cinemas in the historic centers without the opportunity of renovating them and turning
them into multi-screen cinemas, are considered as primary in their nature of opportunity to
be grasped in order not to undergo a new regression and lose ground.
THE APPARENT REGRESSION
The less brilliant results obtained in cinemas in 2011 confirmed the sensation that the
evolutionary process carried out is not ephemeral, as they have been accompanied by the
conquer of market shares that were unthinkable until a short time before. For the first time,
the Italian cinema totaled more than half of its receipts in the circuit of the mega-structures,
that is, multiplexes with more than 7 screening rooms. Not only. If we add the result achieved
in multiplexes to that achieved in the other typology of great structures, that is, 5 and 7 screen
cinemas, we can notice that it has obtained again (as it did before, but only in 2007) more than
two-thirds of its receipts in these two more developed sections of the projection sector and, by
exceeding the threshold of 66.6%, it also reached the highest result ever achieved in the high
range of the market: 67.6% compared to the 66.81% of four years before.
This performance proves the gradual development of the domestic cinema on the two most
delicate fronts of the competitiveness with foreign productions and, therefore, with American
productions: on the one hand, the production pays more attention on the expectations and
preferences of the general (and younger) public; on the other hand, there is a progressive
commitment in marketing strategies, in order to give greater visibility and attractiveness to the
national first releases, on the same ground on which Hollywood major companies have always
produced and achieved (mostly from the economic point of view) the success of their
blockbusters.
Moreover, the comparison between the averages of unit entrances per cinema and for each
single screen points out how the new competitiveness of the Italian cinema – for the first time
ever – resulted in a greater attendance in single-screen cinemas compared to the others and,
at the same time, achieved the best averages ever in terms of attendance in the other three
categories of this business sector.
THAT THREE-YEAR CYCLE
However, there are still some shadows. On the other hand, the historical series of the basic
data of the Italian business sector shows how cinema is facing economic cycles whose trend
develops over a 36 month period. During the last eight years, for instance, three peaks can be
noticed: 2004, 2007 and 2010. During the three following two-year periods, the trend of the
sector has always recorded a marked downturn, with a subsequent quick recovery that in the
third consecutive year has always led to positive “peaks” of the activity, which were always
higher than the previous ones.
After the marked regression of 2011, a still interlocutory season should be recorded, sketching,
however, a new upward curve, with incremental data and coefficients that represent a possible
origin of renewed top indexes (even higher, probably, than those recorded before, at the peak
of the periodical three-year evolution period).
FOUR KEY POINTS
As it results from the data recorded in this edition of the Report, besides the chronic critical
situation of the online market, which is hindered by piracy, there are at least four sources of
turbulence.
• The introduction, at the end of 2013, of the new intervention plans in the least developed areas
of the European Union, with a consequent reduction in Community funds FESR and FAS,
which feed an important part of the funds of the regional Film Commissions and Film Funds
of Central and Southern Italy. At the same time, the new Creative Europe programme will be
launched; it will replace – with less resources – the Media Programme.
• The constant decline of the traditional channel, which was fundamental to the Italian film,
such as the home video. Also in 2011 the haemorrhage was strong: the market decreased by
12 |
TABLE 1
AVERAGE DATA ABOUT CINEMA IN THE NATIONAL MOVIE THEATRES
2004
2005
2006
2007
2008
2009
2010
2011
3.00
3.00
AVERAGE NUMBER OF SCREENS PER CINEMA
2.25
2.36
2.53
2.64
2.78
2.90
AVERAGE BOX OFFICE PROCEEDS (EXPRESSED IN EUROS) PER CINEMA
464,629
420,801
449,904
529,690
522,322
564,004
686,539
615,967
AVERAGE ANNUAL PROCEEDS (EXPRESSED IN EUROS) PER SCREEN
206,215
177,821
178,440
199,899
187,743
194,096
228,561
205,004
AVERAGE UNIT ENTRANCES PER THEATRE DURING THE YEAR
78,739
71,021
76,127
88,141
87,159
89,619
102,753
94,342
AVERAGE UNIT ENTRANCES PER SCREEN DURING THE YEAR
34,929
30,024
30,082
33,527
31,328
30,841
34,206
31,398
Cinetel data related to the business market, from the Italian cinema in numbers (calendar years 2004-2011), by Ufficio Studi/Ced of Anica
Industrie Cinematografiche Audiovisive e Multimediali (the National Association of Audiovisual and Multimedia Film Industries) (Rome).
17.6% and, for the first time, the total value decreased under half a billion Euros, to 486 million
Euros. The sales of supports, which correspond to 58% of the business volume, have reduced
by 16.3%; the newsagency channel (that corresponds to 27%) has lost the 20.5%; rental (15%
of the total) has undergone a 16.5% reduction: Cinema – which constitutes 95.8% of the
transactions, with 61.3% of film videos and 24.5% of animation videos – recorded a 13%
decrease for the works made for cinema and a 17.6% decrease for the works made for video.
The only positive data refer to the growth of the Blu-ray sector, which is mainly made up of
cinematographic works, whose business volume increased by 26% and his value by 22%
compared to 2010, while the e-commerce (thanks to the 3D process that also improve the
development of the Blu-ray sector) increased by 34.3%, going from a 0.4% to a 1.8% incidence
on the total turnover.
• The crisis of the collaboration between national general interest TV networks and the
independent producers who, over the last 15 years, produced most serials and TV-movies
for the national networks. During the last two-year period, the broadcasting of these works
is under the critical threshold of one thousand hours per year and, thanks to a strong
reduction on the profit margins, the productive capacity seems overflowing, pushing small
operators towards inactivity.
• The difficult trend of the technical industries’ sector, due to the problematic shift from film
to digital, as well as to the difficult economic context that threatens its financial balance.
• Great companies like Technicolor and DeLuxe are in a difficult situation, like many other
smaller companies. Moreover, the historical brand for cinema advertising, Opus Proclama,
closed down after a 50 year leadership, like the home entertainment chain Blockbuster (122
stores have been taken over by the parapharmacy chain Essere e Benessere).
| 13
2. The great retreat of the major companies
The peak of the critical situation, which could start a fast involution, does not lie in the
deterioration of a particular situation, but in the so-called “infection risk”, that is, the crisis
of a sector could affect the overall balance. As a matter of fact, there is a common feature in
the different contexts: the structural risks. In particular, considering the lost revenue of the
foreign holdings which, in the last four years, nearly reached the amount of 125 million Euros
– 124.34 million Euros, exactly – and it corresponds to an average erosion of a little more
than 31 million Euros.
This phenomenon involves all sectors and, besides the endemic crisis of the home video
channel and the technological development of the sector, is to be also ascribed to the
production deficit of the major Hollywood companies after the financial crisis which started
in the USA in 2008 (and after the production of the last blockbusters – Avatar [2009; Id.]
first of all – that invaded the screens all over the world in the propitious 2010). Now its size
seems exceptional.
ACCOUNTS
Sony Pictures Releasing Italia, during the last financial year, abandoned activities for almost
20 million Euros (13 of which in the theatrical sector), with 4 million Euro liabilities. 20th
Century Fox, though recording a modest overall loss of 430 thousand Euros in its balance
sheets, recorded, in general, lower revenues of 43 million Euros (in this case, 27 million Euros
less have been reported among cinemas’ revenue) and began winding up Fox Factory, its new
business unit for the so-called local productions. Universal is the holding with the best results,
with an only 2 million Euro lost revenue compared to 2009, but the “competitor” Paramount
showed a 15 million Euro lost revenue (going from almost half a million profit to a 1.496
million loss), and it obliged the parent company Viacom, starting in 2011, to transfer the home
entertainment branch to Universal, which is now controlled by the other communication
conglomerate Comcast, after the recent acquisition by General Electric. Warner Bros. reports
a lost revenue of 37 million Euros, mainly due to the different activities carried out outside the
Warner Village multi-screen cinema circuit (in which it reported revenues of 34.97 million
Euros in 2009). However, thanks to this disposal in favour of The Space Cinema, Warner Bros
could have a balanced budget related to the last year and recover the 18.6 million Euro deficit
accrued in the previous year. Walt Disney also increased by almost 50 million Euros the
revenue of cinema and TV production companies (298.49 Million Euros in September 2011
compared to 248.54 of the previous financial year), but the revenue produced by the film
studios in Italy decreased by more than 25 million Euros, from 90.97 to 64.80 million Euros.
More than half of the American lost revenue in 2011, compared to 2010 (-11.69%), corresponds
to the development of the Italian cinema (+6.35%); the remaining part is for the European
cinema and, to a small extent, for the extra-European one. In the last three-year period the
recovery of the Italian films as regards the box office revenues – +12.49%, in terms of
competence shares out of the grand total – was equal to a little less than 90 million Euro
14 |
profit, compared to the 15.04% drop of the American films. Instead, as for the attendance, a
13.11% increase was recorded, compared to a 15.10% decrease of the USA. This means that
the national films “stole” nearly 14 million viewers from the American films: 11 million in
2010 compared to the previous year and about 3 million in 2011 compared to 2010.
Paradoxically, with relation to the productive and commercial structure of the national
cinematography and to the market structure, the “revenge” of the Italian cinema could raise
doubts about the hegemony of the great foreign holdings even though this hegemony fails.
| 15
Part II
Cinema
and its resources
Capital employment and flows
CHAPTER 2
«THE BIGGEST TROUBLE OF THE CINEMA IS THIS: IT’S NOT JUST AN
INDUSTRY, BUT AN ART. AND THE BIGGEST TROUBLE OF THE
CINEMATOGRAPHIC ART IS THAT IT IS TOO MUCH LIKE AN INDUSTRY»
Garson Kanin (1912-1999), american director and writer
in Il romanzo di Hollywood (Rizzoli, Milano, 1984)
The investment cycle
hen commenting on the new liveliness of Italian cinema and its
strengthening, most observations usually refer to the creative and artistic
contents of the recent production. On the contrary, observations about
some structural changes of the sector are not frequent. After the
constitutional law no. 3 of 2001, that by amending the title V made the
cinematography a competitive subject, Regions, for instance, launched – even though within
the general principles of the State – their own intervention plans, according to which
territorial Film Fund and Film Commission were established; these structures are active
in all sectors, from the production to the distribution as well as the promotion of the
cinematographic activity and entertainment in general. Thanks to the legislative decree no.
28 of 2004, also known as “Urbani Reform” (from the name of the Minister of Cultural
Heritage and Activities, Giuliano Urbani), the public support has been renewed then, by
providing contribution criteria more centered on the reference system and extending the
concessions starting with the introduction of the product placement activity. After law no.
244 of 2007 – the 2008 financial law – a new series of tax incentives finally established
(which was already pre-established by the decree no. 28 of 2004), particularly based on tax
credit and tax shelter forms for both cinematographic and non-cinematographic companies.
However, it has been necessary to wait until the last implementation decrees were issued
in May 2009 and January 2010 in order to verify their practical enforcement. Similarly, only
between 2008 and 2010, the innovative regional funds and Film Commission fully
W
developed1. If it is possible to speak about the revival and the improvement of the national
films today, basically, we have to think about the system modifications that, progressively,
led to an evolution of the organic structure of the cinematography – as operators themselves
had been requiring for years. This is because they tended to innovate every sector (organically
or not, they proved functional) and most of all considered the first and fundamental driving
force of the sector: the economic resources for the production of new works.
As a matter of fact, from the continuous alternation of films under distribution all the specific
production activities originate, from which then derive – besides the direct activities of
distribution and business – also the indirect and induced ones of the “big” broadened sector
which constitute the cinematographic market supply in all its declinations.
R&S as a mission. They are all the investments that, in other industrial areas, would be
defined as R&D (Research and Development) and that involve the film companies, according
to their mission, for an average share of 60-70%, or more, of the total turnover.
This incidence has not been confirmed – if we want to formally distinguish the true
investments from the normal production cost – by any other activities of the industry and the
Italian production system, where it is estimated less than 10%2. The fundamental role played
by the possibility to meet the financial requirements – at least the normal standards of
European competitors – is confirmed by the evolution and growth stages which accompanied
the Italian films in the last decade, when the tumultuous progress of the distribution platforms
(internet, mobile telephony, satellite TV) was recorded, along with the relative development
and diversification of the market.
Bread and fantasy. The real essence of the activity of the first investors is to be seen in the
1
The institutional regulations of tax credit and tax shelter can be found in Law no. 244 (Financial Law)
of December 24, 2007. The ministerial decree of MiBac of 7th May 2009 focuses on the first regulations.
The authorization decree of European Commission (no. 673/08) was issued on July 22, 2009. The last
regulations have been issued by MiBac through the Ministerial Decree of January 28, 2010.
2
In Business Economics, investments are usually divided in: induced investments, for instance, when
they are made as a consequence of variations in the economic trend; financial investments, if they consist in a monetary allocation or partnership; capital investments, if they aim at increasing the assets
values of enterprises, through operations that basically involve the company structure; fixed capital investments, for the acquisition or the qualification of real estate structures; operational investments,
when they are related to productive activities, market strategies and commercial policies; investments
in research and development (R&D) if they aim at innovation; investments in capital goods, related to
the replacement or the updating of the endowment of plants, machinery and equipment. In an integrated industrial sector like the cinematographic one, the investment cycle finds different analogies in
every sector, also thanks to the nature and origin (public or private, foreign or national, direct or indirect,
autonomous or internal) of the resources used, but the prototype nature assimilate films under production to the new products and their funding is the one defined in the industrial organizational system
“in research and development”.
20 |
ability to merge the economic availability with the lively creative process that animates the
cinematography (as Seneca said, “If one does not know to which port is sailing, no wind is
favorable”). More than it seems, the adequacy of the economic resources is directly connected
to the value of a work as well as the value of a subject or a script. Actually, the
interdependence between the two elements is already evident during the conception stage,
when the project starts to take shape. «The problem of the directors or film makers», as
Nanni Moretti sais, «is to understand which means, actors or non-actors are available, how
many weeks for the shoot and, considering all these things, to restructure his story or have
the courage to change it ».
1. The Italian film economy
Even though vital, the resources for the new productions do not have a great influence on the
total requirements of the sector, as market activities need financial contributions at every
level, for the development of both the sectors of distribution-business and the many broadcast
channels. Moreover, all the sections that go alongside the film production – with tens of
documentaries, hundreds of shorts and animated films, and the side film screenings of
cinema clubs and cineforums – the volume of business includes the organization of the
innumerable film promotional events scheduled every year (for instance, more than 280
festivals and shows), as well as the operational capability of the many structures which
support the whole industrial and commercial sector of the Italian cinema. That is why, if Italian
cinema aims at a higher competitiveness and a further growth, financial resources should
be considered not only as regards the production, but in relation to a system logic from every
point of view. (Table 1 summarizes the schematic sizes of the commitment taken by the
productive apparatus in 2000s in the supply market and in the sectors that are more
traditional than the demand one).
A heterogeneous process. Within the investment cycle of the national cinematography, a part
of the flows is common to all operators, in line with the financial management of the Italian
company scene, while another part involves the different characteristics of the sector,
according to its high specificity. It is not only about an activity with a fundamental cultural
interest, with the direct intervention of the state (also as an investor), but it also about a great
international openness of the market – which results in the particular influence of foreign
subjects and contributions – and a deep interdependence between the sectors during the
product development, which induces a frequent integration/commixture of funding strategies.
In search of compatibility. Considering this innate heterogeneity of interests and needs, it is
possible to understand the effects of a more functional and competitive organic framework
of the cinematographic system, as already seen, mostly as regards the widening of the range
of options (through the establishment of regional Fund and Film Commissions and the
| 21
TABLE 1
THE SOURCE OF THE FINANCIAL REQUIREMENTS
Number of films
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Italian films produced*
Italian films co-produced
Total Italian films
86
17
86
68
35
68
PRODUCTION
96
98
96
34
19
38
96
98
96
68
30
68
90
26
90
90
31
90
123
31
123
97
34
97
114
27
114
132
23
155
Italian first releases
Foreign first releases
Total first releases
Italian films distributed
Foreign films distributed
TOTAL FILMS
86
282
368
176
474
650
106
263
369
188
462
650
DISTRIBUTION
114 113 104
254 274 265
368 387 369
276 238 294
448 482 563
664 720 857
98
294
392
257
611
868
100
285
385
298
662
960
110
260
370
268
619
887
130
246
376
288
557
845
115
240
355
294
563
857
120
225
345
298
560
833
133
230
363
241
660
901
Screening rooms
Projection screens
BUSINESS ACTIVITIES
2216 2157 2213 2236 2005 2068 1910 1859 1835 1794 1689 1621
2948 3112 3353 3566 3610 3749 3785 3819 3847 3879 3803 3818
Rentals (in millions)
Newsagent (in millions)
Sales (in millions)
Total film copies
HOME VIDEO
65,0 60,1 71,7 84,3 97,4 94,2 86,2 75,4 55,4
16,0 15,4 20,0 22,0 24,0 32,0 37,5 36,9 31,3
24,0 26,0 31,0 31,3 27,5 36,4 36,7 35,9 30,7
105,0 101,5 122,7 137,6 148,9 162,6 162,4158,2117,494,3
Italian films broadcast
Foreign films broadcast
Free TV total
TV BROADCASTING
1933 1725 1501 1420 1311 1290 1269 1256 1380 1322 1412 1243
3140 2905 2920 2889 2867 2843 2818 2735 2615 2766 2841 2813
5073 4630 4421 4309 4178 4133 4087 3991 3995 4088 4253 4056
42,9
23,0
28,4
80,6
33,2
20,1
27,3
74,5
27,5
19,0
28,0
Source: Italian cinema in numbers, (calendar years 2000 - 2011), by Ufficio Studi/Ced Anica and the General direction for Cinema of
MiBac, as for the production and distribution sectors, as well as the generalist TV; MEDIA Salles and Siae for the business structures;
Univideo for the home video market.
introduction of the product placement), a greater definiteness of public support – for instance,
with the adoption of a less discretionary reference system – and the automaticity of a part of
the innovations, as in the case of the tax credit and tax shelter.
These requirements, in terms of compatibility, are mainly imposed by three factors, which
show the centrality of the financial process for the whole cinematography and, most of all,
for the production sector.
2. Factors analysis
The first factor belongs to the nature of the sector itself. It is a widely shared opinion that no
other artistic and entertainment activity is as risky as the cinematographic one. Besides
considering the amount of capital used, it is a risky activity mostly in relation to time. If
finance is centered on the time-money combination, to be arranged in the best way possible,
for cinema time represents a nearly independent variable.
22 |
The false appearance of “the short”. Capital must be used almost totally ex ante, that is,
during the planning and making stage, while the introduction of the products into the market
takes place twelve months later (sometimes twenty-four months or even more) and even
other years - from two to four – intervene between the first projection and the circulation of
the product through the many different distribution channels3. Basically, on the one hand
there are short-term employments, as they aim at the realization of specific projects or
marketing plans, on the other hand investments end up becoming, practically, medium or
long-term activities, from the point of view of any not expectable end of exposition (this
capability is measured with ROI indicator, Return On Investment).
Enemy number one: the risk. As a consequence, all risk assessment methods used for
industrial and services providing companies are considered technically useless when
speaking about film companies, given the peculiarity of the reference market: the demand
for film products is absolutely a random demand and do not provide reliability to the
expectations in terms of diffusion and income4. The range of risks is almost complete and
financial risks – credit, liquidity and market risks – are deeply connected to the business
3
The monetary business cycle, theory and all business finance techniques on the subject are based on the
fundamental principle according to which suppliers should be paid as late as possible, while receipts should
be collected soon. This has been made possible by supply contracts: in particular, a good negotiation position
or the purchase of great quantities of raw materials and products allow the delayed payment (several months
after the delivery) – and after the majority of these materials or products has been sold. As for production
companies, the temporal unbalance between income and expenditure, from the monetary point of view, is
completely different. Disbursements take place soon, during the planning stage, and receipts – with the exception of advance payments recognized due to any presale agreements with distributors, operators and TV
networks – materialize beyond the due dates normally foreseen in the industrial processes and commercial
transaction.
4
An exhaustive exegesis of the matter was carried out by the economist Carlo Boschetti, Professor of “Resources
and business strategies. The case of the cinematographic companies” (Il Mulino, Bologna 1999, 275 pp.) at
Bologna University, a book that shares with “Strategic industry factors in the video entertainment industry” (Il
Mulino, Bologna 2008, 355 pp.) written by his colleague Paolo Boccardelli, Professor at Luiss “Guido Carli”
University of Rome, the merit of containing one of the most exhaustive bibliographies about the matter. “The
opportunity to rely on thousands or millions of people who will probably go to the cinema to see something
that nobody has never seen before” is considered “a pure gamble” by the business attorney and lawyer Mark
Litwak, one of the most qualified professionals in Hollywood (Reel Power: The Struggle for Influence and Success in the New Hollywood, William Morrow Press, New York, 1986, and Risky Business: Financing & Distributing Independent Films, Silman-James Press, 2004). Also the opinion of the economists Arthur S. De Vany
(University of California) and W. David Walls (University of Calgary), at the end of the researches and analysis
carried out over more than 2000 American works, seems categorical and without appeal: “Estimates on receipts
are useless as the possible determinations of the casual variable examined do not converge on a finite average,
on the contrary, they diverge within the whole area of possible events” (Bose-Einstein Dynamics and Adaptive
Contracting in the Motion Picture Industry in «The Economic Journal», November 1996, pp. 1493-1514, and
The Market for Motion Picture: Rank, Revenue and Survival in «Economic Inquiry», no. 4, 1996, pp. 783-797).
| 23
risks (both general, industry risks, and related to products, production risks) and to the more
frequent operational risks, as every film-maker knows. And it is just in the attempt to avoid,
at least partially, these risks that film companies had recourse to some reduction and
sharing strategies, which then became, in the respective sectors, distinctive and constant
features of their industrial policy5. Despite the planned prevention choices, the high risk
coefficient of the film industry continues influencing the trend of the capital market and
those who operate in this market as main lenders. Then, as the number of the potential cash
providers decreases, also the availability of options for the recourse to credit decreases, as
well as the size of the total resources destined to the sector and the budgets for film-makers.
Moreover, in this scene, we can see the second factor that implements the investment cycle
and shows a more specific national feature: the capitalization of companies.
Undercapitalization, the other problem. Sharing and pulverization are two typical features
of the domestic production system, which is mainly composed of small and medium-sized
companies, partnerships or individual firms, that is, having the legal forms that allow an
initial limited capital injection. The scene of the cinematographic sector is in line with the
national one, even though there is a difference: it’s one of the few sectors whose majority
(50.8%) is represented by corporations, that is, public limited companies, private limited
companies or having other legal forms, like cooperatives. Nonetheless, the nominal capital
at the moment of the establishment of the aforementioned companies is low, as in the rest
of entrepreneurship: in 28% of cases this capital amount is less than 25 thousand Euros, in
5
Industrial policy elements and market strategies are in close relation with the reduction and the distribution
of risk: 1. the strengthening of the star system, in order to qualify the works and attract the audience
through the presence of movie stars in the films; 2. the exploitation of successful works of literature for
new screenplays; 3. the serialization of blockbusters, with the production of sequels and, sometimes, serialized sagas; 4. the expansion and the intensification of promotional activities through massive advertising
and marketing campaigns, whose cost is now higher than the film production cost; 5. the transformation
of some fixed costs into variable costs, by dividing the cachets of protagonists and directors into a predetermined base pay and a percentage pay depending on the economic results achieved; 6. the production of
works that can be easily played in more foreign countries, thus expanding the sales market at the international level; 7. the increase in merchandising operations, in alliance or joint venture with other companies,
in order to sell products related to films’ contents; 8. the diversification of the genres of film produced and
the creation of a varied portfolio of titles in response to the demand of different types of audience (by age,
preferences and life habits).
6
“Sectorial data – Cinematographic productions and distributions, as well as videos and cinematographic projections”, by Cerved Business Information, 2004-2009 database, that is also the point of reference of the surveys reported in the following paragraphs. As regards the specific distribution of enterprises according to
their capital stock, it should be noticed that shares are almost similar to those found in a sample of 551 companies (taken from the index InfoCamere-Registro delle Imprese) in the report “The Italian film market 20002004. Data and trends of Italian Cinematographic Industry of the last five years” (pp. 201-202) drawn up by
the former Italian Observatory for Audiovisual of Cinecittà Holding, managed by Antonio Breschi (Rome, 2005).
24 |
22% of cases it is less than 50 thousand and, for a further 21%, it is less than 75 thousand
Euros. If we also add the 4% range between 75 and 100 thousand Euros, we can number
three small-cap production units out of four6. Since the share capital has to guarantee
creditors that the share capital corresponds to less than two-thirds of resources registered
as share capital, it is clear that a little initial monetary contribution can influence the ability
to access the debt financings and onerous financings with uncertain returns such as those
for the film business. Many operators could easily share the confession of Woody Allen, the
great film-maker who is able to direct one film a year: «The continuous, enormously difficult
problems of filmmaking keep my mind busy. Thus, I don’t have time to think about the
terrible life events».
Opening credits with spread. According to the values recorded over a five-year period by
Cerved Business Information, the Italian Chambers of Commerce database, the average
debt ratio of the sector – which indicates the weight of external financings in the total assets,
that is, the invested capital – corresponds to 78.7%, against a general average of 71.7%.
Moreover, from the analysis of the company solvency ratio, it emerges that film companies,
in 19.4% of cases, show a higher-than-average risk and in 8.2% of cases they show a high
risk, while values recorded for all other industrial and service provider companies are equal
to 11.5% and 4.6%, respectively, with “precarious areas” showing a ten-point difference:
27.6% and 16.1%. In these gaps we can find that kind of deeply-rooted spread the Italian
film has to do with, in terms of pricing, that is, the cost of money that was eventually given
and guarantees requested for its allocation and, moreover, in the shape of clauses
(insurances, covenants and collaterals) which bind its allocation and regulate the plans for
the reimbursement and return of secured and unsecured loans.
3. The value of resources
Moreover, the actual value of the resources and their weight is influenced by the third order
of factors, concerning the double necessity of maintaining and, if possible, improving both
the quantitative and qualitative production standards. It is a double necessity because there
are two compulsory targets.
On the one hand, companies need to update the product portfolio uninterruptedly, from
season to season, in order to defend their positions in the market; the same goes for all
sectors (distribution, projection and diffusion on the secondary channels, like TV), obviously
starting from the production sector, with the aim to reconstitute, from film to film, the
necessary circulating capital that is, inherently, risk capital. On the other hand, this sector
has to prove it is competitive compared to foreign film companies – the USA (the most
important) and other European companies – in a market, like the pictures one, with the
highest transnational openness and sensitivity to the pressure of the massive consumption
caused by mainstream products.
| 25
No competitiveness without capital. The competitive challenge determines the size of the
financial requirements necessary to support it, implying the necessary condition of observance
of the sector benchmarks. According to the analysis carried out by Cerved Business Information
in a five-year period, the average invested capital turnover corresponds to the 70% revenue for
film companies – but it reaches 80% for those companies which have a yearly turnover of 20-50
million Euros, and 85%-90% for companies in the higher range of 50-200 million Euros –
compared to 60% of the general production units (in the macro sector “Sport, recreational and
cultural activities” the indicator itself, also defined as financial turnover, the capital turnover
corresponds to the 61.2% revenue). It is then possible to understand that the commitment of
national operators in the search for better opportunities – most of all in terms of stability,
automaticity and managerial autonomy – following the example of the stronger structures and
financing instruments of other realities. Like the so-called “purpose tax” introduced in France
long ago, according to which a tax rate on cinema tickets will directly increase the capital assets
accessible to all sectors, or like the experimental lottery created in Great Britain and connected
to the cinematographic circuit, which yielded a 40 million Euros revenue in 2011, used to support
the English production chain7. Basically, this follows the statement inserted by the French director
Luc Besson in a dialogue of The Fifth Element, the most expensive of his “American” movies,
shot in the USA in 1997: «If you want something done, do it yourself».
4. The financial requirements of the sector
All cinema activities, beyond the artistic and cultural contents which can connote them, are
business activities – including non-profit activities – that, in order to be carried out and before
giving results, must be started with the recourse to the proper capital support. The first of the
feeding channels that are common to all business initiatives is the availability of one’s own
autonomous resources, that is, the values of operators’ assets. If there is a shortage of internal
7
The first who suggested the creation of an ad-hoc lottery in Italy was Lionello Cerri, President of Anec (National Association of Cinema Operators): “It would mean to develop a game based on films – that, taking
advantage of the popularity of actors and directors, could also be matched to a TV program – to be assigned
to Lottomatica, with tickets sold at tobacconist’s and newsstands, but also at the 4 thousand existing cinemas” (from La Repubblica, 13th January 2012, by Franco Montini). Another proposal put forward by some
operators concerns the opportunity to have recourse to the cash surplus of Enpals, the National Insurance
Board for Entertainment industry workers, generated by contributions paid by the cinematographic sector
and corresponding to about 300 million Euros, used in financial investments. However, from January 2012,
Enpals was absorbed and merged into Inps, the National Institute of Social Security, which also assumed
the assets ownership.
8
References of the main business operations carried out in the previous years have been reported in the previous editions of “Report. The film market and industry in Italy”, by Fondazione Ente dello Spettacolo, referring
to years 2008 (pp. 137-173), 2009 (pp. 102-103 and 162-164) and 2010 (pp. 40-42, 58-60 and 68-71).
26 |
resources, the external ones will be used then. For instance, the contribution (for all sectors) of
the public support can contribute to the partial or possible integration. But, most of all, the two
alternative channels of the bank debt and partnership support the entire sector in gathering the
necessary financial resources, in different forms and through different tools for intervention.
ONE’S OWN MEANS
Considering its attractive “original sins”, the film industry (until thirty years ago, at least),
somehow and sometimes luckily, succeeded in sustaining itself thanks to the resources of its
entrepreneurs. But the compatibility of this autonomy, founded on the so-called internal credit,
has progressively failed (and the deep crisis of the 90s was a result of that), pushed out of the
market from the competitive evolution of the sector with increasing budget levels, which
represent a problem for all one man companies.
Assets strengthening. The reduced dimensional scale of the companies, compared to the
scale of the domestic market, impeded the recourse as an alternative to the stock market.
The only company to be quoted directly on the list was Mondo TV – whose majority
shareholder is the Corradi family – and it is a rare circumstance that, among the shares, there
are Mediaset and De Agostini, the reference subholdings of the production companies Medusa
Film and Mikado Film, and that are owned by Fininvest and B&D groups, controlled by
Berlusconi and Boroli-Drago families, respectively. Until spring of 2012 there was also the
Benetton Group of the holding Edizione Srl, owned by the Benetton family, which controls 21
Partners SGR, the majority shareholder of the first national group of the business “The Space
Cinema” (the 49% is owned by Rti, Mediaset), but the decision to proceed with the delisting
also reduced this indirect presence of the cinematographic sector in the stock market.
Evolution of the organizational structures. Handicap and penalties when having recourse to
the capital market have obviously shown the tendency to become more marked right with the
trends of economic regression and financial crisis which marked the last three-year period
and, even more, the appreciation of the commitment carried out by national operators in that
period, which led to considerable results, is important. The balance sheet reports of 2000s,
in fact, continued recording many operations within the important employments area that –
before the concrete and institutional mission to make or sell films – basically influences the
organizational structure8.
Capital and stock exchange transactions. However, there have been some cooling off signs and,
particularly starting from the second semester of 2011, there was a setback in the interventions
regarding the so-called capital investments, that is, which are destined to increase the assets
and one’s own means, strengthening the operators’ competitive potentialities and skills and,
as a consequence, enhancing the total business activity (Table 2). According to estimates by
private equity and financial intermediation companies, the total value of the transactions carried
out nearly corresponds to 200 million Euros, that is, one-tenth of the estimates related to 2010.
| 27
Only two M&A in 2011. The most recent important mergers&acquisitions initiatives go back
to March and June 2011. In the first case, Mediaset, through the sub-holding Rti, completed
the acquisition of 100% of the production company Taodue Film, buying (for 48.3 million Euros)
the last share of 29% held by the founders Pietro Valsecchi and Camilla Nesbitt (who are still
operations managers) through the holding company Med Due, which was soon merged with
Rti itself. In the second case, Mondo He-Home Entertainment, the main subsidiary of Mondo
TV group, has become sole shareholder of the company Moviemax Italia, after buying the
share of 49% held by the companies RG Holding and Finanziaria Cinema (owned by Rudolph
Gentile and Marco Dell’Utri, their promoters) after the 1.46 million Euros payment and the
asset sale with recourse for 2.04 million Euros, which were initially considered as guarantees
for the payment of the compensation as formerly arranged. Through this acquisition, Mondo
He has also changed the company name into Moviemax Media Group. Actually, a third
movement of company assets was carried out, even greater from the point of view of the
assets, but without the payment of any economic compensation. Rai, which already owned
100% of Rai Cinema and 01 Distribution, in the first part of the year, proceeded with the
merger through absorption of the second subsidiary into the first one, though maintaining
the brand of the company (now turned into a division, from the organizational point of view)
for the distribution activity.
Moreover, two operations involved the foreign activities carried out by Mediaset and De
Agostini, within the more complex acquisition processes, in Spain, carried out by the
respective TV networks Telecinco and Antena 3 – of which they are reference shareholders –
towards two other national private networks: Cuatro and Sexta. As a result, networks of the
Italian holdings have also taken, through their companies Telecinco Cinema and Antena 3
Films, the control over the structures of the two new purchases that operate in the
cinematographic sector.
Fixed assets and acquisition of rights. Many more interventions concerning the budgetary
policies have been recorded, through the strengthening of the financial positions and the
credit restructuring processes towards banks in order to face the new and different
contingencies. In order to demonstrate the intensity of companies’ commitment to maintain
the reached activity levels, even in a more difficult circumstance, there was a constant
recourse to another kind of operations: the acquisition of the exploitation rights. According
to surveys carried out by operators themselves, estimates on the value added to the total
assets (though maintaining real verification difficulties due to the intercompany relationships
and in terms of balance between all the sectors) seem to be the same as in 2010, included in
the 1.8-2.0 billion Euros range.
Rights related to the film marketing or reproduction, as well as other royalties that animate
the artistic and cultural sector, can be intangible and non-concrete entities like the monetary
ones (share capital, cash liquidity, legal reserves) and tangible (property and equipment).
However, they represent an actual value, they are part of the category of property and
intangible assets – both for the cost accounting and the budgeting of the respective
28 |
TABLE 2
THE MAIN M&A OPERATIONS AND THE SLOWDOWN OF 2011
Transaction object*
Buyer
Counterparty
Million Euros
2008
Eagle Pictures (100%)
Prima Tv
Mikado (100%)
De Agostini
Lux Vide (25%)
Prima Tv
Rainbow (2%)
Prima Tv
Filmmaster Group (100%)
Ieg-It. Ent. Group
Europlex (100%)
Warner Village
Cinestar (100%)
Warner Village
Cinecity A.&C. (60%)
Msref V-Morgan Stanley
Ieg-It. Ent. Group (25%)
Cinecittà Holding
Fratelli Ciro. e Stefano Dammicco
63.0
Roberto Cicutto-Luigi Musini
Famiglia Bernabei
Iginio Straffi
Sergio Castellani-StefanoCoffa-Giorgio Martino
Europlex Cinemas Sarl
Draco-Minerva-Globalplex-Alpe Adria
Famiglia Furlan
18.7
Ieg-It. Ent. Group
0.0
2009
Cattleya (20%
Medusa Cinema (51%)
Warner Village Cinema
Immobili Warner Village
Cinecittà Studios (75%)
Cinecittà Ent. (49,6%)
Mediaport (100%)
Globalmedia (100%)
Mediaport Cinema (75%)
Mikado (51%)
Palomar (33%)
Quinta Comm. (10%)
Anteo Milano (25%)
Riccardo Tozzi-Giovanni Stabilini-Marco Chimenz Mediaset-Rti
50.0
The Space Cinema
Time Warner Inc.
95.0
Delta-Fimit Sgr
The Space Cinema
65.2
Ieg-It. Ent. Group
Cinecittà Holding
2.0
Ieg-It. Ent. Group
Cinecittà Holding
2.0
Farvem R.E. (Massimo Ferrero)
Cinecittà Holding
59.0
Cinecittà Holding
**
Cinecittà Holding
**
Mik Holding (Franco Tatò-Sonia Raule)
De Agostini Comm.
Cambria Fund
Carlo Degli Esposti
MsrefV-Morgan Stanley
Gianantonio. e Daniele Furlan
1.5
Lafi Trade Holdings BV
Imperium (Tarek Ben Ammar)
19.0
Cinecittà Holding
Platea srl (Lionello Cerri)
Universal Pictures
21 Partners SGR
2010
Rainbow (30%)
Taodue (50%)
Imperium (67,4%)
Rainbow MagicLand (10%)
Med Studios (20%)
Metropolitan Roma (100%)
Immobili Cinecity (100%)
Planet (5 multisala)
Odeon Milano (leasing)
Vis Pathé (3 multiplex)
Mikado (51%)
Lamberto Pigini (18%)-Giuseppe Casali (12%) 62.0
Pietro Valsecchi-Camilla Nesbitt
48.7
Quinta Communications
Prima Tv (Tarek Ben Ammar)
20.7
Rainbow
Alfa Park-Drago Group
15.0
Invitalia
Einstein Multimedia
2.7
The Space Cinema
Fininvest Sviluppi Immobiliari
19.5
The Space Cinema
Morgan Stanley (70%)-Furlan (30%)
100.0
Delta-Fimit Sgr
The Space Cinema
79.7
The Space Cinema
Famiglia Francesconi
39.5
The Space Cinema
Fininvest Gestione Servizi
10.3
Uci Italia
Pathé e Vis Pathé
60.0
De Agostini Communications
Mik Holding (Franco Tatò-Sonia Raule)
Nickelodeon-Mtv-Viacom
Rti-Mediaset
2011
Taodue (29%)
Rti-Mediaset
Moviemax Italia (49%)
Mondo He-Mondo TV
01 Distribution (100%)
Rai Cinema
Blockbuster (120 locations)
Essere Benessere
Pietro Valsecchi-Camilla Nesbitt
R.G. Holding-Finanziaria Cinema
Rai (merger through acquisition)
Blockbuster Italia (liquidation)
48.3
3.5
0.0
32.0
* Values of the transactions correspond to estimates based on the information gathered, without which no amount was indicated
** GlobalMedia and Mediaport Cinema estimate is included in the valorisation of the holding company Mediaport.
| 29
amortizations – and they fall within the company assets with their own specific evaluation.
Due to the limited availability of physical assets and the traditional lack of financial means,
these rights constitute, as “alternative assets”, the main feature (besides the technical and
professional competences) of the film companies and the rising of the budgets for the
production cost made these rights a very important instrument for assets allocation.
Library and asset allocation. As a whole of the exploitation rights, the library practically contains
the intellectual property of film companies. In Italy, ad hoc structures for a better improvement
of the library, like in the USA and Great Britain, have not been established yet, and only some
companies specialized mainly in trading activities are operating. In the English markets, instead,
there is a widespread financing practice based on the issue of figurative shares of the libraries
called asb (asset-backed securitization), which are invested in mutual funds or sold to the socalled svp (special purpose vehicle), which are companies that “transfer” the sale of shares to
institutional investors, or their placement on the market for savers. However, among the national
production and distribution companies, a progressive managerial concentration is taking place,
defined as all rights.
Rai Cinema, for instance, has absorbed the competences which were formerly assigned to Rai
Trade and 01 Distribution, while Mondo He has created a new specific internal structure that
acts on behalf of the whole group.
Formerly static, the management of the so-called “titles portfolio” performed by national
operators has now become active: by turning into an open source to obtain any possible capital
investments, it has assumed a real, supporting role for the business strategies.
LOOKING FOR THE QUALITATIVE LEAP
However, underneath the cinema chronic “need for resources”, there is still the root problem:
the creation of one’s own means.
The importance of this ability has been recently demonstrated by the capital increase for a 11
million Euros option started on the share market by Mondo TV, as a consequence of a recent
average capitalization at Piazza Affari, equal to 7 million Euros. Even with a great discount (43%),
this increase caused sensible fluctuations of the security (equal to 20%), despite the good
performance reached in 2011 through the improvement of profits, which tripled to 1 million Euros
compared to 2010; but it is also necessary for an ambitious and important operation: the
realization of the new 3D Gormiti cartoon series, together with Giochi Preziosi, which implied
the signing of a commercial partnership with Cartoon Network (owned by Turner’s group), that
would take the warriors from Gorm islands into the screens all over the world, and give Mondo
TV a considerable revenue in the shape of television rights.
The qualitative leap, fundamental for the financial stability and strength of the Italian film
industry, in line with the most modern cinematographies, basically remains bound to the creation
of capital stocks to be destined to the operational growth and the development of new projects.
As every entrepreneur or financial operator knows, more than external contributions, assets and
company assets are fundamental to this objective. But many steps forward are still to be taken.
30 |
EXTERNAL FINANCING
Despite the fundamental role played by economy, capital investments for the strengthening of
company and financial assets are usually generally considered. Attention is mostly concentrated
to resources for the activities in the different sectors of this field, particularly those used for the
production of new films every year. Even if they are not many, these resources end up
representing all the economic flows which animate the whole film industry.
Actually, if we want to identify a parallelism between the use of funds and the vital cycle of each
organization, capital investments could be functionally assimilated to oxygen going to the brain,
while the resources used every year for first-release films could be assimilated to blood flowing
through veins and its supply to the cardiovascular system. As important as the first ones, capital
for production has shown, recently, a progressive settlement and, according to these variations
– by nature, origin and consistency – it is possible to identify the sources through which the
procurement portfolio of the film industry has been remodeled.
5. Investments of the sectors
The process that is reshaping the financing for production is important to all sectors, mostly
when it refers to the high risk and the lack of reliability that, as proved, hinder the possibility,
for the film business, to use proper economic resources (even from external subjects) and to
attract new investors.
The record series of the Italian films produced. In 2011 Italian cinema, with the production
of 155 films, achieved the best performance of its recent history, second only to the record of
1960, when 163 new films were produced or co-produced (130 and 33, respectively), and better
than the previous record of 2000s: 154 films produced in 2009 (Table 3).
By distinguishing the films produced only with Italian capital from those produced with the
participation of foreign operators, it can be noticed that a historical record was really achieved:
100% national movies produced were 132, exceeding the threshold limit reached with 130
films in 1980, and also improving the best share – 123 films in 2008 – reached from 2000 on.
As already underlined in the previous edition of the Report, this trend already delineates,
from a structural and economic point of view, the solidity of Italian film industry (even before
considering the qualitative range, where its historic artistic and creative genome creates the
added value that makes this industry even more competitive) in an international dimension
that few business sectors can equal. The only difference is that this leadership is constantly
acknowledged, as much as it remains unknown to the domestic cinema.
NATIONAL CAPITAL
It is a commitment, to a large extent, that prescinds from the general trend of economy which,
since 2008, has suffered a violent and broad financial crisis, due to the fact that, unlike what
happens in other sectors of consumer goods, this sector is not properly cyclical. This is
| 31
indirectly proved by the number of new films released during 2011, that was greater than the
number of the previous year, despite a lower public funding.
The virtuous trend of uses. The direct comparison that confirms the return of this production
capacity to the highest levels can be found in the revenue of capital invested every year. In
2011, with 423 million Euros, it was the sixth ever, only one million Euros lower than the
plafond reached twelve months before, but basically in line with the trend consolidated in
2000s, in accordance with the highest global resources uses ever recorded: 504.5 million
Euros in 2004, 519.9 million Euros in 2007 (that is the best result ever achieved), then 434.8
and 439.5 million Euros during the following two-year period (Table 4). In the last five years,
investments in the National production remained higher than 420 million Euros, showing, in
the last three-year period, a progressive concentration in films produced compared to the
co-produced ones, which were given 39.0% of the financial supply, the lowest share in the
last eight years (Table 5).
Cruising speed: 300. The main data refer to the consolidation of the gathering levels and,
implicitly, the supply sources: in the last five-year period, national capital stabilized beyond
the amount of 300 million Euros (320.7 million Euros is the average value), after the drop to
214.4 in 2005 (between 2004 and 2006 the average was equal to 252.0 million Euros), with a
contribution that correspond, at least, to four fifths of the total invested capital, until reaching
(in 2011) an incidence point of 78.7%, that is second only to the one recorded in 2009, in the
last nine years (Table 6).
Primacy of the national uses. Moreover, as regards the source of capital used, it can be noticed
that the amount of national funding – both private (not predominant) and public – corresponding
to 333.0 million Euros, for productions and co-productions, is the highest ever, and it improved
the 330.1 million threshold reached in 2008. The performance became concrete again for the
tendency of the sector to favour production initiatives: never before 258.0 million Euros were
used, that is, 77.5% of the total compared to co-production initiatives.
The record of national capital. However, there is another and even more significant performance.
It is the absolute primacy of private national capital used for productions and co-productions.
The more “internal” investments of Italian cinema, in fact, reached the amount of 313.3 million
Euros, with an incidence of 88.8% on the grand total. This was exceeded only once – 89.7% during the previous year (Table 7). In any case, the marked trend reversal in the contribution
from private national subjects should be pointed out. This contribution, after a steep rise up to
86.2% in 2005, had relatively reduced up to 78.5% in 2008, then reached a certain stability rising
by more than ten percentage points during the following three-year period.
Top films produced. The trustful and strategic choice of national private operators to aim at the
realization of projects to be produced autonomously – that exactly led the private amount of 313.3
32 |
TABLE 3
NUMBER OF FILMS PRODUCED BY ITALIAN CINEMA
Number of films
Italian films produced*
With private capital only
With public contributions**
With private capital only
With public contributions***
TOTAL
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
86
57
29
17
17
103
68
37
31
35
35
103
96
44
52
34
34
130
98
45
53
19
15
5
117
96
55
41
38
33
5
134
68
50
18
30
26
4
98
90
69
21
26
23
3
116
90
61
29
31
14
17
121
123
82
41
31
16
15
154
97
71
26
34
22
12
131
114
83
31
27
18
9
141
132
84
48
23
15
8
155
* The film produced is the film that was granted the censorship visa in the reference year; explicitly pornographic films are excluded. The
Italian film is the film that has been produced entirely with Italian capital
** Among FUS contributions (Single Fund for Entertainment) those deliberated during the previous years are also considered.
*** With Eurimages contributions.
FSource: Italian cinema in numbers (calendar years 2000-2011), up to 2011, by Studies Office/Ced Anica (National Association of
Cinematographic Audiovisual and Multimedia Industries) and in 2011 realized in cooperation with the General Directorate for Cinema
of MiBac
TABLE 4
SOURCES OF CAPITAL FOR PRODUCTION
Amounts in millions of Euros 2003
2004
2005
2006
2007
2008
2009
2010
2011
Italian resources
301.7
Foreign capital
82.0
TOTAL INVESTMENTS 383.7
Share of foreign resources 21.4%
284.4
220.1
504.5
45.7%
214.4
132.1
346.5
38.2%
257.3
139.7
397.0
35.2%
312.0
207.5
519.9
40.0%
330.1
104.7
434.8
24.1%
296.0
143.5
439.5
32.7%
312.2
111.8
424.0
26.4%
333.0
90.0
423.0
21.3%
Source: Italian cinema in numbers (calendar years 2003-2011), up to 2010, by Studies Office/Ced Anica and, in 2011, realized in
cooperation with the General Directorate for Cinema of MiBac.
million Euros, the highest ever – is reflected in the new record amount of capital for film
productions: 238.3 million Euros. Moreover, it is mainly supported by three factors that
characterize the contextual trends of other resources.
FOREIGN INVESTMENTS
In the first instance, when increasing by 10.5 million Euros the investments for 100% Italian films
produced, operators also enriched the contribution for co-productions with 26.9 million Euros,
which practically went back to the values of seven years before, even though, compared to that
period, there is a reduced relative incidence: 24% against 39.9%.
Still a little too autochthonous. This greater availability constitutes a plus for the domestic
production, aiming at softening that increasingly autochthonous profile which faces a still reduced
international dimension (as already noticed in the past), with relation to attract foreign
investments and improve the penetration into foreign markets, in order to restore the balance of
trades in which the incidence of export hardly affects the percentages (of volumes and values) of
imported products.
| 33
TABLE 5
CAPITAL INVESTED IN THE NATIONAL PRODUCTION
In film productions
In film co-productions
Co-productions share
TOTAL INVESTMENTS
237.1
146.6
38.2%
383.7
2004
2005
2006
2007
2008
2009
2010
2011
197.4
307.1
60.8%
504.5
152.0
194.5
56.1%
346.5
187.6
209.4
52.7%
397.0
221.0
298.9
57.5%
519.9
253.3
181.5
41.7%
434.8
218.9
220.6
50.2%
439.5
254.7
169.3
39.9%
424.0
258.1
165.0
39.0%
423.1
TABLE 6
COMPLETELY NATIONAL INVESTMENTS
In film productions
Productions share
TOTAL INVESTMENTS
Share out of total capital
237.1
64.6
78.5%
301.7
78.6%
2004
2005
2006
2007
2008
2009
2010
2011
197.4
87.0
69.4%
284.4
56.4%
152.0
62.4
70.9%
214.4
61.9%
187.6
69.7
72.9%
257.3
64.8%
221.0
91.4
70.7%
312.4
60.0%
253.3
76.8
76.7%
330.1
75.9%
218.9
77.1
73.9%
296.0
87.3%
254.7
57.5
82.6%
312.2
73.6%
258.0
75.0
77.5%
333.0
78.7%
TABLE 7
ITALIAN PRIVATE CAPITAL YEAR BY YEAR
2004
2005
2006
2007
2008
2009
2010
2011
In film productions
138.4
54.5
Productions share
71.7%
Share out of Italian total 63.9%
114.0
75.6
60.1%
189.6
66.6%
130.2
54.7
70.4%
184.9
86.2%
150.5
63.5
70.3%
214.0
83.2%
179.5
69.8
72.0%
249.3
79.8%
204.0
55.1
78.7%
259.1
78.5%
194.4
63.5
75.3%
257.9
87.1%
228.8
48.1
82.6%
276.9
89.7%
238.3
75.0
76.0%
313.3
88.8%
Co-production stagnation. In the second instance, in 2011 Italian filmmakers reduced
their participation in minority co-productions (with capital shares inferior than 49%, but
compulsorily above 20%) maintaining the number of majority co-productions unchanged.
However, the total amount of co-produced films suffered the third consecutive reduction
that, given the greater amount of films produced, led their percentage to the minimum
values – 14.8% - since 2000 (Table 8).
At the same time, the participation of foreign capital also decreased (Table 4). Its amount,
equal to 90 million Euros (3.26 of which are allocated within Community programmes)
was a little more than the amount of 82 million Euros of 2003 and corresponded to the
lowest value of 21.3%, that joins the other opposite record related to the incidence of the
foreign private contribution to the total amount of investments, which was equal to 20.5%
(Table 11).
34 |
Private and public resources
The third element that is complementary to the strategy chosen by operators in order to
strengthen, in 2011, their financial commitment, is the verification of how the private
resources inflow fully compensated the fourth consecutive regression of both national and
European public contributions for productions, which decreased to 23 million Euros and only
corresponded to 5.4% (the lowest percentage ever) compared to the total amount of capital
used during the year.
The share of the private contribution has also increased then, by three percentage points, the
maximum value reached during last year: 94.6% versus 91.7% (Table 9). At this stage, the
picture of the series of public contribution allocations, mainly from FUS (Single Fund for
Entertainment) managed by MiBac (Ministry for Cultural and Heritage Activities) seems
symptomatic, with a progressively falling curve as regards the measures supporting
production, which include the Community contributions according to Eurimages programme
(Table 10).
The decline of FUS for cinema. However, it is just a statistical report on a specific intervention
instrument. Actually, when talking about public support to cinema, it is not possible to
prescind from considering the incentive system introduced with the tax credit and tax shelter
system, without forgetting that state contributions are mainly interest-rate contributions –
that is, to be paid back – and not capital, that is, non-returnable, and that during the last years
these state contributions have been replaced by regional reductions through Film
Commission and Film Fund (see next paragraphs).
However, these National resources have been more than compensated form other Italian
amounts of capital and the proper analysis of the trend of FUS for cinema highlights its
progressive loss of importance in quantitative terms, according to a declining process
(somehow driven, as underlined in the previous editions of this Report) that now seems
almost completed, for some aid. A first general evaluation approach is induced by the
summary of the capital allocation, according to its nature and source, which meet the financial
requirements of the production sector (Table 11). From this summary, the evolution of the
dimensional relationships between private and public investments, as well as the role of the
tax handle as a more active principle, can be obtained.
6. The new fundraising area
As they correspond to the financial requirements of operators, in order to keep themselves
competitive, the resources used in the new productions and co-productions end up
representing the liveliness of Italian cinema.
Moreover, the greater average use of capital and the better capital flow of the last five years,
compared to the past, confirms that the renewal process that is still ongoing continues
considering the renewal of the fundraising area its most important cycle.
| 35
TABLE 8
FILMS CO-PRODUCED WITH FOREIGN OPERATORS
Number of films
With majority shares
With minority shares
Italian films produced *
TOTAL FILMS
CO-PRODUCTIONS INCIDENCE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
17
35
34
19
38
30
26
31
31
34
27
23
8
22
17
12
15
16
11
17
20
17
14
14
9
13
17
17
23
14
15
14
11
17
13
9
86
68
96
98
96
68
90
90 123
97 114 132
103 103 130 117 134
98 116 121 154 131 141 155
16.5% 33.9% 26.1% 16.2% 28.3% 30.6% 22.4% 25.6% 20.1% 25.9% 19.1% 14.8%
* The film produced is the film that was granted the censorship visa in the reference year; explicitly pornographic films are excluded.
The supplying mix changes. The combination of the relationships between the different
elements basically highlights three factors:
1. considering the totality of investments, the availability of FUS funds is still decreasing,
while private resources are getting stronger – not only in percentage shares, but also in
absolute values;
2. as regards private resources, foreign inflow seems relatively stable, while contributions
from Italian subjects, both internal and external, are getting stronger;
3. the constantly high trend of the total investments also gives the National private
resources that additional share (formerly given to FUS) which increased the value of the
last period on the capital market.
The project is modified. Even though the mix of funding sources still involves all sectors,
the first with a reactive role – as demonstrated by the different composition assumed by the
investment capital over the years – is the production sector.
This means that the operators’ systemic approach to the financial project as well as to the
search for resources, in order to make it sustainable, reoriented itself, according to
guidelines that are valid thanks to the positive performance differentials, compared to the
past. Considering the results already obtained and those that have to be obtained, it is
possible to evaluate how the new supplying portfolio (according to the choices of operators
themselves) is functional to the development of the sector and can be the main proactive
factor of its further strengthening.
THE DIFFERENT STAGES OF THE PROCESS
In the formulation of the funding plans, as well as while finding the respective and suitable
current assets, the opportunity to consider any possible incentives or aid from the regional
Film Commissions and Film Funds is still propaedeutical (if the subject permits a definite
territorial scenery) or any possible contributions as FUS ministerial funds or EU
Community funds, as the availability of capital or interest-rate subsidies, at a concessional
rate, allows to reduce the total limit of the scheduled supply. Usually, disbursements take
36 |
TABLE 9
TYPE OF RESOURCES INVESTED IN FILM PRODUCTION
Private capital
Public contributions *
TOTAL INVESTMENTS
Private capital share
274.9
108.8
383.7
71.7%
2004
2005
2006
2007
2008
2009
2010
2011
409.7
94.8
504,5
81.2%
317.0
29.5
346.5
91.5%
353.7
43.3
397,0
89.1%
456.9
63.0
519.9
87.9%
363.8
71.0
434.8
83.7%
401.5
38.0
439.5
91.4%
388.6
35.4
424.0
91.7%
400.0
23.0
423.0
94.6%
* Public contributions in the period 2003-2010 only refer to FUS; instead, as regards 2011, they include both the 19.69 million Euro
contribution from FUS funds and the allocation of 3.26 million Euros from the Community Eurimages funds..
TABLE 10
FUS FUNDS FOR ITALIAN RESOURCES
Fus in produced films
Productions share
Fus for co-produced
Co-productions share
TOTAL FUS FUNDS
Average Fus for all films
98.9
41.6%
9.9
15.3%
108.8
28.3%
2004
2005
2006
2007
2008
2009
2010
2011
83.4
42.2%
11.4
13.1%
94.8
18.8%
21.8
14.3%
7.7
12.3%
29.5
8.5%
37.1
19.7%
6.2
8.9%
43.3
10.9%
41.5
18.7%
21.5
23.4%
63.0
12.1%
49.3
19.4%
21.6
28.1%
70.9
16.3%
24.5
11.1%
13.5
17.5%
38.0
8.6%
26.0
10.2%
9.4
16.3%
35.4
8.3%
19.7
7.1%
3.3 *
4.3%
23.0
5.4%
* Fus fuds for films co-produced in 2011 are the Community Eurimages contributions, for which an inquiry is issued by MiBac, and on
which depends the approval for the relative funds al location.
place with staggered payments and follow the progressive operation stages, but the grant
statement is a guarantee to obtain, if necessary, an advance payment at banks or a further
credit granting9.
PARTNERS’ PARTICIPATION
In the other contextual screening stage to verify the opportunity to share the business risk
with other operators of the sector, basically joining together the subjects involved in the
“channeling” process of the product towards the audience – like distribution companies,
business circuits and TV networks – the tax relief system structured on tax credit and tax
shelter is proving to be a key element (Table 12).
Between the public and the private. The reference pattern is simple and functional, and it
meets two fundamental objectives:
9
The contributions allocation process takes place in 5 different stages, with payments equal to 20% of
the total amount: before filming starts; after filming has started; halfway through filming; at the end of
the shooting; finally, before the release into the market, when rating was granted.
| 37
TABLE 11
WHO MEETS THE FINANCIAL REQUIREMENTS OF THE ITALIAN FILM
2004
2005
2006
2007
2008
2009
2010
2011
Italian private capital
192.9
Share
50.3%
Foreign private capital
82.0
Quota
21.3%
Public contributions** 108.8
Quota
28.4%
Tax credit e tax shelter *
189.6
37.6%
220.1
43.6%
94.8
18.8%
504.5
184.9
53.4%
132.1
38.1%
29.5
8.5%
346.5
214.0
53.9%
139.7
35.2%
43.3
10.9%
397.0
249.4
48.0%
207.5
39.9%
63.0
12.1%
519.9
259.1
59.6%
104.7
24.1%
71.0
16.3%
3.1
434.8
257.9
58.7%
143.5
32.7%
38.0
8.6%
22.7
439.5
276.9
65.3%
111.8
26.4%
35.4
8.3%
25.3
424.0
313.3
74.0%
86.7
20.5%
23.0
5.5%
57.0
423.0
* The value (statistically included among the private amounts of capital, as regards the partition shown in the Table) is related to the
applications for tax relief submitted for 100% National movies produced. Among these applications, only one can be referred to tax shelter,
for an amount of about 3.5 million Euros
** Only FUS funds up to 2010 were considered as public contributions, while the value related to 2011 includes both 19.69 million Euros
of FUS funds and 3.26 million Euros of Eurimages contributions granted to Italian companies for 8 co-productions (5 majority and 3
minority co-productions).
TABLE 12
LECONOMIC COMPATIBILITIES OF TAX CONCESSIONS
Values in Euros
and concessions
Retrocession
Max annual Investments
rate credit (millions) max-millions
Producer
Distributor*
Investing operators
Digital products
Technical industries
External **
15%
10%
20%
30%
25%
40%
3.50
1.00
1.00
0.05
5.00
1.00
Internal
External
30%
-
TAX CREDIT
23.33
20.00
5.00
0.16
20.00
2.50
TAX SHELTER
15.00
-
Budget
limits
Italian
expenditure
Aid
intensity
49% cost-70% profits
80%
49% costi-70% profits
80%
200,000 in three years 100%
20 million Euros per film 100%
80%
15.0%
10.0%
20.0%
25.0%
40.0%
100% profits
30% reinvested profits
100%
100%
27.5%
8.1%
* For cultural interest films the tax rate rises up to 15% of the distribution expenditures and the maximum annual credit per company rises
up to 1.5 million Euros on a maximum investment of 10 million Euros. If the distribution company also invests in a cultural interest film,
it can obtain a 20% tax rate for a maximum credit of 1 million Euros on a maximum investment of 5 million Euros. The “investor
condition” for the company only regards the production of cultural interest films.
** External tax credit can be also applied to foreign financial contributions.
This Table contains information provided by the Report Italian way to tax credit and tax shelter for cinema (coordinator: Antonio Di
Lascio) by Osservatorio dello Spettacolo (Observatory of the Performing Arts) of MiBac (Rome, April 2011).
Fostering the flow of resources through the whole field of the National cinema, with the
adoption of tax credit forms which foresee, for the operators of the different sectors, tax credit
tranches – to compensate tax debts (accrued) by Ires, Irpef, Irap, Vat, social insurance
contributions – with relation to new investments in the Cinematographic activities;
“Stimulating” the interest of external companies or single subjects to invest in movies by
joining the tax shelter regime, which grants tax shelter shares – thus benefiting of the socalled “tax shield” – as for the profits which were invested or reinvested in the production or
distribution10.
38 |
TABLE 13
DADVANTAGES FOR EXTERNAL INVESTORS
EXAMPLE OF EXTERNAL TAX CREDIT APLICATION
Budget film
Quota 30% investitore esterno
Quota 70% produttore
8,000,000
2,400,000
5,600,000
Tax credit totale
Tax credit investitore esterno
Tax credit produttore
2,160,000
960,000
1,200,000
THE REDUCTION IS CONVENIENT EVEN THOUGH THE FILM GENERATES LOSS
Bilancio passivo
6,500,000
-1,500,000
-450,000
+960,000
+510,000
Esiti del film
Ricavi totali
Saldo finale
Risultato investitore
Apporto tax credit
Saldo investitore
Bilancio attivo
9,000,000
+1,000,000
+295,875
+960,000
+1,255,875
This Table follows the application example included in the statement Ufficio Tax Credit e Finanziamenti, by Anica (Rome, 2011).
THE FUNCTION OF TAX CREDIT AND TAX SHELTER
Even though they do not set up a true disbursement of funds, tax credit and tax shelter are
an indirect funding in the shape of tax incentives, that, through public support (government
renounces to collect a part of the taxable income, collecting higher taxes deriving from the
total increase in production, though) fosters investments of private capital in new films:
resources come from legal or natural persons, provided that they perform a business activity
as in the case of individual firms (Table 13).
Despite the delays in the issuing of the implementing decree, in the first two-year period in
which new regulations were enforced gave – as anticipated in the previous edition of this
Report – immediately visible results for both purposes11. Until Autumn 2011 (thanks to the
retroactivity of regulations) according to MiBac’s results, 442 applications for tax credit were
submitted and the authorized tax credit corresponded to 75 million Euros, related to
investments corresponding to a total value of 313 million Euros, 55 of which from foreign
countries.
A single pattern in the world. Unlike all other measures formerly introduced by other
European and non-European countries, the Italian incentive system allows production
companies to use the current receivables, thus making use of a further economic resource
that is readily available. The possibility to have recourse to internal tax credit has affected
the average consistency of private investments, especially for films produced with budgets
10
External investors are “subjects not belonging to the sector” and, therefore, different from production
and distribution companies and from cinemas, besides web operators, contents and services suppliers
(like the technical industries), TV networks and companies belonging to the same business group (as
they are affiliated, subsidiary or associated) of the production that is granted the financial allocation.
11
Cf. Report 2010. The film market and Industry in Italy, Edizioni Fondazione Ente dello Spettacolo, Rome
2011, pp. 74-81.
| 39
higher than 1.5 million Euros, as demonstrated by data about the production activity in 2011
and 201012.
The business model evolves. The opening of the access to the tax concessions for other
operators of the sectors (the so-called external tax credit) also favored the increase in the
number of the possible investors; an increase made stronger by the availability of tax
shelter incentives for companies or other subjects that, even though they operate in other
types of sectors, may want to invest in movies, thanks to the tax reduction for profits
destined to this project. It is also for this reason that the validity of these incentives has
been renewed until 31st December 2013, and operators are already hoping for the doubling
(to 5 million Euros) of the investments’ maximum limit for the external tax credit, thus the
contribution of capital not only for a single film, but also for more projects put forward by
a production company13.
The result of the opportunity to have recourse to the two types of tax handle is the combined
provisions to introduce innovation elements into the national cinema. These elements are
suitable for affecting right the critical factors in the development of a project as well as the
business model itself: the role of external complementary resources, the flexibility of
current assets, the so-called relational capital to use in order to start the additional
investments required.
More cooperative than competitive strategies. It is commonly felt that in the new business
model of the national cinema those active principles supporting the elaboration and the
use of a different approach can emerge, with the development of the consolidated
competitive strategy into a less expectable cooperative strategy.
As for the market, with publishers and platforms (mainly the digital ones) which became
12
A “screening” of the tax incentive systems launched in different foreign countries is contained in the
chapter Foreign experiences (pp. 151-165) of the Report on the use of the Single Fund for Entertainment
– Year 2010, by Osservatorio dello Spettacolo of MiBac, Rome 2011. Within the same chapter there is
also a first picture of the implementation of new measures – Cinematographic activities and tax handle:
Italian way to tax credit and tax shelter (pp. 143-150) – based on the previous document Italian way to
tax credit and tax shelter for cinema drawn up by Osservatorio dello Spettacolo according to MiBac data
(Rome, April 2011) and introduced in the previous edition of this report (pp. 75-79) along with another
thorough study: The impact of tax credit. First analysis and development processes, by Paolo Boccardelli,
Francesca Medolago Albani and Barbara Bettelli (Anica/Luiss Business School, Rome, October 2010).
13
Tax benefits have been introduced in the Financial Law of 2008 (n°244 of 2007) and are administered by
the ministerial decrees of 7th May 2009 (internal tax credit) and 21st January 2010 (external tax credit).
Their validity has been extended up to 31st December 2013 by Law n° 10 of 26th February 2011 (tax incentives extension) and Law n° 75 of 26th May 2011 (financial cover). Other technical references are contained in the report Tax credit and funding office, by Anica, that can also be consulted online at
www.anica.it.
40 |
fundamental partners assuring distribution, sales and sales’ exploitation, a long stage of
films’ life cycle (to a non-heterogeneous audience compared to the institutional one of the
first stage, which was focused on cinemas, home video and pay-TV) is now emerging within
the production as well, where the integration between some of its strongest operators and
a film demand based on a limited type of genres had led to the success of a straightforward
business model14.
PARTNERSHIP AND PROFIT SHARING
The relationship suitable for the collaboration and the cooperation of partners that are not
involved in the production companies is expressed by partnership and profit sharing contracts,
under articles 2549 (“profit and loss sharing”) and 2554 (“profit sharing”) of Civil Code. Given
the risk of cinematographic activity, these contracts usually contain clauses protecting
investors, like the exemption from any obligations towards third parties and the right of
reporting the deal made. The introduction of the tax handle has practically led to the
development of the typology of partnership that had previously characterized the co-financing
of some movies from occasional investors from other sectors, who intervened when the socalled venture capital project had already been started, with their own procedures (it being
pure risk capital). Moreover, it is an alternative to the private equity practice, a hybrid
instrument between capital and debit which is used a lot, for instance, within American
cinema. Thanks to this instrument the partner – usually an institutional partner, as an
accredited operator of the financial system – can join the company for a limited period (there
is a commission corresponding to the period and, when it expires, funding will be reimbursed).
BANK AND FINANCIAL PARTNERS’ ROLE
According to data of the General Directorate for Cinema of MiBac, in the first two years of the
tax relief system, the protagonist was the financial sector with 26% of external tax credit
operations and nearly 32% of the total tax credit recognized. Considering the caution of the
capital market in the benefit/cost estimation, the balance sheet confirms the congruity of
fiscal measures and reaffirms the reversal thanks to which credit operators, after a slow
development, started modifying their role within Italian films.
14
Extremely effective is the scene described by Francesca Medolago Albani, responsible for the Area
Studies, Development and associative relations of Anica, in Italian cinema: a key to the reading, appeared in the quarterly magazine published by Il Mulino «Economia della Cultura» (n° 2, 2011, pp. 121132): «Compared to few years ago, the scene has deeply changed and the average independent
producer must plan - before the start of filming – a number of runs and draw up an extremely complex
financial plan […] After abandoning the historic “two-contract model” (fund for production; distribution
in Italy) that had assured the films’ budget for a long time [...] the process does not develop linearly in
the relationship with the new interlocutors [...]. When looking for releasing solutions, the producer accustomed to the “one stop shot model” becomes a ubiquitous producer, who is obliged to create and
foster new internal competences in its own company».
| 41
Investment partnerships. Bnl-Banca Nazionale del Lavoro itself, the historical partner of
national cinema in accordance with the Sezione di Credito Speciale Cinematografico e
Teatrale, established in 1935 as trusted institute of the Minister of Culture of that period,
gave greater impetus to its activity.
The main function as operational arm of the government is now carried out through a TGCTemporary Group of Companies established with the subsidiary Artigiancassa (as the
leading company) that, in the last three-year period, granted 190 different interest-rate
subsidies every year, issued 90 new ones, granted 150 capital contributions (ten-year
mortgages at preferential rate) to technical companies and other 90 for productions. Apart
from being the official payer and accountant of FUS in the name of MiBac, BNL group is
also the Italian manager of Community funds allocated through the EIB-European
Investment Bank, managing to grant, in 2011 – among public (about 92%) and EU funds,
destined to all the sections of the sector – more than 500 million Euros15. After contributing
through these roles to the production of more than 5000 Italian films in 75 years, the Bank
(between 2010 and 2011) promoted its first direct investments in the tax credit regime,
using 4.65 million Euros for the production of 11 different films16. Banca Intesa Sanpaolo
group after financing (in 2010) for an amount of 2.5 million Euros This Must Be The Place,
by Paolo Sorrentino, produced by Lucky Red, Indigo Film and Medusa Film, through the
subsidiary IMI, in 2011 invested 1.5 million Euros on Immaturi – Il Viaggio, by Paolo
Genovese, and also confirmed the support to the project “per Fiducia”, which every year
(starting from 2010) produces three shorts by young directors that promote the film.
No one can judge me by Massimiliano Bruno, and Some say no by Giambattista Avellino
are, instead, the two movies for which Banca Popolare di Vicenza had recourse to the fund
established for partnership initiatives (as for these projects, with Iif-Italian International
Film and Cattleya, respectively) with an amount of 2.5 million Euros, then increased at the
15
Data are drawn from the balance sheet related to the financial year 2010. The majority share (73.85%)
of Artigiancassa (head office in Rome) is held by Banca Nazionale del Lavoro, owned by the French
group Bnp-Paribas, while the remaining share of 26.15% is held by Agart, the company representative
of the National Confederations of Crafts. The institution won the tender for the management of Fus,
in 2007, as regards the cinematographic sector from MiBac, thus inheriting the historic role played by
the Film and Theatre Credit Department of Bnl itself.
16
In 2010, films co-produced by Bnl-Bnp Paribas through tax credit were six: Another World, directed
by Silvio Muccino and produced by Cattleya; Christmas in South Africa by Neri Parenti (Filmauro production); Qualunquemente, by Giulio Manfredonia (produced by Fandango); Someday this pain wil be
useful to you, by Roberto Faenza (produced by Jean Vigo Italia); La scomparsa di Patò by Rocco Mortelliti (produced by 13 Dicembre) and Mission of peace, by Francesco Lagi (Bianca Film production). In
2011 five films were co-produced: Into Paradiso, by Paola Randi (produced by Acaba Produzioni); Ti ho
cercata in tutti i necrologi by Giancarlo Giannini (Magalì Production); Ex - Amici come prima! by Carlo
Vanzina (Iif-Italian Intenational Film production), Come to the World, by Sergio Castellitto
(Picomedia/Allien) and Acciaio by Stefano Mordini (Palomar production).
42 |
end of 2011 by a further million Euros destined to a third co-partnership for a new project
produced by Iif. Following these examples, other banks – starting from UniCredit, the leader
group in Italy – invested in co-partnerships for the production of new films, with a total
investment from the credit sector (in 2011) estimated at 28 million Euros.
The showcase of requirements. Apart from lending money, banks are also becoming
‘partners’, and this is due to the introduction of external tax credit. In 2011 Anica and AbiAssociazione Bancaria Italiana (the Italian banking association) organized conventions and
meetings in order to promote the new financial partnership instruments and the
possibilities to operate in co-partnership.
The innovation is comforting, even though within the limits of a recourse to this tax credit
opportunity from groups and banks that seems still limited, above all compared to the
potentialities and the “courting” of production companies which, through the funding of
new projects, aim at the reduction of the so-called gap financing. Anica itself created an
online notice-board where producers can introduce their projects and show the state of art
concerning their real requirements of external resources (Table 14). For the five films (out
of six) which indicates the amount of capital to be raised within the market (corresponding
to their project budgeting) the Table shows, for instance, that the need of external resources
amounts to 2.61 million Euros and that the level of the primary requirements sets at 26.78%
of the production costs and at 20.74% of the total including distribution costs (the internal
funding capacity is consequently supposed to be equal to 73.22% and 79.26%).
Gap financing interventions. Within the investment cycle, gap financing operations have
always represented the crucial point of an undercapitalized and always suffering Italian
cinema. On the one hand, banks’ predisposition to grant interest-rate funds (mortgages
and loans) to production companies has always been limited, given the riskiness of the
business – with high capital intensity and high levels of uncertainty – and the market has
assumed a morphological narrowness.
On the other hand, the necessary conditions for the access to a line of credit were always
scarcely compatible with the operational availabilities of filmmakers (companies’ assets
are mainly intangible) who, apart from facing the levels of charges, rates, legal and
reimbursement costs, which were higher than in any other sector, in order to assure the
requested covering of the amounts granted, had recourse to personal guarantees, mainly
secured by mortgages (52% of cases, according to data of Banca d’Italia).
The historical recourse to mezzanine. Within the arrears of these objective problems, bank
debt for cinema has become an historical instrument of this sector in Italy, with the name
of “mezzanine”: a gap financing that is a kind of “accompaniment” of the bank as regards
the production companies’ growth requirements, without getting into the venture capital
as in the case of the more binding equity interventions. Practically, banks chose the middleway between pure financing and intermediation when financing cinema, that is,
| 43
complementing the mortgages (usually with an amount that is 20% lower than the
estimated budget) with the prepayment of funds, contributions or other kinds of credit of
different origins and sources.
Intermediation and credit discounting. As widely documented in the previous edition of
this Report, the aim is to reduce the supply costs. In fact, the intermediation services,
known as credit discounting, are down payments made by the bank for contributions,
concessions, pre-sale agreements or contracts, that have already been paid to operators
and that can generate resources that will be allocated or will be available in the future.
Practically, by replacing the producer as counterparty creditor and with a good
remuneration, the bank actually takes a relatively low risk17. It is now emerging the
prearrangement of “packages” of intermediation services with agreed conditions for
cinematographic operators from banks, mainly at the regional level, together with the
organizations of the sector or the Film Commissions. The last initiative, for instance, was
developed by Banca Prossima of Intesa Sanpaolo group with Unione Agis of Apulia and
Basilicata. Moreover, even the framework agreement set up by Bnl with Anica falls within
this sphere of activity. This framework agreement aims at mobilizing companies’ credits
related to contributions upon receipts recognized by MiBac within FUS, that have not been
paid yet and that are not susceptible to anticipated discounts due to the commitment of
“non-assignability of the state contributions” they are bound to and that the Ministry has
decided to terminate by issuing a specific implementing decree18.
On the contrary, it seems that the cartolarization activities started by Artigiancassa, based
17
Cf. Report 2010. The film market and Industry in Italy, Edizioni Fondazione Ente dello Spettacolo, Rome
2011, pp. 37-40. There is a particular reference to the study “The pricing in the cinematographic credit”,
by Sabrina Leo, doctoral student of “Financial and Bank Management” at the department “Banks, Insurances and Markets” of the Faculty of Economics at Sapienza University of Rome (Rome, May 2009),
directly carried out among bank operators through a sample of operations.
18
It is provided for by the institutional law of the Fund (no. 662 of 1996), then integrated with the legislative
decree no. 112 of 1998. Instead, the Agreement for the debt suspension for small and medium-sized
companies (the so-called debt standstill), signed by Government, Abi and Confindustria (which then
signed the other Agreement for credit to small and medium-sized business on 16th February 2011)
dates back to 3rd August 2009.
19
Regulated by the ministerial decree of 12th April 2007, the programme foresees that the start of the
procedures and the administrative management will be assigned to Cinecittà Holding. The reacquisition
of 100% ownership of films’ exploitation rights is connected to the definition of funds granted. For films
presented before 31st December 2006, three progressive ranges for the cartolarization of contributions
have been provided for (between 0 and 30%; between 30% and 60%; between 60% and 99%), according
to the percentage refund that has been already paid, with recoveries set respectively at 35%, 15% and
5% of the amount that has not been paid back yet.
20
60% of credit discounting contracts foresees the application of a spread included between 2% and 2.50%,
while for 70% of gap financing contracts a range between 2% and 5.50% is recorded (see note 17).
44 |
on an agreement signed with the General Directorate for Cinema depending on MiBac itself
for the recovery of old credits related to old contributions paid by FUS to about 600 films,
have not given the expected results. Started on the basis of an agreement signed by the
General Directorate for cinema, the program implies the evaluation and the updating of
practices concerning those films, in addition to a complex assessment activity19.
A matter of pricing. The pricing of the discount operations foresees the application of an
interest rate represented by the reference index (Libor or Euribor) of the cost of money in
the international iterbank markets, which has risen by about 200 basis points, from a
commonly agreed limit (spread) that varies according to the asset nature and reliability –
the so-called track record – of the financed subject, more than the legal, organizational
and managerial costs, and a specific commission (commission fee) correlated to the
duration of the operation, that is never lower than 14-16 months, and following the waterfall
and rebate expected times, that is, for the generation of the first earnings coming from
rights and options given as a guarantee as well as the fulfillment of the reimbursement.
With regard to the pure gap financing, the interest rate set by credit companies is instead
3 basis points higher, and the value of the real guarantees necessary largely exceeds the
TABLE 14
CREDIT NEEDED BY NEW PROJECTS
Project’s budgeting in € The barbarians
Treddi movie
Do not
disappear!
Il mistero
Vino dentro
Ci vediamo
1,043,301
830,514
800,000
2,150,000
2,760,000
1,800,000
Distribution costs
156,800
Gap financing
0
Break even point
620,101
Italian box office estimate 600,000
Start of filming
1-7-2012
End of filming
15-8-2012
First release estimate
3-4-2013
Production
Inmedia-Zut
150,000
410,000
1,500,000
2,500,000
7-5-2012
2-6-2012
19-11-2012
Due P.T.
300,000
300,000
400,000
700,000
4-6-2012
27-7-2012
31-1-2013
Adagio Film
450,000
800,000
3,400,000
2,500,000
18-6-2012
28-7-2012
22-2-2013
Bell Film
280,000
600,000
1,000,000
5,000,000
27-8-2012
3-9-2013
3-10-2012
Alba-Cine P.
Claudio
Insegno
Pietro
Reggiani
Guglielmo
Zanette
Ferdinando
Vicentini
Orgnani
1,500,000
500,000
3,300,000
0
14-5-2012
16-6-2012
31-3-2013
Smile
Moviemax
Andrea
Zaccariello
Production costs
Director
Carmine
Amoroso
* Notes: Treddi Movie is expected in the 3D version. As for Non scomparire, Il mistero and Ci vediamo, the complete pre-titles are Do not
disappear! Two stories of psychosomatic invisibility, Il mistero di Aquileia and Ci vediamo domani.
According to data contained in the banner Vetrina tax credit, in Anica’s website www.anica.it (Rome, May 2012).
amount lent, placing itself between 200% and 300%. It is possible to explain, then, the low
influence of the gap financing on the gathering of investment capital for cinema, with an
estimated contribution of a little less than 50 million Euros for 201120.
Svp and revenue discounting just for few. The assistance given only to few, big groups
according to a portfolio approach or with management SPV tools (Special Purpose Vehicles),
| 45
that separate the portfolio risk from the risk of the borrower, as the financing of a project
usually goes into a stable and durable relation which includes different activities and
initiatives, is different.
The key to the service defined revenue discounting (or film slate discounting) that allows more
leeway is the opening of a revolving line of credit that replenishes itself along with the
reimbursements recovery, thus allowing companies to have a relatively constant and stable
amount of resources for the carrying out of new investments and projects21.
Leasing for extreme cases. The recourse to leasing operations is even rarer. In front of an
immediate benefit as regards liquidity, the producer (either after the film has been completed
or during the post-production stage) transfers its exclusive exploitation rights – without losing
their ownership – to a financial operator who, at the same time, commits himself to “give
them back to him”, through leasing (that is why he is called leaser) through the payment of a
fee and assuring himself the reimbursement release from any negative trend of the movie
after it has been released into the market.
It is clear that funds coming from the leaser are not suitable to finance the film under
examination, but new projects, and it is possible to understand how banks always tend to
avoid this solution22.
The novelty of the guarantee funds. However, the year 2011 recorded the beginning of a new
instrument to support the establishment of new production, distribution and technical
companies and, above all, the industrial and structural strengthening of the existing and
active companies, mainly the smallest ones.
The access to the Guarantee Fund for small and medium businesses, established in 2000
by MiSe-Ministry of Economic Development, and that over the last five years received 150
thousand funding requests for a total value of more than 30 billion Euros, was also opened
21
National companies that are eligible for the support of Revenue discounting forms are realistically few.
Besides Rai Cinema and Medusa Film, according to market operators, Mondo TV, Moviemax Media Group,
Eagle Pictures, Cattleya, Iif-Italian International Film, Fandango, Lucky Red can be included in the list,
while The Space Cinema and Uci Cinemas can be included in the business sector.
22
There has been an only case of real taking over of the management of a film production company by a financial subject, which dates back to 1931, when Banca Commerciale Italiana took over Cines after the
death of the entrepreneur Stefano Pittaluga, who had formely acquired the company from its founder Filoteo Albertini and associated it to his Uci, heir of that Italian Cinematographic Union (the consortium of
the major companies of the early 19th century) which was the protagonist of a resounding collapse in
1923. Cines, in its turn, after being affected by a commercial downfall, was hived off from the credit institution in 1933, and Iri was assigned the main part of its structures, then sold to Carlo Roncoroni, until
the great fire that destroyed the production studios in 1935 and obliged the Government to intervene directly. As a result, the great studios of Cinecittà were built in 1937. In 1941 the President of Cinecittà studios, Luigi Freddi, re-constituted Cines for the third time. The possibility of a new direct intervention in
46 |
in fact to the film sector, which was excluded before, with the implicit aim to reduce the
credit costs.
When using the bank gap financing, operators, once interest rates, conditions and clauses
have been agreed, can ask the same banks to make the Fund guarantee part of the operation
(up to an amount of 2 million Euros), with a “no cost” public guarantee – that is, without
further expenses for guarantees or insurance policies – thanks to which any eventual
insolvency would be paid by the Fund itself, even though its plafond runs out, because
government would automatically replace the Fund through MiSe23. The convenience lies in
the possibility to reduce the financial provision – the so-called regulatory capital – imposed
by Basel agreements for the stabilization of the international financial system (Table 15)24.
Counter guarantees of Credit guarantee consortia. As an alternative, the company itself can
demand the so-called “counter guarantee”, by applying to a credit consortium that will submit
the application form (automatic and simplified) to the Central Fund. Anica itself took the
same direction: it drew up a specific agreement, for the associated companies, with Unionfidi
Lazio (a company of Regione Lazio)25.
There is also the community option. However, the European Union has also endowed itself
with its own structure: the Media Production Guarantee Fund, established within the Media
Program 2007, having a budget of 755 million Euros for the period 2007-2013. It is endowed
with 8 million Euros and it can guarantees up to 55% the financing granted by banks through
two private financial institutions recognized by the European Commission: the IFCIC (Institut
the sector by banks also appeared during the financial hardship (between 2003 and 2006) before the bankruptcy of Finmavi, the cinematographic holding owned by Vittorio Cecchi Gori. But the complexity of the
business structures, the tangle of legal and administrative procedures, the willingness of the heir of Mario
Cecchi Gori (1920-1993) to preserve at least part of the group’s assets, and the high risk estimated by the
credit counterparts have never proved the feasibility of a possible management assumption.
23
The access to the Fund is excluded to companies which show turnover decreases higher than 40% during
the last financial year, and losses exceeding 5% of the production value in one of the last two balance sheets. Sometimes – even though within the same limits – the access is possible even for operations that are
not backed by real, bank or insurance guarantees for amounts up to a maximum 30% of the total turnover
(20% if these operations are up to 36 months).
24
These are the rules for the European credit system, introduced by the so-called “Basel II” standard (chapter
Pillar I) and “Basel III” for the risks assessment, which mainly weigh on the compulsory appropriations,
for which new criteria of estimative rating have been adopted.
25
In Italy, according to last data available, there are 312 consortia (they were 690 in 2000), 45 of which are
controlled by Banca d’Italia – and they can therefore give valid guarantees with relation to the standards
Basel II and Basel III – and 17 were entitled to certify (along with other 4 non-controlled consortia) the
credit. Represented by Assoconfidi, they join more than 1.1million small and medium-sized companies,
and guarantee funds for 20.3 billion Euro per year. Consortia using the Central Fund are about 170, which
are responsible for 34.2 thousand counter-guarantee operations for a total funds value of 4.9 billion Euros.
| 47
pour le Financement du Cinéma et des Industries Culturelles) of Paris and the SGR (Societad
de Garantía Recíproca) of Madrid.
Microfinance is emerging. The Central Fund of MiSe also foresees microcredit interventions
for very small businesses with a coverage up to 20 thousand Euros for operations that are
not assisted by real guarantees, bank or insurance guarantees, on condition that businesses
prove their profit at least in one of the last two balance sheets, with an eventual loss lower
than 10% of the total turnover.
But micro-enterprises of Italian cinema are testing another type of ‘collection’, the so-called
grassroots collection, which assumes the name of crowdfunding or crowdsourcing and it is
already well-established in France, Spain and Great Britain.
Crowdfunding. Borrowed from the community of video-makers that mainly operate on internet,
this practice consists in launching a fund-raising campaign throughout the web with minimum
financial contributions in return of a figurative stock option (in this case, the sense of the
expression is almost lateral) on the ownership of the work. It is, basically, a sort of ticket linked
bond used in the American and British bank financing for the film industry (also through the
SVP), but without the complex financial structure (they are bonds, often listed, similar to the zero
coupon bonds) that regulates its amount, issue, duration, yield and reimbursement26.
Considering a well-known quote by Walt Disney – “If you can dream it, you can do it!” – Vinylmania
– When life runs at 33 revolutions per minute was realized, a 75-minute documentary film by
Paolo Campana produced by Stefilm International with the support of Piemonte Doc Film Fund
of the Piedmont Film Commission. The aim was to raise 33 thousand dollars (a little more than
23 thousand Euros) within 45 days between October and November 2011, and it was achieved
and exceeded – 37,173 dollars (27,240 Euros) were raised – with a final rush during the last hours
on Kickstarter, the largest international funding platform for creative projects, thanks to the 395
supporters from all over the world27. This direction has been also followed by another production
26
The new funding model was the object of the convention “Crowdfunding & crowdsourcing. Newfinancial
and marketing instruments for the independent production”, of 25th November 2011, organized in
Genoa by Fert Association (Filming with a European Regard in Turin) of Turin, with the support of the
Community agency Antenna Media Torino and Genoa Liguria Film Commission, Fondazione Crt, MiBacGeneral Directorate for Cinema, Società per Cornigliano and Clp-Liguria Center for Productivity.
27
The film was co-produced with Lato Sensu Productions (France), Zdf/Arte and Mdr (Germany), Yle (Finland), Media Programme of the European Union, Piedmont Doc Film Fund and Genoa Liguria Film
Commission. Distributed in Italy by Cinecittà Luce, and abroad by Deckert Distribution, it was broadcast
in the evening of 3rd November 2011 on the Franco-German channel Zdf-Arte, presented for the first
time on 20th November at Cinema Farnese in Rome, within the “Road to Ruins” Festival, and abroad
at the end of January 2012 at Göteborg International Film Festival. As for video market, a special edition
with a double DVD was promoted, whose cover was created by Winston Smith, an American artist
among the most important covers authors.
48 |
TABLE 15
WHEN THE STATE GUARANTEE IS CONVENIENT
EXAMPLE OF GUARANTEE FUND SUPPORT
Amount financed
100,000 euros
Risk weighting
100%
EFFECTS ON REGULATORY CAPITAL WITH THE 50% INTERVENTION OF THE FUND
Non-assisted operation
Coordinates
Assisted operation
8,000,000
Average regulatory capital
4,000,000
0,0
Capital saving
4,000,000
EFFECTS ON REGULATORY CAPITAL WITH THE 70% INTERVENTION OF THE FUND
Non-assisted operation
Coordinates
Assisted operation
8,000,000
Average regulatory capital
2,400,000
0,0
Capital saving
5,600,000
According to the statement La garanzia dello Stato. Un’opportunità per le imprese, by Francesca Brunori, responsible for the sector “Fisco,
Finanza e Welfare di Confindustria” (Rome, June 2011;within the workshop “The Guarantee Fund for small and medium businesses
in the service of film companies”).
company, Acaba Produzioni, that created a limited liability company – Cineama, which manages
the homonymous web platform – for the online sharing and the participation of new audiovisual
projects aiming at the creative innovation 28.
CO-PARTICIPATION AGREEMENTS
Actually, the sharing principle which inspired social networks and many initiatives of web 2.0
like Kickstarter and Cineama is, as demonstrated by the structure of tax concessions like tax
credit and tax shelter, one of the basis of the cinematographic activity (most of all the Italian one,
that through the composition and recomposition of the resources has supported the production
for several decades).
One of the most followed examples in the same direction is given by co-participation agreements
with other operators of the sectors, basically associating – since the planning stage – those
involved in the process of the product release to the audience, like distribution companies as
well as business circuits and TV networks. In some rare cases it can happen that the producer
28
Co-founders of Cineama are: Fabrizio Mosca, independent producer with Acaba Produzioni (One Hundred Steps, The Golden Door, A Quiet Life); Antonio Badalamenti, project manager of the production
company Palomar; Savina Neirotti, founder and manager of TurinFilmLab; Federico Bo, IT engineer;
Tania Innamorati, responsible for communications of Acaba Produzioni. Moreover, there are: Irene
Cassarino, innovation manager of Experentia: Andrea Ciccarelli, historian and cinematographic communication expert, and Chiara Tingali, community manager.
29
Using the technical jargon, the operation is defined “take over”. If the external investor is the same
subject (usually a bank) that funded the production, the completion bond is then also refunded through
a completion fee that is usually equal to 6% of the new resources allocated. This type of intervention
is more frequent within TV productions, With TV networks playing the role of “completors” that appoint
a production representative and a script editor who have to constantly follow the works under the economic point of view (most of all, they have to control the cash flows) and the artistic point of view.
| 49
overruns the budget and the association with an external investor is required only afterwards. In
these contexts, providing for the integration (completion bond), the new partner also takes over
the work’s ownership29.
JOINT VENTURES WITH THE DISTRIBUTION
Among the operators of the sector who represent possible referents, a production company can
grasp the opportunity to integrate the necessary budget mainly with the distributor – who is the
first responsible for the marketing and already looks after edition, marketing and rights
management. In this kind of relations, the object of negotiation and transaction is represented
by the terms of three main factors:
1. estimate of the project’s value, considering the investments and the results expected on the
market;
2. sharing of the business risk and its success or flop (that’s why it s called joint venture);
3. consequent sharing of co-participation shares and exploitation rights of the work, based on
the relative expectations and the degree of interest and convenience with regards to the
amount of resources to be given and the immobilization times of such capital.
The different rate of creative, operational and financial involvement of partners corresponds to
a marked flexibility of contractual conditions, from which different typologies of partnership
agreements took shape, basically referring to two main patterns. The research and collection of
30
The amount can be also estimated in other different forms. For instance: industrial full cost, that covers
the artistic and technical realization costs of the work; company full cost, that also covers general expenditures and financial interests on the investment; cost-plus, that is, adding an absolute predetermined profit.
31
If the distributor only intervenes when the production process has been completed, the transction becomes
an acquisition contract (pick up deal). Sometimes, the ex post contribution of the distributor is limited to the
simple services supply for the marketing of the film, and it becomes a rent-a-distributor, as the necessary
funds are allocated by the same production company or its partners.
32
Agreements structured on the net margin, the so-called net deals, can be distinguished according to the
form of distribution of the financial flows: cost-off the top or dynamic (staggered). With the first form income
is used, first of all, to cover the minimum guaranteed amount and the advertising launch, then for the distribution of profit. With the second form the distributor holds, until the first receipts in the cinemas, a socalled distribution tax, that was prearranged and used to cover the specific indirect costs of the film over the
distributor’s structure. Receipts are then used to cover the direct distribution costs and, only later, for the
refund among partners.
33
The gross margin formula, or gross deal, according to which proceeds due to producer and distributor are
allocated proportionally as they are earned, has different alternatives, but three are the main ones: first dollar
gross, that is, if the producer has not arranged any advance payment and ony relies on future receipts; 50/50
dollar split, if the producer does not receive any advance payment and shares even the launch and re-production costs with the distributor (thus sharing also the market risks); modified gross deal, when the producer
receives an advance payment from the distributor, compensated (in its turn) by the possibility to recover
(through the first receipts) the amount paid in advance (interests included) and the distribution costs.
50 |
investment resources are charged to the distributor. According to the formula (coming from the
USA, where it is more widespread) called Pdf – production-financing-distribution – the
distribution company holds the greatest bargaining power. It controls both the management of
the project from the producer and the distribution rights. The typical pattern foresees that the
production company gets 20% of the budget in weekly instalments for all the pre-production
period; 60% during the filming (again, through weekly instalments); 10% as soon as the first cut
is delivered; last 10% when the completed film is delivered (the master copy)30.
Financing charged to the producer. According to the project the total value of production is set
and after the film has been completed, the distribution company pays the so-called pick up price,
the price agreed, that is why the method is known as negative pick up, or with the initials PA
(printing & advertising), as it usually contemplates, besides the payment of the guaranteed
minimum, also an advance to the producer of the expenditures for copies’ duplication and
marketing for the advertising campaign31.
Upon these two matrixes, based on a 100% funding from one of the subjects as well as on the
transaction of all rights – practically, at a fixed amount or flat-flee license – a large series of joint
ventures structured on the risk, investment and receipts sharing, in front of the different choices
of sharing and proportionally to the different shares of capital and commitments, takes shape.
For instance, from the distributor as regards the payment of the so-called GM-Guaranteed
Minimum (when a set advance on receipts is guaranteed to the producer) or the modes for the
recovery of promotional expenditures.
The “fifty-fifty” practice. Usually, it is not convenient to distribution companies to hold a
participation of less than 40% in the partnership – they tend to acquire the 50% - as their
charge/commission usually corresponds to 30% of the gross margin and the cost of
promotion, advertising and distribution of the work amount to an average 20% of the gross
margin itself.
One of the main modulation factors for the typologies through which joint ventures develop,
is represented by the revenues’ distribution, that can be divided into two modes:
1. since they start becoming concrete, allowing only gradually the recovery of the relative
investments according to the formula of the gross margin (gross deal);
2. or, they can be initially held by the distribution company – that is the first beneficiary of
revenues from sales through different channels – until covering the expenditures for the
release on the market according to the so-called method of the net margin (net deal)32.
As easy to guess, the individuation of the necessary match point depends on the different
convergence of interests: the distributor makes certain that the first receipts will
guarantee, in any case (also in the case of a flop), the full or partial recoup of the resources
used, while, on the contrary, the producer relies on the quickness of receipts’ flows in order
to recoup the investment made, whose recoup is bound to the success of the film in
cinemas (or at least a respectable success)33.
Emergency triangulations. In place of partnership agreements it can sometimes happen that
| 51
the relation between producer and distributor becomes the result of a triangulation, through
the instrument of leasing. If a production risks the “paralysis” for the lack of liquidity or the
crash for the excessive debts resulting from the attempt to complete the production of a film,
before it is released into the market, the intervention of a financial operator that acquires the
exploitation rights and then leases them to a distribution company on the payment of a fee.
Only with a total recoup of the acquisition costs by the leaser, the producer can demand
(preferentially with respect to the distributor) the reacquisition of the film ownership.
PRESALE CONTRACTS
If the distribution company is the main referent for the circulation in the primary circuit of
cinemas, home video companies, free-TV broadcasters, pay-TV networks, telecommunication
networks, broadbanders and aggregators (the so-called contents aggregators) of digital
platforms are as many partners for the film distribution within the so-called secondary channels.
And, like distribution companies, they can participate, similarly, to the financing for the realization
of films.
Callable bonds. The most common instrument is represented by presale contracts, according
to which a specific value of the relative exploitation rights is assumed and the terms of sale are
agreed: usually, with a partial advance payment at the moment of the signing, together with the
commitment to pay the entire amount with a single paqyment – when the film is delivered – or
by instalments. Practically, under the point of view of the financial technique, it is about bonds,
according to that negotiation pattern that created the forward markets (commodity futures and
forward) within the economic sector and, within the financial sector, the futures market (financial
futures), where the enforceability of the bond is carried out afterwards, with the call option
previously agreed. Compared to partnerships with distributors – based on Pdf or pick up patterns
– the main feature that differentiates these presale agreements consists in the fact that the
acquisition of marketing rights does not imply also the participation to the final profit sharing,
ensuring, however, a remuneration only through revenues derived from the sale or films
broadcast on channels for which the circulation license had been acquired.
Reciprocal interests and conveniences. The segmentation of rights formally meets a double
interest of the partners. On the one hand, the fragmentation of value allows the acquirers to
34
Cf. Il cinema, by Andrea Marzulli, (pp. 621-660), chapter about the Report on the funds for cultural economics in Italy1980-1990, by Carla Bodo, a publication promoted by the Association of Cultural Economics
(Rome) for the Department of Information and Publishing of the Presidency of the Council of Ministers,
published by the Polygraphic Institute (Rome, 1994, pp.816, not for sale).
35
it should be noticed that only in exceptional cases the acquisition of rights for the television distribution
was carried out for low-budget national films (less than 200,000 Euros or between 200 thousand and 500
thousand Euros.
52 |
limit the so-called counterparty risk, that is, the risk that the project (subject to the transaction
and for which a commitment to pay a specific amount has been signed) will not be carried out.
Their value is relative, as it is compared, in percentages, to revenue estimated for the specific
channel and not to the total revenue on the market. Moreover, the acquisition takes place with
a certainty of use, as in the case of TV networks that set the insertion of films into their TV
schedules and sell the advertising spaces for their broadcast.
On the other hand, production companies can rely (since the preparation stage) on an external
contribution as well as on the acknowledgment of these agreements by banks like collateral
guarantees for the granting of other financial resources in the shape of mortgages or credits.
Iif group, in the last decade, supported the credit line destined to the production and distribution
cost-covering with another credit line (thus increasing financings by 80 million Euros) supported
by advances on commercial credits and presale rights. At the same time, the fractionalization
of rights allows flexible marketing strategies, reserving the transfer of rights for foreign
countries, area by area, to one sales agent or more.
Sui generis investments. According to the common meaning, presale contracts are defined as
investments, even though during the planning stage their contribution is limited (as their
effective valorization is achieved only after the release in cinemas, according to the audience
appreciation) and always depending on their partial discount at banks. They formally do not
correspond to the nature of the financings, as they represent the payment for the supply of a
service or an asset transfer. And even their relative, partial advance payment is carried out for
a specific and concrete economic factor: ensuring the exclusive exploitation rights of certain
films. Basically, since several years, they are considered (within the sector) the source that can
create the predominant money flow used to meet the financial requirements of the production
sector, as if cinema was depending on the most important communication groups which operate
on TV, home video and web distribution channels. At the origin there is their use as a valuable
supplying instrument for the covering of the project budget, mostly through the relations with
the TV networks during the darkest season of the national cinema.
Which dependence? According to current estimates, in 1980 the sale of TV rights represented
about 10% of a financial volume of production corresponding to a little more than 96 billion
lire and, if it nearly reached 16% in 1985 (23 billion out of 145 invested in the production), in
1990, according to Anica’s data, it rose up to 40% (130 billion lire compared to 335 of the total
production cost)34. During the next decade, its estimated share increased further, rising up
to 50% before, and then up to 60% (with Rai and Fininvest covering the 50%), until reaching
nearly 65% at the end of the 90s. This incidence, in the first years of 2000, with the
development of pay-TV, has sometimes been exceeded35.
Disaggregated data are missing. However, these ratios should be handled with care. TV
networks’ indication is, in fact, punctual and pertinent to direct investments – also carried
out in co-participation and intensely by Rai Cinema and Medusa-Mediaset – in the production
| 53
of new works, while it seems much more generic with regard to the acquisition of rights, as
its nature remains global (as the notes to the balance sheet regarding the accounting of their
costs or the depreciation charges in the economic account, as well as the old depreciations
charge in the balance sheet) with the indistinct aggregation of the amounts related both to
Italian and foreign shares/films, as well as to acquisition operations ended up with
counterparties selling according to a national matrix other than a foreign one.
How many rights for Italian films. Moreover, the program has always been mainly based on the
exploitation of foreign films more than Italian ones, in the past and during the last seasons (Table
16). As for generalist networks, the percentage of national movies broadcast in the three-year
period 2008-2010, for instance, is equal to 36.3% and, as for satellite networks, it is even more
than 10 points lower (25.6%), showing how the acquisition of exploitation licenses affects foreign
cinema more than the domestic one. Within the analysis of the TV schedule it is also important to
consider the years of production of films broadcast. Usually, films produced before 2000 are
already part of networks’ library, therefore they do not generate considerable charges for
producers (besides the relatively marginal rights for authors and actors). During the last five-year
period, generalist networks’ broadcast of Italian movies produced between 2000 and 2010 refers
to 785 works, corresponding to 12.3% of the 6,383 national works broadcast within those five years.
Theoretic quotient: 58.2%. As the 1,348 national films realized in the decade were produced with
Italian capital, it is possible to deduce (with sufficient reliability) which percentage of national
production can be referred to presale contracts: the 58.2%, before the inevitable titles overlapping
that, within the statistic survey, are recorded every year. Moreover, it is not to be forgotten that the
two most important broadcasters, Rai and Mediaset – which reach 98.86% of the domestic free
TV’s schedule – are concerned in the production or co-production and distribution of almost 150
recent films (out of 785), distributed by themselves and that, therefore, generate intergroup
exploitation flows, by internal lines (Table 17).
Satellite and pay TV. There is not any specific information available about the schedule of satellite
and pay TV – which have a primary role, nowadays, in the air broadcast of films and national titles
– as regards the dates of production of the broadcast films. From Anica’s surveys of data provided
by Studio Frasi of Rome, dealing with television contents, an indicative picture only for what
concerns the offer of Italian films in the two most important time slots of 2011 – prime time and
second time – can be obtained. The comparison shows the great importance of the offer of recent
national films by Sky on its eight channels (Cult, Cinema 1, Cinema Classics, Cinema Comedy,
Cinema Family, Cinema Hits, Cinema Max and Cinema Passion), even though the total percents
of Italian cinema compared to foreign cinema – as well as to the overall budgeted values for
rights acquisition – remains quite limited: during the year, Sky broadcast 2,346 films, 676 of
which (equal to 28.8%) were made in Italy, compared to 574 films of 2008, 549 of 2009 and 573 of
2010 (Table 18).
Far away values. Given the predominant presence of foreign films and international
54 |
distribution companies, it is easy to guess how difficult it is to make the licensing fee activities
of groups and TV networks coincide with pure financing activities for Italian cinema. In this
case, also given the other contributions for the projects financing, the amount of resources
gathered through mortgages and loans with banks in order to cover the pure gap financing
deriving from production activities could not be explained.
Divergent results from the balance sheets. In fact, the balance sheets of active companies in
the domestic market have always recorded divergent results as regards these rights. Moreover,
only the consolidated companies which realize medium and high-budget films are involved,
which represent not more than 3-4% of the total number of production companies, as well as
a part of production activities corresponding to about 60% of the total (presale contracts related
to low-cost films represent a meager minority). Well, the few financial statements of film
companies, which show a general indication of the type of commercial takings and proceeds by
business areas, assign a share fluctuating between 30% and 40% (with some higher value,
though) to the sale of television rights. Moreover, they are the proceeds obtained by license
rights year by year, that is, not only limited to those resulting from presales. Considering the
majority of company financial statements, it has never exceeded the threshold of 50%.
Not always subordinate. Perhaps a certain subordinateness that spread through the audiovisual
sector, between television and cinema, fostered by numbers with a low benefit of caution and
hasty connections, should have no foundation, also given the recent downturn of the generalist
television. If TV films are blamed for a loss of audience, it is also true that this decrease is not
relative compared to the breakdown suffered by the broadcasters as regards the respective
channels and other genres. And if the cost of certain television products proved to be
incompatible with a positive business management, the resulting expenditure compressions
that are transferred by networks to other market operators do not seem always adequate to a
conservative planning policy, with schedules anchored to former parameters and traditional
time slots, which also the improvement of what is broadcast or purchased partly depends on –
as in the case of films – in order not to be broadcast.
Who is assisted. A similar comparison can be also used for the frequent observation of how the
Italian cinema sector is assisted by the government and, therefore, is favoured. However, this
consideration does not consider the large public contributions granted to the television system
through capital financing, that is, non-refundable subsidies and not interest-rate subsidies –
36
These are contributions to local networks (decreased to 160 million Euros in 2008 to about 70 in 2011), to
political TVs (5.7 million Euros) and satellite theme channels (5.7 million Euros). Funds for the introduction
of the digital terrestrial should be added. Funds are granted by the Department of Information and Publishing of the Ministry of Economic Development (which also administers the financial incentives for the
radio sector) in accordance with Law no. 448 of 1998 and Ministerial Decree no. 292 of 5th November 2004.
| 55
therefore to be reimbursed – like those for the cinematographic sectors36.
Service contracts
However, the importance of the investments of TV networks (free and pay TV, generalist and
satellite television) for cinema, with higher contributions than those of home video publishers
and digital contents aggregators, remains undoubted. At the basis of this important role there
is the Directive TSF “Televisione Senza Frontiere” (Borderless Television) of 1989, according
to which all national networks of EU member states must reserve fixed shares of their
schedules to audiovisual works realized by national producers or producers from other EU
member states37.
Minimum guaranteed. Due to the introduction of these regulations, many European TV
networks endowed themselves with structures able to produce and distribute films on their
own or through the co-participation with other independent companies, and to support their
activity through the presale contracts (which, in the meantime, have become compulsory for
the main national networks, at least until a certain threshold). While endorsing this policy
supporting the development of the audiovisual sector, counties with public television have
then integrated these rules for the television market with other rules for a more specific
regulation of competences and burdens of the reference broadcasters, generating the socalled service contracts38.
A matter of calculation. In Italy, the point of reference of the contract signed by Rai in April
2011 with MiSe-Ministry of Economic Development for the three-year period 2010-2012, is
given by the total annual proceeds, 15% of which is destined to European works, imposing
37
Tsf “Télévision sans frontières” has been under revision for a long time, and its reformulation is expected by the end of 2012/beginning of 2013. Its regulations go back to CEE (European Economic
Community, now European Union) directive no. 552 of 1989, then amended with the directive no. 65
of 2007, acknowledged by Italian government through Law no. 122 of 30th April 1989.
38
The service agreement is regulated by the legislative decree no. 177 of 31st July 2005 (Act of the audiovisual and radio media services) amended by Laws no. 244 of 24th December 2007 and no. 31 of 28th
February 2008, besides the resolution “Approval of the guidelines about the content of further obligations of the radio and television public service” no. 614 of 2009, by the Authority for Communications
Guarantees (in accordance with the Law no. 112 of 3rd May 2004, and the subsequent “Act of the audiovisual and radio media services”, published on Gazzetta Ufficiale no. 276 of 26th November 2009).
39
According to article 16 “Italian and European audiovisual products” of the “National Service Agreement”, the “total annual receipts are the revenue deriving from subscriptions for the radio and television supply, as well the advertising receipts related to the same supply, net of the revenues deriving
from agreements with the public administration and from the sale of goods and services” and investments are “the cost configuration which includes amounts paid to third parties for the acquisition of
rights and the use of the works, the costs of internal and external production and the specific promotion
and distribution costs, as well as publishing costs vand other expenditures for these products.
56 |
TABLE16
MORE FOREIGN THAN ITALIAN FILMS IN THE TV LISTINGS
Film offer for
TV networks
GENERALIST NETWORKS RAI-MEDIASET-LA7
Film
Share
Runs
Share
Film
SATELLITE NETWORKS *
Share
Runs
Share
2008
Italy
United States
Europe
Other Countries
Total
1,380
2,028
464
123
3,995
34.5%
50.8%
11.6%
3.1%
100.0%
-
-
982
2,041
663
167
3,853
25,5%
53,0%
17,2%
4,3%
100,0%
8,226
20,348
4,620
1,192
34,386
23.9%
59.2%
13.4%
3.5%
100.0%
Italy
United States
Europe
Other Countries
Total
1,201
2,072
439
103
3,815
31.5%
54.3%
11.5%
2.7%
100.0%
1,322
2,195
466
105
4,088
2009
32.3%
53.7%
11.4%
2.6%
100.0%
949
1,918
517
106
3,490
27,2%
55,0%
14,8%
3,0%
100,0%
8,023
24,610
4,579
1,091
38,303
21.0%
64.3%
11.9%
2.8%
100.0%
Italy
United States
Europe
Other Countries
Total
1,277
2,089
461
124
3,951
32.3%
52.9%
11.7%
3.1%
100.0%
1,412
2,214
498
129
4,253
2010
33.2%
52.1%
11.7%
3.0%
100.0%
738
1,828
417
108
3.,089
23.9%
59.2%
13.5%
3.4%
100.0%
9,955
33,528
6,245
1,227
50,955
19.5%
65.8%
12.3%
2.4%
100.0%
Italy
United States
Europe
Other Countries
Total
4,506
6,189
1,364
350
12,409
TWO-YEAR PERIOD 2008-2010**
36.3%
2,734
32.8%
2,669
49.9%
4,409
52.9%
5,787
11.0%
964
11.5%
1,597
2.8%
234
2.8%
381
100.0%
8,341
100.0%
10 ,434
25.6%
55.5%
15.3%
3.6%
100.0%
26,204
78,486
15,444
3,510
123,644
21.2%
63.5%
12.5%
2.8%
100.0%
* The satellite networks that have been considered are Fox, Mgm, Rai Sat, Season, Sky Cinema and Studio Universal as regards 2008; the same networks with the
exception of Studio Universal as regards 2009; Fox, Mgm and Sky Cinema for 2010. In 2008, Italian film corresponded to 44.0% of Rai Sat schedule; in 2009,
instead, 42.6% as regards films (333 out of 782) and 34.5% in terms of runs (833 out of 2,389). Su Rai Sat nel 2008 il film italiano aveva coperto il 44,0%
della programmazione; nel 2009 invece il 42,6% per titoli (333 su 782) e il 34,5% in termini di passaggi (833 su 2.389). Sky Cinema schedule has always been
predominant: it was equal to 52.8% in 2008, 57.9% in 2009 and 77.6% in 2010 for the number of films and, respectively, to 72.8%, 84.9% and 88.8% as
regards the runs.
** The total amount of runs on generalist networks in the three-year period has been estimated according to data available for the two-year period 2009-2010
According to data contained in the Report Italian cinema in numbers (calendar years 2008-2010) by Ufficio Studi/Ced Anica.
that part (not less than 20%) of those investments – 3% of the total proceeds – must be
granted to Italian films and other two amounts equal to 4% and 5% (that is, 6.0% and 7.5% of
the original 20%) must be granted to Italian or European documentaries and animation
products for children. Moreover, Rai has to reserve a minimum share of its schedule
corresponding to 20% of the total broadcasting to the European works of the last five years,
included films defined as “original Italian films, wherever they have been made”39.
Subject of comparison. According to experiences of the different European countries, in
respect of these regulations, frequent problems arise among the different counterparties
– mostly concerning the calculation parameters of proceeds and amounts to dedicate to
investments (originally more favourable for cinema) – and also within the same category
| 57
TABLE 17
ITALIAN UNIQUE TITLES OF 2000S ON TV
Last six years*
RAI
MEDIASET
LA7
TOTAL
SHARE**
2006 (2000-2006)
2007 (2000-2006)
2008 (2000-2008)
2009 (2000-2008)
2010 (2000-2010)
Totale (2000-2010)
3
50
60
65
85
298
77
82
96
88
135
478
1
2
4
1
1
9
116
134
160
154
221
785
9,14%
10,66%
12,18%
11,64%
15,65%
14,45%
* Time intervals indicated in parentheses show the overall period for the production of Italian unique titles broadcast over several years.
** The share corresponds to the incidence of Italian unique titles produced after 2000 in the TV schedules of all films produced by national
cinema.
According to data contained in the Report Italian cinema in numbers (calendar years 2006-2010) by Ufficio Studi/Ced Anica.
TABLE 18
ITALIAN UNIQUE TITLES IN PRIME AND SECOND TIME IN 2011
Programmazione 2011*
2011 (2000-2004)
2011 (2005-2011)
Totale (2000-2011)
RAI
MEDIASET
LA7
SKY
FOX
TOTAL
SHARE**
5
21
26
20
31
51
1
2
3
15
91
106
5
1
6
46
146
192
9,48%
19,26%
15,44%
* Time intervals indicated in parentheses show the overall period for the production of Italian unique titles broadcast during 2011.
** The share corresponds to the incidence of Italian unique titles produced after 2000 in the TV schedules of all films produced by national
cinema.
According to data contained in the Report Italian cinema in numbers – Year 2011, by Ufficio Studi/Ced Anica in collaboration with the
General Directorate for Cinema of MiBac (Rome, 2011).
of operators, like the broadcasters one, where networks operating in different modes are
active, that is, satellite TV encoding, or on platforms that have not been considered initially,
like internet40.
Also in Italy, in the most recent seasons, Anica and Apt (Association of Television Producers)
confronted with Rai, Mediaset and Sky in order to verify some aspects of these relations. For
instance, in its particular international-integration structure, Sky tends to follow its own
management model that foresees the stipulation of commitment contracts with the
associative representations of producers following predetermined “escalators”. Defined as
“Methodology and proposal for Sky investments in Italian films”, the agreement basically sets
a sort of automatic list for the estimate of titles to be chosen41.
The value of regulations. In order to express the economic value of these investments it is
possible to notice that, considering data of 2011 provided by Agcom (the Communication
Regulatory Authority), in the case of Rai, 15% of the total revenues destined to all national
and European audiovisual sector correspond to about 387 million Euros, 77.5 of which are
only for the Italian films. In the case of Sky, instead, the amount corresponds to 394 and 79
million Euro, respectively, after an agreement was signed by the network of the News
Corporation owned by Rupert Murdoch and the entrepreneurs’ associations, which seems
58 |
to be based on a total investment commitment in the Italian cinema for about 40 million
Euros per year.
As for Mediaset and Telecom Italia (a group that includes La7 through Telecom Italia Media)
a similar equivalence corresponds to 415 and 83 million Euros for the first one, and to 24 and
4.8 million Euros for the second one. As everybody knows, Rai and Mediaset also operate
directly with their own structures that abundantly “cover” the gaps and limits open to external
producers with European and national regulations42.
THE PRODUCT PLACEMENT
Another item of the income that technically pertains to the category of proceeds but refers in
toto to the investment capital, in the mix of the private resources used, is the product
placement, that is, the introduction of quotes or images of products and brands within a film
in exchange for advertisement proceeds or equipment and services supply – according to the
barter formula – that allows to cut certain production costs43.
Together with the recourse to tax credit from companies which intend to take part in the
financing of a work also as external investors, the product tie-in proves to be nearly
propaedeutical for the realization of the project. In fact, the basis are laid down in the stage
of the scriptwriting, and the formalization of the possible agreement takes place even before
the start of the filming, with the signing of the contract and the contextual payment of the
40
Observations on the development of the secondary rights discipline and on the new contract procedure
of Rai-Radiotelevisione Italiana S.p.a., introduced by Apt-Association of Television Producers to Agcom
– Authority for Communications Guarantees, which guarantees the competition and the market, within
the survey on the audiovisual sector IC41 (confidential document by Studio Associato R&P Legal;
Rome, July 2011).
41
Approximately, it should be remembered that the two-year agreement signed on 21st July 2004 committed Sky to acquire not more than 60 films which could reach at least a 25 thousand people audiences
in the cinemas (on average, 50% of the films projected, that in terms of box office, is equal to 98% of
the overall receipts) with two protection clauses: decrease in the number of Sky subscribers under
2.2 million or the entry of a new pay-TV operator in the territory. Among the different clauses as regards
the pay option (duration of the 13-month license; pay window opened 10 months before the first projection in the cinemas or 6 months after the release on DVD; right to 120 exhibition days) there was a
minimum compensation in case of purchase option corresponding to 200 thousand Euros (related to
60 films, the initial budget was then equal to 12 million Euros). The succeeding agreement, with a 18month validity, starting from 21st January 2007, referred (for the first year) to 70 films that could gather
at least 20 thousand people in the cinemas and 35 for the remaining six months, and set the maximum
investment at 52.5 million Euros, with a minimum compensation for the purchase of each film set at
250 thousand Euros.
42
Annual Report 2011 on the carried out activity and work programmes of Agcom (Rome, 2012).
43
A detailed analysis of the types and promotional value of the product placement can be noticed in the
previous edition “Report 2010. The film market and industry in Italy”, Edizioni Fondazione Ente dello
Spettacolo, Rome 2011, pp. 42-46.
| 59
TABLE 19
DISTRIBUTION OF THE SINGLE FUND FOR ENTERTAINMENT BY SECTORS
Contributions 2008
Euros Share
Contributions 2009*
Euros Share Trend
90,986,122 19.3%
93,746,497
215,488,448 45.7%
223,078,844
84,256,409 17.9%
63,208,292 13.4%
Contributions 2010*
Euros Share
Trend
CINEMATOGRAPHIC ACTIVITIES
20.5% +3.2% 75,795,008 18.5% -19.1%
Contributions 2011*
Euros Share
Trend
75,815,460
17.9% +0.02%
LYRIC-SYMPHONIC FOUNDATIONS
48.8% -17.3% 190,394,812 47.5% -14.6% 206,576,700
48.9% +8.49%
67,126,333
THEATRES
14.7% -20.3% 60,971,569
16.3%
-9.2%
65,992,059
15.6% +8.23%
56,687,062
CLASSICAL MUSIC
12.4% -11.5% 55,168,419 13.8%
-2.7%
7,473,010
13.6% +4.17%
9,586,772
2.0%
9,281,735
DANCE ACTIVITIES
2.1% -3.3% 9,984,719
2.2%
-2.1%
9,986,445
2.4% +0.02%
6,945,999
1.5%
5,995,905
CIRCUSES AND TRAVELLING SHOWS
1.3% -13.6% 6,252,883
1.5% +4.2%
6,277,194
1.5% +0.39%
867,045
0.2%
OSSERVATORIO DELLO SPETTACOLO – EOMMITTEES AND COMMISSIONS
1,091,717
0.2% +25.9%
399,600
0.2% -63.4%
499,132
0.1% +24.90%
471,339,085
100%
457,008,093
TOTAL FINANCINGS
100% -3.0% 398,067,013 100%
-12.9% 422,620,000
100% +6.16%
* Contributions of 2009, 2010 e 2011 include the special integrations made during the year (equal to 60.0, 10.94 and 15.0 million Euros, respectively)
to the original contributions, set at 397.00 million Euros for 2009, 398.06 million Euros for 2010 and 407.61million Euros for 2011.
Source: Report on the use of the Single Fund for Entertainment – Year 2010 (MiBac, Rome 2011) by Osservatorio dello Spettacolo
according to data provided by MiBac
first tranche. The payment will be finally paid off at the moment of the first release, even
though an intermediate instalment is frequent, when editing has been completed44.
It is in six films out of ten. The last market results show its further increase in the circulation,
as it involves almost 60% of Italian films compared to the 48% of 2010 – but a film can contain
several promotional insertions – with contributions between 5 thousand Euros and a
maximum of 300 thousand Euros (except some exceptional case with lower or higher
amounts, up to 500 thousand Euros), for a total contribution of about 36 million Euros, 16 of
which in barter deal regime45.
7. The Public Purse
The public purse plays a fundamental role both in the worldwide cinematographies and in the
Italian one. It is basically made up of three subjects – the State, the territorial administrations
like Regions and Municipalities, and the European Union – but it represents a decisive factor at
all levels46. In fact, while supporting the financial balance of the entertainment sectors, t
guarantees their fundamental social and cultural role, thus representing a vital contribution for
60 |
the development policy for the society and the economy of each Country and its territories47.
It is right in these raisons d’être that the intervention of the public purse through FUS-the single
fund for entertainment (Table 19) has undergone, since the early 2000s, a sensible development.
This is both for the technological transformation that involved the cultural and entertainment
offer, the media and the markets’ structure itself, and for the real needs imposed by the financial
involution that has recently stopped the economic growth in many Western Countries, also
affecting the balance sheet of the resources which are generally used for incentive systems and
in particular, within the tertiary sector activities, those destined for personal services.
As for FUS, there is an ongoing nominal contraction since 2003, when 517.93 million Euros were
allocated (588.67 million Euros for the values of 2010 and 254.24 for those of 1985) and, in terms
of real monetary values, since 1987 (Table 20). In fact, the influence on GNP – the Gross National
Product of the Country – it seems to be decreasing since 1986: halved during the first 15 years
(from 0.087% to 0.042%) and reaching a value of less than one-third, this share, decreased up to
0.026%, sets at one of the lowest levels reached for expenditures in cultural heritage and activities
in all other European countries48.
44
The payment schedule is suitable for the administrative management of production companies, as it gives
the opportunity to charge the relative values to the period of two financial years, according to the real period
of the films making. Film releases are usually scheduled for the year after the project and filming started.
45
Data are drawn from the reports of PG Media, Propaganda Gem, ArmosiA Italia, StageUp-Osservatorio of
Pavia and from the balance sheets of the production companies dealing with paid product placement operations.
46
The whole national, Community and international Law shows the priority of the support to cultural, artistic
and information activities, as a guarantee of the identity values and the intellectual and cultural heritage of
citizens of every country, mostly considering market structures that, in some sectors, affect their protection.
The principle is stated in the first chapter “Basic Principles (Art. 9) of the Constitution of the Italian Republic”
(Rome, 1st January 1948) and in Article 27 of the “Universal Declaration of Human Rights”, voted by the General Assembly of the United Nations on 10th December 1948 in New York, as well as in the “Convention for
the Protection of Human Rights and Fundamental Freedoms” signed on 4th November 1950 in Rome by the
14 States member of the Council of Europe, then adopted by States that joined the European Community
in the following years.
47
According to Baumol’s Law – also known as the Baumol’s disease, from the name of NY economist Wiliam
J. Baumol who, together with his colleague William G. Bowen explained the value of public interventions in
1965 (following the theories of John Maynard Keynes) – there are fundamental activities like the art and
craft activities that often suffer the penalizing effects in the market evolution caused by the technologically
progressive sectors (which can bring innovations, capital accumulation, high productivity and large-scale
processes) and that are not supported as they are considered “low-productivity activities”. According to the
same experts, cinema also falls within the sectors considered static or stagnant, but with potentialities that
make it similar to more progressive activities which can contribute to the economic growth of the country.
Cf. William J. Baumol and William G. Bowen, On the Performing Arts: The Anatomy of Their Economic
Problems, in «The American Economics Review», vol. 55, March 1965).
48
The Fus Law – no. 163 of 30th April 1985 – actually provided for the three-year indexation of its financial endowment.
| 61
TABLE 20
DOWNTURNS OF FUS IN NOMINAL AND REAL VALUES
Fus for entertainment CURRENT
in millions of Euros
EUROS
Annual CONSTANT €
variation
2011
Annual CONSTANT €
variation
1985
Real
devaluation
Incidence
on GNP
at constant € 1985
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2011 SU 1985
357.48
414.51
443.87
464.03
428.59
459.43
436.29
477.13
460.63
460.58
439.02
471.82
461.89
477.67
494.31
499.36
530.34
499.82
517.93
499.39
464.49
427.30
441.29
471.33
457.00*
409.70*
407.10
-
357.48
390.78
399.88
398.82
345.08
348.64
311.14
323.10
299.10
287.74
260.33
269.28
259.12
263.14
268.17
264.15
273.22
251.39
254.24
240.36
219.82
198.26
201.29
208.27
200.43
176.94
-5.7%
-9.9%
-14.1%
-19.5%
-24.1%
-28.7%
-32.3%
-35.1%
-37.5%
-40.7%
-42.9%
-43.9%
-44.9%
-45.7%
-47.1%
-48.5%
-49.7%
-50.9%
-51.9%
52.7%
53.6%
-54.4%
-55.8%
-56.1%
-56.8%
0.083%
0.087%
0.085%
0.080%
0.068%
0.066%
0.057%
0.059%
0.056%
0.052%
0.046%
0.047%
0.044%
0.044%
0.044%
0.042%
0.042%
0.039%
0.039%
0.036%
0.032%
0.029%
0.029%
0.030%
0.029%
0.026%
PERCENTAGE VARIATIONS OF THE ENTIRE PERIOD
-14,60%
-50,81%
-
-50,5%
-68,67%
+15.98%
+7.06%
+4.54%
-7.64%
+7.20%
-5.04%
+9.36%
-3.46%
-0.01%
-4.68%
+7.47%
-2.10%
+3.42%
+3.48%
+1.02%
+6.29%
-5.75%
+3.62%
-3.58%
-6.99%
-8.01%
+3.27%
+6.81%
-3.04%
-10.35%
-0.64%
827.74
904.62
925.95
922.30
799.06
807.31
720.44
747.47
692.51
666.22
602.77
623.51
599.99
609.50
620.95
611.61
632.64
582.04
588.67
556.52
508.98
459.04
466.09
482.21
464.06
409.70
407.10
+9.28%
+2.35%
-0.39%
-13.36%
+1.03%
-10.76%
+3.75%
-7.35%
-3.79%
-9.52%
+3.44%
-3.77%
+1.58%
+1.87%
-1.50%
+3.43%
-0.79%
+1.13%
-5.46%
-8.54%
-9.74%
+1.53%
+3.45%
-3.76%
-11.71%
-0.64%
Contributions of 2009, 2010 e 2011 include the special integrations made during the year (equal to 60.0, 10.94 and 15.0 million Euros,
respectively) to the original contributions, set at 397.00 million Euros for 2009, 398.06 million Euros for 2010 and 407.61million Euros
for 2011.
Table based on data provided by MiBac and Osservatorio dello Spettacolo, included in the editions 1985-2010 of the Report on the use
of the Single Fund for Entertainment, and on data provided by ISTAT, the National Institute of Statistics, related to the Prices index
for the monetary revaluations and to the National index of consumer prices for families of workers and employees (FOI).
49
62 |
Direct evidences of the critical aspects of surveys on the public financing have been shown by many authors
of different analyses. For instance, in Gli investimenti pubblici nell’industria culturale e delle telecomunicazioni, XIII Iem Report, by Flavia Barca, Andrea Marzulli, Luca Murrau, Lorenzo Principali and Bruno Zambardino, by Iem-Institute for Media Economics of Rosselli Foundation (particularly in the considerations of
Carla Brodo, pp. 306-308), Rome, 25th January 2011; La cultura serve al presente. Creatività e conoscenza
per il benessere sociale e il futuro del Paese - Rapporto annuale, by Roberto Grossi, President of Federculture (his intervention is included in the introduction of the Annual Report 2010 to the General Assembly of
Which rating is to be adopted. The settlement procedure involves all the sector of the cultural
heritage and entertainment, but in the last context the most important is cinema which is, at the
same time, object and subject of the change. It being an analysis of the production factors and
the economy of the sector, therefore related to the structure of the resources which feed the
different areas and to the flows going through them, the assessment of investments – in particular
the public ones – is mostly based on the homogeneous and precise representation of the
considered values. However, the differences between the methods for the gathering and analysis
of data, as well as of the survey’s area of activities, and most of all, a wide range of titles and
chapters of their classification between macro and micro (by territorial contexts, composition and
typology levels of “social objects”) both by administrations and authorities of the different
institutional systems, and by subjects that statistically monitor and observe their realities,
represent problems that are almost always prejudicial to the elaboration of an exhaustive picture49.
Homogeneous coordinates. Concepts like culture, entertainment, leisure (but often like
communication, digital or creative contents as well) lend themselves to hundreds interpretations
with thousand nuances, which do not imply certainty and reliability of the verification of the
considered stakes. In response to an objective of information and definition of values like
dimensions, nature and value of national cinema’s structure, they chose to take the homogeneity
of financial uses and the employments of instruments used to realize them, by diachronically
comparing (that is, in their temporal progressions and modifications) funds for the development
of cinematographic activities in relation to origin, destination and intended purpose, with more
homogeneous resources, like the devolutions to companies and a more general level – always
according to the different territorial range – the budget of the public expenditure and the
development of GNP, the gross national product.
THE SINGLE FUND FOR ENTERTAINMENT
FUS, managed by MiBac and main intervention instrument at a central level, is the fundamental
financial point of reference of the macro sector of entertainment, it has been the fulcrum of Italian
cinema economy in the last 25 years and it is still developing. During the last years, the flow of
state contributions was affected, in fact, by the gradual erosion of the endowment and by another
problem (as broadly reconstructed in the previous edition of this Report): the growing instability
of the real granting of the scheduled contributions (Table 21).
Ferculture, Rome, 24th March 2011); Finanziamenti pubblici alla cultura: meno ma meglio, by Anna M. Alessandra Merlo in «Culture Economics» (no. 1, 2001, il Mulino). Further references can be found in Il sistema
economico integrato dei beni culturali, a report drawn by Guglielmo Tagliacarne Institute for Unioncamere
(160 pages, Rome, June 2009) and in Confindustria’s study La valorizzazione della cultura tra stati e mercato.
Assetto economico e giuridico, imprese e istituzioni del mercato delle attività culturali in Italia by Paolo De
Luca, Simona Dotti and Giuseppe Mele of Area Impresa e Territorio of Confindustria, with the contribution,
for Confcultura, of Patrizia Asproni and Gaetano Mercadante (Editore Sipi, Rome 2009).
| 63
TABLE 21
EROSION OF FUS FOR CINEMA IN NOMINAL AND REAL VALUES
Fus for cinema
CURRENT
in millions of Euros *
EUROS
Annual CONSTANT €
variation
2011
Annual CONSTANT €
variation
1985
Annual Real annual
variation devaluation
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
+14.22%
+6.21%
+5.06%
-28.30%
+8.84%
-8.34%
+9.41%
-3.23%
-0.59%
-2.86%
+2.47%
-0.81%
+2.37%
+3.13%
+1.02%
+4.73%
-43.91%
+67.84%
-3.10%
-7.50%
-6.69%
+1.92%
+14.54%
+3.03%
-19.14%
+0.02%
+29.05%
+1.53%
+0.10%
-79.34%
+5.27%
-13.86%
+3.80%
-7.14%
-2.93%
-7.80%
-1.36%
-0.89%
+0.55%
+1.63%
-1.50%
+2.01%
-45.25%
+63.82%
-4.98%
-9.05%
-8.52%
+0.20%
+10.04%
+2.26%
-20.38%
+0.02%
90.87
97.72
99.89
99.57
66.74
68.98
59.01
61.26
56.77
55.11
50.67
50.10
49.70
49.98
49.16
49.95
50.95
27.92
45.74
43.42
39.46
36.07
36.20
39.87
41.11
32.60
32.60
+7.15%
+2.22%
-0.32%
-32.97%
+3.35%
-14.45%
+3.81%
-7.32%
-2.92%
-8.05%
-1.12%
-0.07%
+0.56%
-1.64%
+1.60%
+2.00%
-45.20%
+63.82%
-5.07%
-9.12%
-8.59%
+0.36%
+10.13%
+3.11%
-20.70%
0.00%
-6.41%
-9.46%
-14.02%
-19.61%
-22.56%
-28.75%
-32.40%
-35.26%
-37.53%
-35.02%
-42.99%
-43.86%
-44.85%
-47.45%
-47.15%
-48.53%
-49.71%
-50.91%
-51.91%
-52.75%
-53.71%
-55.47%
-56.17%
-56.14%
-56.98%
-56.96%
PERCENTAGE VARIATIONS FOR THE ENTIRE PERIOD
-16.58%
-56.80%
-
-64.12%
-64.12%
at constant euros
2011 SU 1985
90.87
103.78
110.23
115.81
83.03
90.37
82.83
90.63
87.70
88.22
85.69
87.81
88.53
90.63
93.56
94.52
99.00
55.52
93.19
90.30
83.52
77.93
79.43
90.98
93.74 **
75.79
75.81
175.49
226.48
229.95
230.18
150.84
158.79
136.77
141.98
131.84
127.61
117.65
116.04
115.00
115.64
117.53
115.76
118.09
64.65
105.91
100.63
91.52
83.72
83.89
93.08
95.19
75.79
75.81
Endowment of FUS for Cinema include any annual integrations allocated. Extra Fus funds are, instead, excluded from the amount (5 and
8 x 1000, Lotto, Arcus), and are assigned to the sector from time to time.
** The endowment of 2009 includes the special integration allocated during the year (equal to 24.0 million EUros) to the original amount,
set at 69.74 million Euros.
Table based on data provided by MiBac and Osservatorio dello Spettacolo, included in the editions 2003-2010 of the Report on the use
of the Single Fund for Entertainment, and on data provided by ISTAT, the National Institute of Statistics, related to the Prices index
for the monetary revaluations and to the National index of consumer prices for families of workers and employees (FOI).(Foi).
If cinema is cut off. It should be remembered that cinema is (paradoxically, as it is the main
sector of the whole entertainment) the only sector that suffered deep contribution cuts, and
the results affected the other activities thus favouring, first of all, the lyrical-symphonic
50
64 |
Law no. 55 of 29th December 1988.
foundations which showed a chronic and deep deficit. A first, drastic cut dates back to 1988,
when the responsibility of the partition of FUS financial endowment was assigned to MiBac
by the Government. Compared to an original partition that, according to FUS regulations,
granted cinema 25% of the available resources, this partition decreased up to 19.5%, and
after further contractions, settlements and fluctuations, decreased to under 18% in 2011
(Table 22)50. If, on the one hand, certain contractions seem to be already settled, on the other
hand the progressive nature of the process makes us think that the progressive downward
trend has not finished yet. The perception of the resources decrease is even more marked
if from the comparison between the total values we move, from one year to the next, to a
more detailed analysis of the ranges of real contribution paid to the beneficiary subjects
(Table 23).
More and more “pressing” ranges. Besides the decrease in the number of beneficiaries,
mostly the incipient concentration in the minimum ranges of contribution can be noticed:
up to 5 thousand Euros all contributions corresponded to 53.8% of the total number in 2008,
but then rose up to 65.4% in 2009 and to 78.2% in 2010, thus collecting the 2.5%, then 3.7%
and finally 4.6%, respectively, of the total availability, with a drop from 3,073.2 Euros to
2,881.2 Euros and then 2,854.9 Euros during the third year. In particular, 69 contributions,
in 2010, did not exceed the minimum threshold and, among these ones, the unimportant
threshold of 292 thousand Euros was only reached by the art cinema Aurora, while the higher
ones oscillate between 331 thousand Euros and 860 thousand Euros given to Warner Bros
and DueA Film as rewards for their receipts. It can also be noticed how 95.6% of the subjects
lies within the maximum range of 100 thousand-euro incentive, but only absorbing 14.6% of
the total endowment, while the 46 beneficiaries – corresponding to 4.0% of the total – of
funds between 100 thousand and 1 million Euros absorbed the 22.8%.
The influence of the great beneficiaries. However, the last three beneficiaries of funds
higher than 2 million Euros, even though equal to a little less than 0.3% of all accesses to
reductions, drained 53.8% of the total funds budget. They are the institutional organizations
Biennale di Venezia, Fondazione Centro Sperimentale di Cinematografia and Cinecittà Luce
which, in different ways, obtained more than the share given to interventions higher than 5
million Euros – 20.5 million according to Table 23 – in accordance with the financing of some
initiatives in the category of the special projects (then other special supports are classified,
like those deriving from Lotto). Biennale di Venezia, which is eligible for 1% of Fus funds for
cinema, music, dance and theatre sectors, is given, apart from a 6.8 million-euro
contribution, another aid of 640 thousand Euros; Cinecittà Luce is given 12.2 million Euros
and another contribution of 999.6 thousand Euros. Given the strong influence of the two
highest contribution ranges, the average amount of the sector is equal to 47,707 Euros, with
a decrease of 20.5% compared to 51,178 Euros of 2009. If we take off these “anomalous”
amounts from the budget, the average amount decreases to 17,911 Euros: however, under
this level we can find 1018 of the remaining 1145 allocations. If the statistical surveys of
| 65
Osservatorio dello Spettacolo also included the indirect contributions paid with extra-Fus
funds – mainly concentrated in the two last ranges – an average amount of 65,996.0 Euros
could be obtained (Table 27) and the distance between the top and the last ranges of the
ranking could become enormous.
Many cash holdings yet. The management of Fus, however, suffers some particular
handicaps. One is given by the share of commitments undertaken compared to competence
amounts and by the real effectiveness of payments, according to the available allocations,
where also the budgetary residuals flow in from past amounts that have not been paid yet.
During the last years, the management of Fus for the different sectors seems decidedly
improved and commitments in general now correspond to 98.42% of the competence
allocations, while payments have risen up to 95.72% of cash availabilities. However, cinema
still suffers great difficulties: as regards the first report, its index is equal to 94.61% and, as
for the second, to 85.24%. As a consequence, the remaining funds resulting from the amounts
committed but not paid yet, acknowledged by cinematographic activities in 2010, correspond
to 72.44% - 15.6 million Euros out of the total 21.5 million – of the residual amounts of the
whole Fus (Table 24).
And the three expenditure forecasts including all the main forms of aid, that is, contributions
to production, the production Fund, distribution, technical companies and incentives to
promotional activities are unpaid51.
With these difficulties, given the uncertainty of contributions to rely on when planning
investments, the same role of concessions is at risk.
Which weights and measures. A fundamental question, controversial and unsolved, is the
analysis of the different sectors of entertainment in the proportional partition of the resources
considering the activities carried out and their economic impact, also given the corresponding
requirements of financial compatibilities, in the picture of the general issues concerning the
balanced development of the cultural and artistic supply in the Country (Table 25).
As shown by the annual report of MiBac on the use of Fus, cinema is the only sector of
entertainment that only receives a limited part of non recoverable grants and mainly interestrate subsidies that must be refunded, unlike other sectors supported by state capital grants.
What can be produced with one thousand Euros. Applied to other areas of intervention of
Fus, the same analysis criteria would sometimes give upsetting results in many activities.
Besides the already substantial private funds, or funds of public administrations and
51
66 |
Two “incidental” circumstances should be remembered, pointed out by the Court of Auditors in the reports
for the vigilance purposes: cash holdings create budgetary residuals; moreover, they are not even available
to MiBac, as they fall within the so-called special accounts administered by MiSe (the Economic Development Ministry), only for their real allocation, when the Entertainment Ministry arranges for it.
TABLE 22
FROM THE FIRST TO THE LAST PARTITION OF FUS
Shares by sectors
CINEMA
LYRICAL FOUNDATIONS
THEATRES
MUSIC AND DANCE **
CIRCUS ACTIVITIES
MANAGEMENT COSTS
TOTAL OF THE SECTOR
First Fus - 1985
New regulations1988
25.0%
42.0%
15.0%
13.0%
1.5%
3.5%
100.0%
19.0%
47.8%
16.0%
14.0%
1.5%
1.7%
100.0%
Fus shares 2011 Values of 2011 in (Euros)
17.9%
48.9%
15.6%
16.0%
1.5%
0.1%
100.0%
75,815,460
206,576,700
65,992,059
67,459,455
6,277,194
489,132
422,610,000 *
* The total amount of Fus – 2011 corresponds to 422.6 million Euros, compared to a former endowment of 407.61 million Euros, as it
includes a 15-million integration for lyrical-symphonic foundations provided by Law no. 10 of February 26, 2011, which also provides for
a further extra-Fus contribution of 6 million Euros..
** Financial endowments for music and dance activities were formally hived off after the approval of Law no. 55 of December 29, 1988,
which assigned MiBac the partition of Fus resources among the different sectors; 2011 allocations show, for instance, contributions equal to
57,473,010 Euros (corresponding to 13.6% of the total) and 9,986,445 Euros (corresponding to 2.4%), respectively.
TABLE 23
HOW FUNDS FOR CINEMA ARE DISTRIBUTED
Contribution ranges (in Euros)
granted in 2010
Up to 5,000 euro
From 5,000 to 10,000
From 10,000 to 30,000
From 30,000 to 60,000
From 60 mila to 100,000
From 100,000 to 200,000
From 200,000 to 300,000
From 300,000 to 500,000
From 500,000 to 1 million
From 1 a 2 million
From 2 a 5 million
More than 5 million Euros
TOTAL OF THE SECTOR *
CONTRIBUTIONS OF 2010
Number
Share
898
66
79
33
23
26
7
6
7
0
1
3
1,149
78.2%
5.7%
6.9%
2.9%
2.0%
2.3%
0.6%
0.5%
0.6%
0.0%
0.1%
0.3%
100.0%
TOTAL FOR EACH RANGE
Thousands of Euros
2,563.6
540.2
1,554.4
1,511.5
1,856.2
3,824.9
1,840.0
2,466.2
4,350.8
0.0
4,800.0
29,500.0
54,808.3
Share
AVERAGE AMOUNT
PER CONTRIBUTION
4.6%
1.0%
2.8%
2.7%
3.4%
7.0%
3.4%
4.5%
8.0%
0.0%
8.8%
53.8%
100.0%
2,854.9
8,148.8
19,676.5
45,895.1
80,704.4
147,113.5
262,857.0
411,044.8
632,569.1
0.0
4,800,000.0
6,833,333.3
47,707.8
* This Table only refers to the direct contributions granted within Fus funds; therefore, the total of the amounts is lower than the grand total,
which corresponds to 75,795,008 reported in other Tables.
Source: Report on the use of the Single Fund for Entertainment – Year 2009, by Osservatorio dello Spettacolo of MiBac according to
data provided by the General Directorate for Cinema of MiBac (Rome, 2011).
territorial institutions, for instance, lyrical activities receive a 100 thousand-euro state
contribution for a performance – with receipts that cover less than half incentives themselves
– and classical music receives almost 50 thousand Euros to set up a concert (Table 26)
After cinema, which offers 33.7 films per one thousand Euros of Fus support, only the circus
and travelling shows sector stands out, as it can produce almost eight events every 1000
Euros of Fus support. In terms of audience attendance and economic returns then, theatre
and dance show good results, even though at a certain distance from cinema which, moreover,
boasts an additional diffusion outside cinemas that cannot be compared to the diffusion of
other forms of live entertainment.
| 67
TABLE 24
RESIDUAL AMOUNTS OF FUS IN THE STATE TREASURY
Amounts of 2010 (expressed
in Euros) by sector
Cinema
Production
Fund P-D-E-IE*
Promotion
Opera
Theatre
Music
Dance
Circuses
Osservatorio
Fus Committees
FUS TOTAL
COMPETENCE
ALLOCATIONS
75,799,807.2
30,999,999.0
4,296,008.2
40,503,800.0
190,394,812.9
17,963,189.5
55,479,025.4
9,515,710.4
6,281,597.0
279,705.9
123,061.4
355,835,609.9
CONTRIBUTION
CASH
COMMITMENTS APPROPRIATIONS
71,717,525.2
26,920,000.0
4,293,725.2
40,503,800.0
190,394,612.4
17,963,189.5
55,478,924.5
9,500,976.1
4,771,255.0
273,760.0
119,766.8
350,220,009.8
78,261,744.0
4,437,945.0
32,319,999.0
41,503,800.0
190,394,812.9
31,367,571.5
55,251,945.5
10,513,889.4
6,281,597.0
762,345.9
185,143.4
373,019,049.9
PAYMENTS
MADE
RESIDUAL
AMOUNTS
66,716,595.8
4,436,850.5
28,910,000.0
33,369,745.3
190,359,612.4
29,592,856.7
55,210,405.5
9,532,266.1
4,937,352.6
611,527.2
102,692.5
357,063,309.1
15,627,355.4
4,081,093.5
3,412,207.2
8,134,054.7
40,401.0
1,774,714.8
41,640.9
996,357.6
2,854,586.4
156,764.6
85,745.5
21,571,340.9
Source: Report on the use of the Single Fund for Entertainment – Year 2010, by Osservatorio dello Spettacolo of MiBac (Rome, 2011)
according to Sicoge data.
TABLE 25
RELATION BETWEEN FUS CONTRIBUTIONS AND SECTORS’ ACTIVITIES
CONTRIBUTIONS ALLOCATED IN 2010
SHOWS IN 2010 *
Amounts expressed Share **
Thousands
Share
in Euros
ENTRANCES IN 2010 *
Millions
Share
75,795,008
18.5%
2,558.48
94.33%
120.58
190,394,812
47.5%
60,971,569
16.3%
81.33
55,168,419
13.8%
9,084,719
2.2%
6,252,883
1.5%
398,067,010
100.0%
BOX-OFFICE RECEIPTS *
Millions
Share
83.7%
772.77
67.23%
LYRICAL-SYMPHONIC FOUNDATIONS
3.10
0.11%
2.06
1.4%
94.23
8.19%
THEATRES
2.98%
14.60
10.2%
192.66
16.77%
13.47
CLASSICAL MUSIC
0.49%
3.30
2.3%
43.47
3.79%
6.76
DANCE ACTIVITIES
0.29%
2.05
1.4%
33.06
2.88%
CIRCUSES AND TRAVELLING SHOWS
49.01
1.80%
1.40
1.0%
13.12
1.14%
TOTAL FINANCING **
2,712.17
100%
143.99
100%
1,149.31
100%
* Data related to shows, entrances and receipts within the year only refer to pay events, excluding the free ones. Just for temporal
homogeneousness, along with Fus funds also results related to the same year (2010) have been reported.
** The amount of 399.6 thousand Euros (equal to 0.2%) related to management costs of Fus itself incurred by MiBac are added to the
amounts related to the assignments of the single sectors.
Table: Report on the use of the Single Fund for Entertainment – Year 2010, by Osservatorio dello Spettacolo of MiBac (Rome, 2011)
and Entertainment yearbook 2010 by Siae, the Italian Society of Authors and Publishers (Rome 2011).
Why stability is necessary. The issue of the resources’ stability, strictly connected to the gradual
erosion of the endowment, arises again under another aspect. Contrary to the common belief, public
contribution is not an independent variable. As a primary condition, public incentives meet the
68 |
TABLE 26
ESTIMATE OF THE ECONOMIC IMPACT OF FUS FUNDS
Sectors in Fus area and
receipts expressed in Euros
Cinema
Opera
Theatre
Music
Dance
Circus**
Fus sectors
Thousands
of Euros
75,795.0
190,394.8
60,771.5
55,168.4
9,984.7
6,252.8
ACTIVITY GENERATED THANKS TO CONTRIBUTIONS OF 1.000 EUROS
Number of shows * Entrance tickets * Receipts expressed in Euros*
33.75
0.01
1.33
0.24
0.67
7.83
MEDIA DEI SETTORI D’ATTIVITÀ
398,067.0***
6.81
1,590.90
10.83
240.32
59.97
206.28
212.08
10,195.55
494.93
3,170.36
78.07
3,311.45
2,099.66
361.72
2,887.25
* Data related to shows, entrance tickets and receipts within the year only refers to pay events, excluding the free ones. Just for temporal
homogeneousness, along with Fus funds also results related to the same year (2010) have been reported
** Data related to “circus” also include values referring to the activities of the so-called travelling shows.
*** The amount of 399.6 thousand Euros (equal to 0.2%) related to management costs of Fus itself incurred by MiBac are added to the
amounts of the assignments of the single sectors.
Table: Report on the use of the Single Fund for Entertainment – Year 2010, by Osservatorio dello Spettacolo of MiBac (Rome, 2011)
and Entertainment yearbook 2010 by Siae, the Italian Society of Authors and Publishers (Rome 2011).
economic law of additionality, that is, the critical criterion according to which the availability of a
certain resource is only justified if its use can really modify the starting situation or start a new
process that would have never started otherwise. Therefore, relevant increases or decreases,
according to what the experience of the national cinema shows, can have distorting effects, and the
functionality automatically decays52. The production sector would have been dangerously facing this
eventuality (as indicated in Tables 9, 10 and 11) if the tax handle with tax credit and tax shelter had
not been introduced in the public intervention policy. It is a common belief that every action produces
three levels of effects: reaction, repercussion and interest. As regards the public intervention, the
primary reaction of the innovation has been the protection of the competitiveness margins of Italian
cinema, since the incentive systems are widespread in all countries and, in the other European
States – mostly from the major competitors like France, Great Britain, Germany and Spain, which
already provided for tax credit and tax shelter before Italy - they can rely on greater endowments.
52
This economic principle, for instance, is followed by the biggest international institutions in the allocation
of funds of competence shares (for instance, the European Union, the World Trade Organization or the
UNFCCC-United Nations Framework Convention on Climate Change, the institution for the climate change
control). Firstly elaborated by the Irish economist Francis Ysidro Edgeworth (1845-1926, who shared many
professional experiences with John Maynard Keynes), also known as “Additivity Law”, provides that the
amount of public contribution should neither rise nor decrease excessively, up to values that could compromise its usefulness. Generally speaking, all the support forms imply a fundamental tie: when their value
is demonstrated, with the achievement of the goal they aim at, their ideal level of stability is also set. That
is, the point of reference beyond, or under which an imbalance in the market or in the activity of the sectors
involved could arise: by increasing or decreasing its intensity, the risk of improving or decreasing them
raises (sometimes without remedy), thus nullifying the results achieved before.
| 69
Difficult or minor, however irreplaceable. Another reaction factor – planned in the strategy for the
reform of the intervention of the General Directorate for Cinema of MiBac – aimed to keep a
sufficient amount of resources for the production of the so-called “difficult” films, or films made
by new authors, according to the institutional purpose of Fus for cinema. Mainly addressed to
medium and high-budget projects, the access to tax concessions gives the opportunity to see a
large part of the operators’ requests gathered in it, also allowing the extension of the sphere of
activity to the area of the first and second works compared to the area of the common film53. It is a
widespread opinion that the production offer is far greater than demand, and that not more than
50 new Italian films every year manage to reach a long-lasting and widespread distribution,
practically cancelling the investments – obviously starting from the public ones – for the new minor
productions.
But even though well-grounded, these arguments overlook two fundamental features of the
cultural film offer, which are strictly connected to the production structures of the film industry:
the overall economic and entrepreneurial inclination of operators to reinvest in new productions,
and the creative potential and the artistic and technical regeneration capacity of the sector54.
The “suffering” sectors. The effect reflected by the stability of Fus for Cinema, instead, concerns
the endowment of the Fund for production, distribution and technical companies as well as the
endowment of funds supporting other activities. As a matter of facts, the introduction of the tax
handle has strengthened the production and partly the distribution sectors, but the business and
technical companies seem suffering due to the contraction of public aid. In the fragile equilibrium
of contributions sharing (Table 27), the problem of finding additional forms of support for these
sectors arises, without affecting those funds – for other activities – that represent the main support
for institutions, associations, shows and events (from export promotion to the schedule of art
cinemas, from the organization of festivals and shows to the initiatives carried out by cine-forums,
film libraries, film clubs and museums) that are fundamental for the whole sector in terms of
diffusion of the cinematographic culture and the film in itself. If the direct consequences of the
introduction of the tax handle are the challenge of the overall competitiveness of the system and
the problem of not sacrificing fundamental elements (starting from the “difficult” films) or entire
53
“Difficult films” are those experimental films or, more generally, films that are not meant for the general public and, therefore, having low commercial potentialities. “Minor films” are films produced
with limited financial resources and production budgets lower than 1 – 1.5 million Euros. Documentaries, shorts, first and second works and certain formative films that are not meant for distributive
clubs (developed, for instance, within film schools recognized by the State, like the Experimental Centre
of Cinematography).
54
The importance of these elements for the analysis of the film industry was highlighted by the researcher and consultant Fania Petrocchi in the chapter The Cinema (pp. 573-599) contained in the
Report on the culture Economics in Italy 1990-2000, by Carla Bodo and Celestino Spada, il Mulino,
Bologna 2004, page 776.
70 |
TABLE 27
FUS ACTIVITY IN 2010 OVER THE SECTORS OF CINEMA
Distribution
by sectors
FUNDS IN 2010
Amount expressed in Euros
Share
PRODUCTION
BUSINESS*
PROMOTION
AUTHORITIES * *
TOTAL SECTOR
31,559,535
2,615,250
11,980,223
29,640,000
75,795,008
41.6%
3.5%
15.8%
39.1%
100.0%
PAYMENTS
Number
Share
157
880
109
3
1,149
CONTRIBUTION AVERAGE
Amount expressed in Euros
13.7%
76.6%
9.5%
0.2%
100.0%
201,016.1
2,971.8
109,910.3
9,880,000.0
65,966,064.4
* In the business sector funds for the 849 art cinemas are included. These are included in funds for promotion in the institutional
partition of Fus.
** The amount related to authorities also includes contributions paid to the same authorities for promotional activities and special projects
(managed by the General Directorate for Cinema of MiBac and financed with extra-Fus funds).
According to data provided by Osservatorio dello Spettacolo, contained in the Report on the use of the Single Fund for Entertainment –
Year 2010, by MiBac (Rome, 2011).
TABLE 28
BENEFICIARIES OF FUS FOR CINEMA
Categories of Fus funds *
beneficiaries
Funds allocated
Number
Share
PRIVATE COMPANIES AND FIRMS
NATURAL PERSONS
AUTHORITIES AND ORGANIZATIONS
ASSOCIATIONS AND COMMITTEES
TOTAL BENEFICIARIES
NATURAL PERSONS
ASSOCIATIONS AND COMMITTEES
TOTAL BENEFICIARIES
687
16
211
235
1,149
59.8%
1.4%
18.4%
20.4%
100.0%
Amount of 2010 contribution expressed in Euros
Amount
Share
Average
25,052,971
181,897
22,100,810
7,472,632
54,808,312
BENEFICIARIES OF OTHER FUS FUNDS
398
21.5%
32,542,591
0
0.0%
0
214
11.6%
249,028,143
1,237
66.9%
45,025,972
1,849
100.0%
326,596,706
45.8%
0.3%
40.3%
13.6%
100.0%
36,467.2
11,368.5
104,743.1
31,798.4
47,700.8
10.0%
81,765.3
0.0%
0.0
76.2% 1,163,682.9
13.8%
36,399.3
100.0%
74,224.4
* Private companies and firms also include individual firms. Authorities and organizations are the foundations, public and religious bodies.
Among the Associations, there are also the committees.
Source: Report on the use of the Single Fund for Entertainment – Year 2010, by MiBac (Rome, 2011). Data processing by Osservatorio
dello Spettacolo, according to data registered by the General Directorates for Cinema and live Entertainment of MiBac itself.
areas of the sector, we can say that also a more general reconsideration of State funds for
entertainment and their openness, as regards both the use and the effectiveness of the obtained
results, took place.
Where are the projects? In the original vision, Fus had to give its resources to the so-called
unstable or fixed-term funding first of all (that is, based on the conception plans of specific
works) and only secondarily to the stable funding that, instead of supporting new initiatives, is
based on a priori funding – therefore destined to become, over the years, recurring and
continuous – to authorities, organizations or associations in the name of their institutional and
social purposes more than the actual activities carried out, which can be technically evaluated
| 71
just a posteriori55. This form of contribution – we could say, according to the company name – has
become predominant over the time and it absorbs more than 86% of Fus resources now. Only
cinema keeps on using unstable investments, with the part (almost half) of its financial contribution
assigned to natural persons, individual firms and private companies for the new, single film projects
to be carried out, and considered eligible for the contribution only after being analysed by the
examining commissions (Tables 28, 29 and 30). It can be thus understood how the tax credit for the
participation of distributors, operators or external investors to the new productions, is based on
the verification of the value of the single works to be financed, as well as their possible success on
the market.
Reference system and self-references. It is sufficient to compare the allocation criteria and the
evaluation parameters used by the different ministerial commissions when examining the funding
requests and deciding who funds must be granted to, to understand the deep gap between the
reference system applied to contribution for cinema and the basically self-referential screens
adopted for all other live shows. On the one hand, contents, quality and features of each film or
single initiatives are examined and compared in a reference context that is objective and relating
to the general scene of activities and market. On the other hand, we base on quantitative structural
references – almost always aside from a judgement on the merits – among which the main
coefficients are the management costs sic et simpliciter or production costs related to the
workforce and its consistence (within the lyrical activity, for instance, they are equal to 65% and
55
Additionality and fixed-term unstable financing are part of the basic guidelines assigned to each public support system for culture and art; they are also followed by Fus regulations (law no. 163 of 30th April 1985):
“Achieve the best territorial proximity and promote the fruition and the diffusion of entertainment activities
among the greatest number of people”.
56
Only three cases that had a great importance in the economic columns are still remembered. The first concerned the real amount of State funds granted to Fiat group over the last thirty years, but in the absence of
appropriate data this matter remains only subject to discretionary evaluations; the second refers to the
construction of Saras refinery in Sardinia in 1962, which was built with a public contribution of 40 billion
Lire and then received, in the last twenty years – thanks to the protests of Trade Unions – further 200 billion
Euros; finally, regarding the amount of the most recent contributions given to the sector of renewable energies, without any references to specific initiatives.
57
According to the Annual Report 2010, drawn by Banca d’Italia (Rome, 2011) only some general coordinates
are known: the average amount of incentives is equal to 84 thousand Euros (153 thousand only for State
contributions); more than 800 thousand subjects benefit from it; the reduction forms allocated between
2005 and 2010 involve 78 central bodies and 1004 territorial authorities, while those related only to the last
year are 866, 51 of which at a central level and 815 at a regional or municipal level; the influence of the contribution on GNP in Italy (0.4%) is lower than the European average (0.6%) and other countries (1% Denmark,
0.9% Sweden and Ireland, 0.8% France and Greece, 0.7% Germany); among the greatest countries, only
the United Kingdom shows a lower contribution (0.3%). If we add the measures against the crisis – extraordinary measures – passed after 2009, the EU average rises up to 3.6%, led by the share of the United Kingdom (7.9%) and those of Germany (4.8%) and Denmark (4.6%), while France sets at 2.2%.
72 |
TABLE 29
ALL THE SUBJECTS FINANCED BY FUS FOR CINEMA
Legal form of beneficiaries
of Fus funds for cinema 2010
DISBURSEMENTS IN 2010 AMOUNT OF FUNDS EXPRESSED IN EUROS
Number
Share
Total
Share
AVERAGE
AMOUNT
362
31.6%
3,586,844
32
2.7%
14,873,971
84
7.3%
251,334
63
5.5%
1,108,536
90
7.8%
267,954
56
4.9%
164,332
7.2%
29.7%
0.5%
2.2%
0.5%
0.3%
9,908.4
464,811.5
2,992.0
17,595.8
2,866.1
2,934.5
NATURAL PERSONS
1.4%
181,997
0.4%
11,374.8
30
2.6%
20,469,296
34
3.0%
1,379,183
147
12.8%
252,333
40,9%
2,8%
0,5%
705,837.7
40,564.2
1,716.5
Associations
Consortia-committees
ASSOCIATIVE ORGANIZATIONS
232
20.2%
7,284,632
3
0.2%
188,000
14.6%
0.4%
31,399.2
62,666.6
TOTAL BENEFICIARIES *
1.149
100.0%
43,599.2
Ltd – Limited liability**
PLC – Public limited company***
Individual firms
Cooperatives
LP – Limited partnership
GP – General partnership
Authors
Foundations****
Public authorities
Religious bodies**
16
100.0%
50,008,312
* The Table does not include the funds equal to 25,786,696 Euros granted within the indirect support (contributions to first and second
works, films, shorts and original scripts).
** 347 beneficiary limited liability companies out of 362 run art cinemas; similarly, 146 religious bodies out of 147 were granted funds
destined to art cinemas and cinemas of the “religious or ecclesial community”.
*** Among PLCs there is Cinecittà Luce, with a disbursement of 12.2 million Euros (the company was also granted an extra-Fus fund,
deriving from Lotto, corresponding to 4.8 million Euros). The average amount for the other 30 subjects included among PLCs actually
amounts to 89,132.2 Euros.
*** Among foundations there are Biennale di Venezia and Centro Sperimentale di Cinematografia, with a total amount of funds granted
in 2010 of more than 17 million Euros.
Source: Report on the use of the Single Fund for Entertainment – Year 2010, by Osservatorio dello Spettacolo according to data provided
by the General Directorate for Cinema of MiBac (Rome, 2011).
35%, respectively), social security contributions for workers (orchestral players for music activities,
dancers for dance or theatre companies for drama...), rather than “squares” used as places for
the shows, with scores based on the subdivision into different grids of cities and regions. Basically,
a production analysis is compared to a welfare system, where social values and cultural factors
seem to be focused, preferentially, on the occupational aspects.
Double-edged openness. The meaning of this differentiation, most of all in times of spending
review, is absolute and relative. It is absolute if we consider that in the great number of public
incentives for professional and business activities, only funds granted to entertainment usually
attract the critical attention, thus undergoing disputes56. The point is that we have a complete and
detailed picture of the last ones (funds for entertainment), therefore amounts and beneficiary
subjects are nominally visible, while as for the other two categories there is no information available,
nor details about beneficiaries and amounts granted, that are necessary to estimate their
| 73
TABLE 30
DENSITY OF CONTRIBUTIONS IN THE DIFFERENT SECTORS
Type of contributions FUS ENDOWMENT IN 2010
per beneficiary sectors
EXPRESSED IN EUROS
Lyrical foundations
Musical activities
Dance
Theatres
Circus activities
Travelling shows
Total/Live entertainment
Cinema
Grand total*
Live entertainment influence
Cinema influence
FUNDS
SHARE
NUMBER OF
SUBJECTS
BENEFICIARIES
AVERAGE AMOUNT
SHARE EXPRESSED IN EUROS
LIVE ENTERTAINMENT
47.5%
14
13.8%
1,055
2.2%
171
16.3%
417
0.7%
75
0.8%
117
81.3%
1,849
0.46%
35.20%
5.70%
13.91%
2.50%
3.90%
61.67%
13,599,629
52,292
53,127
146,214
40,711
27,346
174,079
75,795,008
18.5%
1,149
38.33%
65,966
100.00%
61.67%
38.33%
132,644
131.23**
49.73**
190,394,812
55,168,419
9,084,719
60,971,569
3,053,328
3,199,555
321,872,402
397,667,410
80.94%
19.06%
FINAL DATA
99.8%
81.3%
18.5%
2998
61.67%
38.33%
* The real total of Fus resources of 2010 is 398,067,010 Euros (as in Table 24), but in this case 399.6 thousand Euros have been hived off
- equal to a share of 0.2% of the grand total – corresponding to the management costs of Fus itself incurred by MiBac.
** The point of reference is the average total amount of 132,644 Euros, a value considered as equal to 100.
According to data of the General Directorate of Live Entertainment and the Genral Directorate for Cinema of MiBac.
congruity57. It is relative because, in the context of incentives for entertainment, mostly those for
cinema are analyzed and verified from an economic point of view (and in a polemical way). In fact,
only about the film sectors or films themselves – paradoxically, due to the openness of the reference
system adopted and to the exclusive characteristic of most funds destined to films to be interestrate capital, therefore refundable – we can also know the market’s results and assess the
usefulness of the support received.
OTHER STATE CONTRIBUTIONS
The decay of Fus is not alleviated by other State contributions derived from Lotto or 5x1000
and 8x1000 – which have already suffered a drastic cut – on Irpef income (income taxes on
natural persons) or granted through Arcus (a public limited company owned by MiBac and
the Ministry of Infrastructures and Transport, for the direct management of specific
intervention in the sector of the cultural and artistic heritage), which can rely on 3% of the
investments for the realization of great infrastructural works, which are also bound to the
budget requirements (it has already happened that the same percentage of 3% was reduced
to 2.5%). These resources have been shared by other expenditure estimates aiming at
supporting the national assets, according to the good intentions that pave the way of the
central administration, which are weakened by exceptional emergencies or economic slump,
like the one ongoing since winter 2008, thus leading to search for other extraordinary
instruments until their subsequent and fatal decay.
Common to almost all entertainment sectors, the opportunity to open alternative sources for
74 |
the public contribution may give the means to soften the institutional funds slump, but it does
not seem a decisive strategy, as these sources give rise to unstable contributions that are
connected to specific purposes, as demonstrated by their trend.
LOTTO PROCEEDS
The transfer of part of Lotto proceeds to finance interventions for the artistic and cultural
heritage was instituted in 1996, but only from 2004 it was also used (partly) for
cinematographic and live entertainment activities. It specifically provides for the allocation
of a percentage of Lotto proceeds, up to an annual maximum amount of 154.9 million Euros,
with an advance at the beginning of the year equal to 50% of the contribution granted during
the previous 12 months (77.4 million Euros), and setting within June 30 the definite amount
that the lottery – through Lottomatica circuit – must pay to MiBac and that, in 2010,
corresponded to 3.8% of the amount paid to the State58.
As it is renewable, MiBac could plan its use over three years, selecting significant
interventions by financial importance and territorial structure, preferentially to be carried
out through forms of partnership and co-financing with other subjects, therefore, on the basis
of parameters and references that are different from the ones of the ordinary planning.
The “steady trickle” of refunds. After only one year, however, the annual allocation for the
period 2004-2006 was reduced by 35 million Euros, while in the following three-year period
it was reduced by 30.9 million Euros by the Financial Law of 2007, then by 15 million and again
further 82 million Euros, thus cutting the three-year budget from the initial 464.7 million
Euros to about 371 million, then to 354 and finally to about 271 million Euros, consequently
drying up the annual average from the expected 154.9 million Euros to 124, 118.6 and (in 2008)
less than 90 million Euros, which one year later became 79 million Euros (Table 31).
In order to avoid repercussions on the different long-term interventions and make eventual
financial “reparative” integrations, in 2010 the determination of refunds year by year was
introduced, but the budget requirements drained the State treasury of further 17.8 million
Euros, and its endowment decreased to 60.8 million Euros (-60.85% compared to the original
one). Moreover, within the arrears of this steady trickle, also the share for the entertainment
and (in particular) cinema sectors – kept at one-quarter of the total in six years – suffered a
58
The transfer of Lotto revenues was issued by Financial Law of 1997 “Measures for the rationalization
of public finance” (law no. 62 of 23rd December 1996; art. 3, paragraph 83), following the example of
the English National Lottery, with the 28% revenues allocated to social assistance and museum preservation activities. The law was then integrated and amended by subsequent measures in 2001 and
2003. The amount to be destined to the “recovery and the preservation of cultural, archaeological, historical, artistic and library heritage”, as well as to interventions for the “landscape recovery, cultural
activities and entertainment sector” was fixed by Law no. 449 of 27th December 1997 “Measures for
the stabilization of public finance” (article 24, paragraph 30).
| 75
TABLE 31
LOTTO PROCEEDS SHARING
Funds expressed in millions of Euros 2007
2008
2009
2010
2011*
Annual sharing
Millions Share Millions Share Millions Share Millions Share Millions Share
Funds for culture
Funds for entertainment
Live entertainment share
Share of funds for cinema
106,02
32,39
16,60
9,23
100%
30,5%
15,6%
8,7%
89,22
25,23
11,08
11,13
100%
28,3%
12,4%
12,5%
78,66
32,22
12,14
3,16
100%
36,1%
15,4%
4,0%
60,86
11,90
2,90
5,40
100%
19,5%
4,7%
8,8%
60,86
9,90
3,20
6,40
100%
16,3%
5,2%
10,5%
* Values related to 2011 correspond to data contained in the forward budget (end of 2010).
MiBac data processing.
downward reshaping (Table 32).
The total amount of 93.889 million Euros paid to cinematographic activities during the seven
years of economic support from Lotto – equal to 51.61% of the 181.888 million-euro total
inflow to entertainment – was mainly due to Fondazione Biennale di Venezia and Cinecittà
Luce (formerly Cinecittà Holding) that absorbed 80.72%, that is, 75.59 million Euros. The
balance between the two institutions from 2004 to 2010 is quite stable, even though in the
second part of that period Cinecittà Luce predominated.
THE INFRASTRUCTURAL FIXED ASSETS OF ARCUS
Arcus was established in 2003 to support the development of art, culture and entertainment.
It started a further flow of contributions granted through the withdrawal of 3% of the state
investments for the realization of great infrastructural works. Arcus was directly issued by
MiSe – Ministry of Economic Development – that subscribed its capital stock, and it operates
according to programs and implementation decrees adopted by MiBac together with Mit –
Ministry of Infrastructures and Transport – as an instrument for managing and collecting
financial resources related to mortgages contracted by MiSe itself with Cassa Depositi e
Prestiti (to be paid back in 15 annual installments).
Among Arcus purposes there are the promotion and financial support to investments in favour
of culture and entertainment, with a sharing that in the first five-year period relatively
favoured culture (53.6% of the resources compared to 43.3% for entertainment and 3.1% for
the landscape) and that for the following four-year period aimed instead at a more marked
diversification, with 29.8% of the contributions granted to the landscape, 20.0% to
entertainment and 50.2% to culture59.
Authorities are favoured. On the whole, the support given to cinema was equal to 48.54 million
Euros, corresponding to 9.2% of the support to entertainment: 24.12 million Euros from 2004
to 2008 – corresponding to 9.8% of that 43.3% granted to entertainment – and 24.61 million
Euros in the following four years, with an incidence decreased to 8.3%, but compared to the
entertainment share reduced to 20% during that period (Table 33).
In this second stage, funds for cinematography have been concentrated in 2010, in order to
favour (through a urgent intervention) the strengthening of the new Cinecittà Luce. It is right
76 |
to the institutional bodies that MiBac granted most of the endowment of the sector: 36.3
million Euros allocated since 2004 until 2012 to Cinecittà Luce (24.3 million Euros) and
Biennale di Venezia (12.0 million Euros), equal to a percentage of 76.3% (Table 34).
Marked by managerial and organizational problems, also due to prolonged delay in the
adoption of regulations for the interventions to be carried out, which started in late 2004, its
activity as “facilitator” was carried out through specific projects, bound to specific parameters,
requirements and budget limits set by periodical assignment notices, however paying the
penalty for a thwarted alternation between the resources. The assets’ share equal to 3% for
infrastructural investments, for instance, was reduced to 2.5% in some financial years, while
other decrees tried to restore a certain balance through the charge off of 2% (only until the
end of 2007) of the allocations provided for by Law no. 443 of 2001, the so-called Target Law.
Within seven years, Arcus used an amount of resources corresponding to 580 million Euros
for interventions that also attracted other public and private investment capital for more than
1.2 billion Euros, and it increased its assets from the initial 8 billion Euros to 16.4; however,
its role has been called into question and the promotion of new projects is facing a stalemate
after the last two three-year notices of 2009 and 2010, despite a significant part has not been
carried out yet and, at Cassa Depositi e Prestiti, the endowment for the amounts to be issued
or re-assigned still corresponds to more than 200 million Euros. In the estimates drawn up
by the General State Accounts Office as regards MiBac management in the three-year period
2012-2014, proceeds of the cinematographic sector from Arcus have been already recorded,
corresponding to 4 million Euros in the first year, 2,652,661 and 2,169,784 Euros in the
following years.
How state investment changes
It seems obvious, since the first edition of this Report, that the cinematographic sector is the
protagonist of a gradual and difficult development of the state investment process. In
particular for Fus, compared to other entertainment activities and in the context of the larger
system of public incentives, including contributions granted by territorial administrations and
the Community structure.
Generally, the total flow of state contributions fosters the perception that the contribution
level keeps a certain dimensional-scale continuity. In spite of a greater contribution of the
Fus amount, in 2008 the total support amount recorded a downturn, but then exceeded or at
least equaled (in 2010) the amount of 2007 (Table 35). This trend proves to be positive only if
we consider the support of tax credit and tax shelter like other financial supports, according
to the same reclassification adopted by the General Directorate for Cinema of MiBac. Tax
credit and tax shelter act by direct deduction on the tax system, and not on the material
59
Establishment and mission of Arcus date back to Law no. 291 of 16th October 2003 “Regulations on interventions for cultural heritage and activities, sport, university and research” (article 2).
| 77
TABLE 32
HOW MUCH IS DRAWN FROM LOTTO IN FAVOUR OF CINEMA
Amounts (in millions of Euros) by purpose*
2004
2005
2006
2007
2008
2009
2010
Institutional authorities
Special projects
Promotion
Contributions to receipts
TOTAL/LOTTO-CINEMA
LOTTO FUNDS FOR ENTERTAINMENT
Cinema against entertainment funds
30.450
0.400
0.100
30.950
49.388
62.66%
10.400
0.062
10.462
41.738
25.06%
7.000
9.495
7.059
23.554
29.069
81.02%
8.000
1.150
0.080
9.230
32.399
28.54%
11.000
0.136
11.136
25.230
44.11%
3.000
0.160
3.160
32.224
9.80%
4.800
0.600
5.400
11.900
40.33%
* The Table does not include values related to 2011, as the partition according to the purpose of the resources had not been quantified yet.
According to data provided by the Report on the use of the Single Fund for Entertainment, by Osservatorio dello Spettacolo of MiBac,
for the annual editions related to the period 2004-2010.
TABLE 33
FROM INFRASTRUCTURAL WORKS TO THE ITALIAN FILM
Institutional bodies
Special projects
Promotion
CINEMA total
0.250
0.250
2005
2006
2007
2008
2009
2010
2011
8.000
0.950
8.950
0.200
0.100
0.300
0.500
0.725
1.225
12.000
12.000
1.150
1.000
2.150
15.800
4.400
1.097
21.297
0.670
0.200
0.870
According to data provided by the Report on the use of the Single Fund for Entertainment, by Osservatorio dello Spettacolo of MiBac,
annual editions related to the period 2004-2010, and by Arcus public notices 2004-2011.
assignment of monetary contributions, and their role seems decisive especially in terms of
qualitative refining – not only in quantitative terms – of the tools for the economic support
that could be given to film operators by the State.
Which policy. On the contrary, considering this trend, it is possible to notice how the importance
of Fus keeps on decreasing compared to other funds providers. If in 2009 it was still above 60%,
in 2010 (with its percentage of 49.48%) it decreased under the threshold of 50% for the first
time (but it would have literally slumped if the total endowment of Fus-Entertainment that, at
mid-year, had been already set at 307.1 million Euros before, and then at 256 million Euros,
had not been taken back to its current standards). As a consequence, in the change process
started in 2008 and still ongoing, Fus-Cinema tends to “reduce” its substantial function of
planning and coordinating interventions, above all with regard to the support to the central
sector of production and the primary sectors of distribution and business.The sharing of
incentives according to the purpose can provide further evaluation elements (Table 36). From
the acknowledgment of the destination of state funds (this is a first estimate, given the difficulty
of the gathering of data that otherwise are disaggregated and sometimes different, making
their classification discretionary) the search of a new contributory policy stands out. On the one
hand, the introduction of the tax handle stresses the automaticity of non-financial instruments;
on the other hand, the influence of the resources flow towards the institutional bodies – already
78 |
TABLE 34
ARCUS FUNDS ALLOCATION TO THE CINEMATOGRAPHIC SECTOR
ALLOCATIONS BENEFICIARIES
AMOUNTS EXPRESSED IN EUROS
EAR 2004
250,000
Azienda Speciale Palexpo
250,000
ASSIGNMENT OF CONTRIBUTIONS
Renovations Casina delle Rose Luce Theatre
YEAR 2005
8,950,000
Cinecittà Holding SpA
5,500,000
Business plan 2005
2,500,000
Diffusion plan “ Centocittà”
300,000
Project “ Floating Film Festival”
Cis-Comunicazione Immagine e Suono
Doc-Fest
200,000
Project “Doc Festival”
Italian Dreams Factory Srl
300,000
Promotion cinema-Spot in cinemas
Società Artù Produzione Eventi
150,000
Anti-piracy promotion cinema-Spot
YEAR 2006
300,000
Istituto Capri nel mondo
100,000
Promotion of cinema around the world
Cdg-Cine Design Group
200,000
Digital systems certification
YEAR 2007
1,225,000
Istess-Diocesi di Terni
100,000
Film festival “Popoli e Religioni
500,000
Production-distribution-promotion
Foundation Cinema per Roma
100,000
Project of the event “Sergio Leone Day
300,000
Inaugural concert – Cinema Festival
Dazzle Communications
200,000
Project “Literature and cinema
Association Roma Ind, Film Festival
25,000
Festival for Ennio Flaiano
YEAR 2008
13,400,000
64° Mostra del Cinema di Venezia
12,000,000
Project “Communication and technologies
1,400,000
International Film Festival of Rome
YEAR 2009
2,250,000
Compagnia italiana
1,150,000
Cinema and theatre
1,100,000
Internazional Film Festival of Rome
YEAR 2010
21,297,000
“Silvio D’Amico” Academy of Rome*
500,000
Academy of Dramatic Art
Cultural association Teatro L’Aquila *
400,000
Film and TV studios Rodolfo Valentino
Agis-Ass, Generale Italiana Spettacolo *
3,500,000
High-quality screens
Cinecittà Luce Spa*
15,800,000
Valorization and revitalization of activities
General Directorate of Entertainment-MiBac *
1,097,000
International bilateral agreements
YEAR 2011
870,000
General Directorate of Entertainment-MiBac *
670,000
International bilateral agreements
200,000
Cinema for Abruzzo
General Directorate of Cinema-MiBac *
TOTAL FUNDING
48,542,000
* These projects are included in the last public notices of Arcus 2009 (three-year period 2010-2012) and Arcus 2010 (two-year period
(2010-2011).
According to data contained in the inter-ministerial decrees MiBac-Mit (Ministry of Infrastructures and Transport) related to Arcus
intervention plans (inter-ministerial decrees of 7th July 2004, 11th February 2005, 20th July 2005, 16th March 2007, 9th April 2008,
24th September 2008, 16th October 2009, 1st December 2009, 1st and 13th December 2010, 10th May 2011).
| 79
remarkable within the single Fus, where in 2010 they drained 29.6 million Euros (Table 27)
against 20.3 of 2009 – increases even more the area of the forms of concession with a defined
destination. Basically, the strategy can result from a conscious choice: priorities are set and,
as a consequence, the suitable intervention systems are used, operating, for instance, through
the institutional bodies.However, the unstable trend of allocations for different purposes, fosters
the perception of more and more limited spaces to conduct a more effective policy of resources
management – even though shared and agreed with operators – and a strategy that aims at
market development. Moreover, the expenditure estimates drawn up by the General State
Accounts Office for the General Directorate for Cinema of Mibac in the three-year period 20122014 (Table 37) should be considered. Therefore, there is the opportunity to give the centrality
that has been acknowledged by the major European competitors back to the cinematographic
sector, thus making even the activities of institutional bodies themselves more suitable for
the development goals, as underlined by the last recent conversion of Cinecittà Luce.
Resources subject to restrictions. There is still the awareness that the state investment in Italy
still has to regain consistency and stability compared to investments promoted by the other
main European countries, even though this gap has been somehow made up. If being rich means
that you do not have to think about money, Italian cinema cannot define itself rich, nor supported
adequately to its business volume, as proved by the dimensional relations between state
contributions for industry and services and those for this sector (Table 38).
Entertainment activities are supported by the state, basically according to the value of their
production compared to the value of the whole national productive apparatus (1 : 75) and every
1000 Euros contribution to investments or production granted to companies of each sector, they
receive funds corresponding to 4.42 Euros (2010 data) However, the share of public resources
destined to cinema (less than 18%) within entertainment and Fus itself, seems inversely
proportional to its specific weight, included between 65% and 80% according to the different
evaluation parameters used (Tables 22, 25 and 26), compared to the other entertainment
activities that, instead, share 9.31 Euros60.
60
80 |
The extremely varied typology of contribution for businesses lends itself to different classifications,
according to their origin (central or territorial) or to their purpose (research and development, innovation, internationalization, conversions or reorganization, renovations of buildings or plants), nature
(capital allocations or reductions in the recourse to credit) and destination (direct support to companies
or indirect support when aiming at stimulating the reference market, for instance, through incentives
for consumers), allocation instruments (financial instruments more than fiscal ones), characteristics
(free grant or interest-rate contributions), procedures (automatic access or bound to fixed parameters)
etcetera. Their calculation also varies at an institutional level, among the different administrative structures of allocation, like Ministries, agencies, public bodies or public interest companies. Contributions
for Fus for cinema, as they aim at developing the activities, are mainly contributions to production,
even though they partly aim at supporting the investment volumes. The reference classification in the
analysis of this report is the one adopted by Banca d’Italia.
TABLE 35
EVOLUTION OF STATE FUNDS FOR CINEMA
Amounts expressed
in millions of Euros
2004
2005
2006
2007
2008
2009
2010
Fus funds for cinema
90.300
83.526
77.933
79.434
90.986
93.746*
75.795*
75.815
Tax credit-tax shelter
-
-
-
-
-
14.328
49.799
55.000
Extra-Fus funds***
2011**
-
0.332
14.188
43.280
10.589
31.585
0.863
-
Lotto and Arcus funds
31.200
19.412
23.854
10.455
23.496
5.310
26.697
0.870
TOTAL STATE FUNDS
121.500
103.260
115.975
133.169
125.071
144.969
153.154
131.685
FUS SHARE OUT OF THE TOTAL 74.32%
81.20%
67.19%
59.64%
72.74%
64.66%
49.48%
49.98%
* Psame year out of 60 million Euros taken from a fund of the Ministry of Economy and Finance which was made available to MiBac.
MiBac has then shared them in order to integrate the amounts that were initially available. As for Fus 2010, extra-Fus funds have been
joined to extraordinary funds found by other expenditure estimates or previous assignment deliberations and used for special projects or
structural interventions that entailed a disbursement (from MiBac) exceeding by 21 million Euros the disbursement indicated in the following
Table 35, related to the intended purposes.
**Data related to 2011 should only be considered as approximate, as values come from estimates, while there is no information about extraFus funds and Lotto (only Arcus has already set its allocations).
*** Extra-Fus funds also include the so-called extraordinary funds allocated for MiBac to face any particular budget requirements or specific
urgent or extraordinary initiatives.
According to data provided by: the General Directorate for Cinema of Mibac (Annual activity report 2010, Rome, 2011); Osservatorio
dello Spettacolo (Report on the use of the Single Fund for Entertainment - Year 2010); the General State Accounts Office; Arcus
60 cents every 1000 Euros. Considering the investments referring to public expenditure, it
can be noticed that, in 2010, every 1000 Euros expenditure central administrations pay 97.7
Euros to support the companies and only 1.67 Euro of that amount is given to entertainment
activities, where cinema only gets a share of 54 cents, 31 of which through Fus. In terms of
Gross National Product, the share for all industrial and service companies every 1000 Euros
allocated is equal to 19.2 Euros, for entertainment it is equal to 26 cents, to 9 : 4 for cinema
through Fus and 5 more if we consider all other Extra-Fus and extraordinary funds.
8. The other public purse
If the introduction of the tax handle represents the most recent innovation that contributed
to revitalize the state incentive system, the commitment of territorial administrations in the
support of cinematographic activities is the other factor that, in the last years, contributed to
stimulate the revival of the sector. For instance, all Regions except Molise, after a little
thwarted gestation process, given the difficult gestation of many different local realities, can
rely on organic or in-house structures for the development of cinema or audiovisual sector.
Among the eighteen regional bodies that have their own Film Commissions, fifteen also have
one or more Film Funds, that is, the main financial instrument to put additional economic
resources into the productive and cultural fabric of the territory, in order to foster new
initiatives and further investments.
More than from the type of action carried out – borrowed (a bit late) from the experiences of
other Countries that are more “organized” from a cinematographic point of view, starting
| 81
TABLE 36
BENEFICIARIES OF STATE CONTRIBUTIONS
Amounts expressed
in millions of Euros by purpose
Institutional bodies*
Promotion
Integrated chain* *
Tax credit-tax shelter
Other beneficiaries
TOTAL /CINEMA
AUTHORITIES SHARE OUT
OF THE TOTAL
2004
2005
2006
2007
2008
30.450
26.650
58.510
5.890
121.500
25.06%
29.900
27.512
37.126
8.722
103.260
28.95%
27.500
26.227
61.259
0.989
115.975
23.71%
39.354
29.489
61.158
3.168
133.169
29.55%
35.911
19.810
66.800
2.550
125.071
28.71%
2009
36.291
36.624
54.014
14.328
3.712
144.969
25.03%
2010
35.538
8.720
32.197
49.799
5.900
132.154
26.89%
* in the reclassification of the share considered (Fus funds, extra-Fus funds, extraordinary funds, Arcus, Lotto and tax concessions) Authorities were granted
contributions for “special projects” within the promotional activities.
** In the item “Integrated chain “ there are also the incentives to art cinemas or other initiatives – like the program “High-quality screens” until 2009 –
related to projection circuits (they are also included in Fus nomenclature at the item “promotion”) considering them suitable to the business. Also Fus
contributions (particularly from 2004 to 2007) related to the Fund for production, distribution, business and technical companies, as well as the annual
charges paid until 2007 to Bnl-Banca Nazionale del Lavoro and then to Artigiancassa (1.6 million Euros in 2010), owned by Bnl group , for the
management of capital and interest-rate ministerial Fus funds, are included in the same category. Moreover, the item “Integrated chain” also includes the
allocations granted – from 2007 to 2010 – for the automatic support of the percentage contributions on proceeds (20.4 million Euros in 2007; 23.5 in
2008; 30.0 in 2009 and 4.29 in 2010) besides the contributions to the best movies for 2.5 million Euros in 2007, the last year they were granted.
According to data provided by: the General Directorate for Cinema of Mibac (Annual activity report 2010, Rome, 2011); Osservatorio dello Spettacolo
(Report on the use of the Single Fund for Entertainment - Year 2010); the General State Accounts Office; Arcus
TABLE 37
ESTIMATES ON FUS ALLOCATIONS FOR THE THREE-YEAR PERIOD 2012-2014
Annual sharing by
expenditure estimates
8570 – Production
8571 – Fund P-D-E-IE
8573 – Promotion
TOTALE IMPEGNI
THREE-YEAR ESTIMATE FOR FUS-CINEMA ENDOWMENT (EXPRESSED IN EUROS)
2012
2013
2014
20,578,000
17,889,000
37,609,000
76,076,000
20-578,000
17,889,000
37,609,000
76,076,000
20,578,000
17,889,000
37,609,000
76,076,000
Source: General estimates of public expenditure, General State Accounts Office (Rome, 2011).
from United States – the innovative connotation of the phenomenon seems to come from its
development process, that is so fast that the process of the implementation of tax credit and
tax shelter seems nearly exhausting.
Apart from the private experimental experience of Campania Film Commission (1997) and
Italian Riviera-Alpi of Mare Film Commission (1998) and the initial public experiences of the
city of Bologna and Emilia-Romagna Region in 1997, followed by Friuli Venezia Giulia and
61
82 |
A first, deep reconstruction of the development process of territorial structures which aimed at the
promotion of the development of cinematographic activities was carried out in the 2010 edition of this
report for the first time: The other public hand. Regions and Film Commissions in the Report 2009.
The Film Market and Industry in Italy (Appendix, pp. 207-238) by Fondazione Ente dello Spettacolo
(Rome, 2010).
TABLE 38
CINEMA AND STATE CONTRIBUTIONS TO INDUSTRY AND SERVICES
Annual amounts expressed in mllions of Euros
2005
2006
2007
2008
2009
2010
QUOTA DEI FONDI STATALI AL CINEMA SUI CONTRIBUTI ALLE IMPRESE
Contributions to investments
22,016
23,999
30,970
25,790
27,230
Contributions to production
5,092
4,888
6,464
5,829
5,221
Transfers to companies**
27,108
28,807
37,434
31,619
32,451
Fus for entertainment
1.713%
1.483%
1.178%
1.490%
1.408%
State contributions for cinema
0.380%
0.402%
0.355%
0.395%
0.446%
Fus for cinema
0.308%
0.270%
0.212%
0.287%
0.288%
23,867
5,965
29,832
1.373%
0.442%
0.254%
INFLUENCE OF CONTRIBUTIONS TO CINEMA ON THE PUBLIC EXPENDITURE
Transfers to companies
12.22%
12.43%
16.06%
11.12%
10.87%
Fus per lo spettacolo
0.209%
0.184%
0.189%
0.170%
0.190%
0.046%
0.050%
0.057%
0.051%
0.060%
Fus per il cinema
0.037%
0.033%
0.034%
0.037%
0.039%
9.77%
0.167%
0.054%
0.031%
QUOTA D’INCIDENZA DEGLI AIUTI DI STATO SUL PIL NAZIONALE
Transfers to companies*
1.89%
1.93%
2.42%
2.01%
Fus for entertainment
0.032%
0.029%
0.028%
0.030%
0.007%
0.008%
0.008%
0.008%
Fus for cinema
0.005%
0.005%
0.005%
0.005%
1.92%
0.026%
0.008%
0.004%
2.13%
0.030%
0.009%
0.006%
* Transfers to companies include all forms of contribution accepted both by the government and administrative bodies and by other public
entities of the State system (agencies, finance companies and institutions like the Chamber of Commerce).
According to data contained in the Annual report on 2011, drawn by Banca d’Italia (Rome, May 2012) and in the Report on the use of
the Single Fund for Entertainment - Year 2010, by Osservatorio dello Spettacolo of MiBac (Rome, 2011).
Umbria in 1999, up to 2000 the scene actually seemed meager, while in Europe there were
already 80 regional funds (half of which in Germany). Only twelve years ago a first “bloom”
took place, with the establishment of six regional organizations, but if Friuli and Piedmont
proved to be fully operational, other regions have experienced some difficult training stages
– and the support from the relative issuing bodies61.
Five tumultuous years. Actually, the process took shape only between 2006 and 2007. Despite
the evident complications created by the following downturn of the economic cycle,
particularly on the front of the public finance and its stability, this process recorded an
impetuous growth (in the meantime, regional funds of 36 European counties reached 130
points). Regional structures have been joined by dozens of town and provincial bodies. In a
large range of procedures, the financial instruments activated – mostly at a regional level –
are 35 and the resources to be invested in the sector, provided for by laws, decrees or
deliberations by the different administrations, recorded a growth of 42.2% between 2009 and
2010, and a nearly double increase in consistency – equal to 83.6% – during the last year
(Table 39).
THE ROLE OF REGIONS AND FILM COMMISSIONS
Actually, the strengthening of the so-called film federalism shows some problems. Regional
| 83
legislation is usually younger than the national one.
Apart from Abruzzo Region, which was the forerunner in 1999, only after 2004 other
administrations endowed themselves with organic laws which were less focused on cinema
and more open to a communication and market scene that embraces (10 cases out of 19) the
integrated group of audiovisual media, even though, in many regulations, this approach
remained based on the more indistinct scene of entertainment macro sector62. Nonetheless,
in these first years of full functionality – that recorded the establishment of Film Commissions
and Film Funds – a strategy in which intervention policies are soon assimilated to the funds
allocation prevailed, while the working-out of an overall strategy for the cultural values and
the economic downturns has not been worked-out yet63.
Who does what? In different cases, the identification of the instrument of funds with the Film
Commission led to consider the two instruments as inter-changeable. In other cases, the
economic contraction induced regional bodies to transfer the funding activity to the Film Fund,
from the expenditure estimates for the support to culture or entertainment to those (more
consistent) for the development of productive activities (or, as an alternative, touristic
activities), creating an overlapping of administrative responsibilities and managerial
guidelines64. The last and emblematic example is given by Sicily that, with the promotion of a
new public notice to “Support audiovisual production”, endowed with 3 million Euros (2.1 of
which come from the inter-institutional plan “Sensi contemporanei”), also decided the
62
The last organic law on the sector at a national level is the decree “Reform in the discipline on the cinematographic activities” (no. 28 of 22nd January 2004), ALSO DEFINED “Cinema Law” or “Urbani Law”, from
the name of the Minister for Cultural Heritage and Activities, Giuliano Urbani, who signed it. As regards
Abruzzo region, we refer to Law no. 98 of 1999 “Regional discipline of cinematographic, audiovisual and
multimedia activities”.
63
Many laws issued by Regions date back to this period: Liguria (no. 10 of 3rd May 2006), Sicily (no. 16 of 21st
August 2007), Apulia (no. 8 of 21st May 2008), Lombardy (no. 21 of 30th July 2008), Marche (no. 7 of 31st
March 2009) and Veneto (no. 25 of 9th October 2009) until the last “Framework Law” of Lazio administration,
passed by the Regional Council in March 2012. Only the Autonomous Region of Sardinia (no. 15 of 20th
September 2006) and Friuli Venezia Giulia (no. 21 of 6th November 2006) moved differently, as these regulations were issued after the constitution of financing funds approved through the relative financial laws
no. 3 of 29th April 2003 (item III, art. 12, paragraph 4, section b) and no. 1 of 29th January 2003 (but from
2000 the FVG Film Commission was already operational). Campania Region represents a different case.
In 2002, it had already established (law no. 15 of 26th July 2002) its own Film Commission, along with a
fund for cinema and audiovisual activities that remained inactive until 2006, when the resources needed
to support its activity became available.
64
An exemplary close examination of these institutional aspects is given by the analysis “The evolution of
public support to the audiovisual sector” by Alberto Versace, Lorenzo Canova, Tommaso M. Fabbri and
Francesca Medolago Albani, contained in “1987 – 2008”. Changes in the Italian communication industry,
XI Report of IEM-Institute of Media Economics of Rosselli Foundation (Edizioni Guerini e Associati, Rome
2008, pp. 275-308).
84 |
TABLE 39
HOW MUCH REGIONAL DEVELOPMENT FUNDS INVEST IN THE SECTOR
Support funds for cinema
and audiovisual activities
Year of
establishment
Calabria Region
Sardinia Region
Lazio Region
Marche Region
Veneto Region
Abruzzo Region
ANNUAL BUDGET EXPRESSED IN EUROS*
2009
2010
2011
FUNDS DIRECTLY GRANTED BY REGIONS
2006
600,000
600,000
600,000
600,000
2007
648,700 2,680,000
991,000
991,000
2009
250,000
250,000 15,000,000 15,000,000
2009
277,000
350,000
654,000
654,000
2010
670,000 1,500,000
1,200,000
2010
- 4,000,000 4,000,000
-
FILM FUNDS ADMINISTERED BY REGIONAL INSTITUTIONS
Venture capital-Filas Lazio
2007 4,500,000 5,000,000 5,000,000
Development Fund-Filas Lazio
2007 1,290,000 1,290,000 1,290,000
Film Investment Piedmont
2007
750,000
750,000
750,000
Emilia R,F,F,-Mediateca
2008
420,000
420,000
420,000
Audiovisual Fund R, Siciliana
2008
- 3,000,000
Bls Südtirol/Alto Adige
2008
- 5,000,000
Toscana F,F,-Mediateca
2009 4,500,000 5,000,000 5,000,000
Fusr Lombardia-Finlombarda
2010 1,000,000 1,000,000 1,000,000
Fondo Sale Finlombarda
2011
- 2,000,000
Sicilia in sala-Sicilia c,t, SpA
2011
850,000
Fondo Sale Cinesicilia srl
2011
20,000
Audiovisual Fund F,C, FVG
Film development fund F,C, FVG
Training Fund F,C, FVG
Distribution Fund F,C, FVG
F,C, Campania Region
Apulia Film Commission
Turin Piedmont F,C, Doc
Turin Piedmont F,C, Fip
INVESTMENT
2011**
FILM FUND MANAGED BY FILM COMMISSION
2003
520,000**
560,000
560,000
2003
520,000
560,000
560,000
2003
520,000
550,000
550,000
2005
2007
2007
2007
1,800,000
700,000
500,000
750,000
1,320,000
1,600,000
350,000
750,000
3,300,000
1,950,000
250,000
750,000
5,000,000
1,290,000
750,000
420,000
3,000,000
5,000,000
5,000,000
1,000,000
2,000,000
850,000
20,000
560,000
560,000
550,000
3,000,000
1,950,000
250,000
750,000
segue
transfer of competences related to cinema and audiovisual activity from the Department of
Cultural Heritage and Sicilian Identity to the Department of tourism, sport and entertainment,
depending on the homonymous department, as well as the establishment of a service called
Cinesicilia-Film Commission, giving the ownership of the Fund – before managed by the Film
Commission itself – to Sicilia Cinema e Turismo, a 100% owned in-house joint-stock company
(decrees no. 2024 of 20th December 2011 and no. 1030 of 15th May 2012), that is already
appointed to manage the fund for the initiative “Sicilia in sala”. The Autonomous Province of
Bolzano, which made its debut in 2010 with a fund of 5 million Euros only for 2011, directly
included the budget of the Film Fund and the competences of promotion services into the
Bls-Business Location Südtirol / Alto Adige, a 100% owned joint-stock company that is the
constitutional operating arm for the territorial marketing and the establishment of
companies, thus creating a new single-denomination institution (the only case): Film Fund &
Commission. The provincial body – which is subject to the regional legislation – aimed at
| 85
segue TAVOLA 39
QUANTO INVESTONO NEL SETTORE I FONDI DI SVILUPPO DELLE REGIONI
Fondi di sostegno
per cinema e audiovisivi
Anno di
istituzione
DOTAZIONE IN EURO DEL BUDGET ANNUALE*
2009
2010
2011
INVESTIMENTO
2011**
F,C, Sicily Region
F,C, Emilia Romagna Doc
Trentino F,C,/Format
Genoa Liguria F,C,
Lombardy F,C,
F,C, Aosta Valley
Calabria F,C,
FILM FUND GESTITI DA FILM COMMISSION
2008
4,950,000
**
2008
176,000
180,000
180,000
2010
800,000
2010
240,000
200,000
200,000
2010
- 1,000,000 1,000,000
2010
600,000
2011
500,000
180,000
800,000
200,000
1,000,000
600,000
500,000
INTER-INSTITUTIONAL REGIONAL FUNDS***
Sensi Contemporanei Sicily
2006
- (2,100,000)
Sensi Contemporanei Basilicata 2006
- 1,000,000
800,000
Sensi Contemporanei Apulia
2006
900,000
900,000
TOTAL RESOURCES
24,911,700 33,980,000 59,975,000
800,000
900,000
55,375,000
* The estimate of the investment values related to 2011 refers to the amounts that were actually allocated. Some amounts have been italicized because, as
they do not represent final data yet, correspond to indicative estimates. The 2011 budget of Lazio Region, corresponding to 15 million Euros (one-third of
the 45 million Euros allocated for the three-year period 2011-2013) provides for the al location of 10 million Euros to cinema and 5 million Euros to the
audiovisual sector, for productions and initiatives that have been already carried out and recognized as eligible for funds. Investments of Abruzzo Region
are included in the three-year plan 2010-2012, with an al location of 12 million Euros (for all entertainment sectors), whose implementation still has to
be defined according to the reconstruction plans after the 2009 earthquake in L’Aquila. The endowment of the annual budget of Filas Lazio corresponds
to the rotational allocation of funds.
** Film Funds of Friuli Venezia Giulia Region are an integral part of the budget of FVG Film Commission (on the whole, higher than 500 thousand
Euros) but since 2012 are administered by Associazione Fondo per l’Audiovisivo constituted by the regional body. The 2010 allocations of the Film
Commission of Campania Region, deferred for judicial dispute, integrated the 2011 budget.
*** The amount indicated between parentheses, related to “Sensi Contemporanei Sicilia”, indicates the funding share of 3 million Euros (excluded from
the total calculation) granted to Fondo Audiovisivo Regione Siciliana, administered until 2010 by the Film Commission Regione Siciliana and (in
2011) assigned to Sicilia cinema e turismo, a joint-stock company 100% controlled by the same regional body. Funds granted through the project “Sensi
Contemporanei” (signed by the Department for Development and Economic Cohesion of the Ministry of Economic Development, the General Directorate
for Cinema of MiBac and Biennale di Venezia) according to the long-term regional Apq-Accordi di Programma Quadro (Framework Program Agreements)
are granted through the programs Fesr (Fondo Europeo per lo Sviluppo Regionale, the European Regional Development Fund, of the European Union)
and Fas (Fondo per le Aree Sottoutilizzate, Fund for Underutilized Areas, of the Italian Government) mainly supported by Community resources. The
specific use of contributions if in favour of cinema, but it is modulated on different projects and the annual charge is considered approximate
Economic Cohesion of the Ministry of Economic Development as regards the program “Sensi Contemporanei”
grasping the opportunity to use the experience of Bls and interact with operators of central
European countries, the traditional point of reference of Alto Adige. Along with the similar
structure of Friuli Venezia Giulia, as regards the relationships with the adjoining countries of
the former Yugoslavia, Film Fund & Commission of Bls promotes public notices for Austrian
and German filmmakers, with a business plan that also the new body of Aosta Vally has
planned to adopt with regards to French productions65.
Reorganization in progress. The heterogeneity of legal positions, organic administrative
regulations and organizational features that physiologically characterized the development of
regional institutions for the promotion of the audiovisual sector still generates progressive
adjustments. Friuli Venezia Giulia Region transferred the administration of its four Funds from
the Film Commission to a specific structure called Associazione Fondo per l’Audiovisivo (regional
funds for the audiovisual sector); Marche Region started a multipurpose organization, Fondazione
86 |
TABLE 40
OTHER PUBLIC FUNDS AT TERRITORIAL LEVEL
Support funds for cinema
and audiovisual sector
Latina Film Fund
Bologna F,C,-Cineteca
Emilia R,-Prog, Spettacolo
Provincia-Camera C, Roma
TOTAL RESOURCES
Year of
establishment
ANNUAL BUDGET EXPRESSED IN EUROS*
2009
2010
2011
MUNICIPAL AND PROVINCIAL FUNDS
2007
120,000
100,000
100,000
2008
240,000
420,000
420,000
2009
173,300
173,300
173,300
2009
500,000
500,000
500,000
1,033,300 1,193,300 1,193,000
INVESTMENT
2011*
100,000
420,000
249,000**
500,000
1,271,000
* The estimate of the investment values related to 2011 refers to the amounts that were actually allocated.
** Programma Spettacolo della Regione Emilia Romagna results from a three-year agreement with all provincial capitals of the Region
(which contribute to the funding through minority shares)and the amount related to 2011 investments refer to the actual payment of the
three-year contributions allocated only to support the cinematographic sectors
According to data contained in the notifications of administrations and territorial Film Commissions.
Marche Cinema Multimedia, in which the activities of Marche Film Commission (that supports
production and scriptwriting) and Mediateca delle Marche flow together; Tuscany Region
incorporated Fondazione Mediateca Regionale and Tuscany Film Commission, funds and other
support instruments in a new Fondazione Sistema Toscana; Umbria Region – without any funding
institute, like Molise Region, which is the only region that has never established its own Film
Commission even though it falls within its plans – merged Umbria Film Commission with the
Tourism Promotion Agency, which formally assumed its functions. Roma Lazio Film Commission,
a foundation endowed with 1.09 million Euros, according to the new Framework Law issued in
March 2011, will become (with its six operators) a member of the new instrumental body of Lazio
Region: the Regional Center for Cinema and Audiovisual Industry.
In the meantime, budgets increase. Along this tortuous way and its gradual adjustments (even
considering their intrinsic influence on the qualitative substance of activity) there have been an
inflow of resources that increased even not considering the entry of new protagonists and
instruments. It is probably because of such a sensible increase in investments that sometimes
seems to see, in the arrears of some reshapings, the return of a certain political willingness to
reappropriate, also directly, of the allocation power. The fact is that the consistency of financial
means used in accordance with film federalism, reached a level that founds no confirmation in
the usual interventions carried out in the cinematographic sector by all local bodies. The
calculation of current budgets (Table 39) does not even indicate the total volume of uses arranged,
as it only refers to stable or rotation funds – that is, increased year after year, even though through
alternate amounts – granted by regions. By adding the other territorial funds (even though the
official data available are occasional) the inflow is even more confirmed (Table 40).
65
Bls promotes the incentive systems adopted in Austria and Germany also at the communication level.
| 87
Rounded down calculations. The financial analysis does not include the allocations granted
by most regions along with other territorial administrations, like those autonomously granted
by municipalities and provinces. Nor it includes investments carried out by different regions
according to expenditure estimates different from those of Film Commissions or Film Funds,
according to contribution programs related to festivals, shows, cinema houses, film libraries
and multimedia libraries or to initiatives for the promotion of the film culture, that have
innumerable forms and beneficiary entities66. Sometimes, even facilitations and services
granted by Film Commissions or cinemas to local operators and companies operating in the
territory are distributed among expenditure budgets according to their different pertinence.
Moreover, charges rarely include the costs for personnel if the structures – like Film
Commissions that materially grant contributions or Film Funds themselves – do not have
their own legal position with their own social and statutory bodies, and are instead integral
part of departments of public administrations they depend on. The structure costs incurred
by Sicily Region for Cinesicilia Srl in its three-year operational period, with 15 operators in
the start-up stage and before the handover to Sicilia cinema e turismo Spa, amounted to
nearly 3 million Euros: 752.5 thousand in 2008, 914.0 in 2009. 913.0 thousand in 2010.
Besides the amounts allocated to their own development funds, the Autonomous Region of
Sardinia supports the activity of the Sardinia Film Commission with an endowment of 200
thousand Euros per year, equal to the amount granted by Umbria Region to Umbria Film
Commission, while Lombardy Film Commission can rely on an allocation of 400 thousand
Euro per financial year.
Alternative opportunities. On the other hand, the opening of other new channels for the
recourse to investment resources for cinema has been recorded. Marche Region, for instance,
included the cultural sector among the strategic intervention areas of Svim-Svilupo Marche,
the financial company controlled by the same authority, with which it operates in order to
support its projects, according to the goals defined in Por-Programma Operativo Regionale
(the regional operational programme), that became a partner of Fondazione Marche Cinema
Multimedia. Similar measures were adopted by Lombardy Region for the eligibility for funds
of small and medium-sized companies or for the establishment of new companies managed
by Finlombarda. In spring 2012 Apulia Region also included production and cinematographic
companies among the subjects that have access to the Fund supporting initial investments
of micro and small companies, endowed with 100 million Euros for the operational program
Fesr 2007-2013, that is fueled by Community resources.
Piedmont and the internal revenue service. Moreover, there is the innovative initiative of
Piedmont Region that, in May 2012, introduced a rule in the Financial Law, according to
which the destination of the local Irpef surtax to culture is extended to sport and tourism
sectors, but it is also increased from 1.7% to 30.0%, thus ensuring cultural activities a share
of 10% at least, which is undoubtedly useful to deeply support the funding to their main
subjects, starting from Teatro Regio and Film Commission Torino Piemonte, which is the
88 |
TABLE 41
CINEMA AND SUBNAZIONAL SUPPORT TO INDUSTRY AND SERVICES
Annual amounts expressed in millions of Euros
2005
2006
2007
2008
2009
2010
LOCAL CONTRIBUTIONS TO CINEMA TO FUNDS FOR ENTERPRICES
9,861
9,290
9,897
8,788
9,208
6,636
7,818
8,182
8,408
9,172
10,214
10,075
Total transfers*
Subnational funds to cinema
17,679
17,412
18,305
17,960
18,422
16,711
0.026%
0.046%
0.062%
0.084%
0.135%
0.203%
INFLUENCE OF FUNDS TO CINEMA ON THE PUBLIC EXPENDITURE OF THE TERRITORIAL BODIES
Transfers to enterprises
Funds for cinema
7.21%
6.83%
6.75%
6.31%
6.17%
5.47%
0.001%
0.003%
0.004%
0.005%
0.008%
0.011%
INFLUENCE OF TERRITORIAL CONTRIBUTIONS ON REGIONAL GNP **
Transfers to enterprises
Funds for cinema***
1.23%
1.17%
1.16%
1.14%
1.21%
1.07%
-
-
-
-
0.001%
0.002%
* Transfer sto enterprices include all forms of regional, municipal and provincial contributions granted both by local administrations and
other public entities (companies and institutions like the Chambers of Commerce).
** IThe regional GNP, without extra-regio values (see Regional Accounts, by Istat) only records little distance from the National GNP.
*** The influence of funds for cinema in 2005, 2006, 2007 and 2008 is not reported, as it is lower than one thousandth.
Acording to data contained in the Annual report 2011 of Banca d’Italia (Rome, May 2012) and the survey on public contribution to
cinematographic activities by public regional and local administrations.
second most important regional cultural institution, and to all projects on the go, most of
all in the cinematographic and audiovisual sector, given the dynamism of investments made
up to now. Within the limited area of the regional system competences on fiscal policy, the
predetermined setting of shares of the internal revenue to be allocated to culture and
entertainment can in fact contribute to stabilize its sources of public funding, and this
subordinate and horizontal form of tax handle (that does not affects directly the taxes of
single operators) is already object of evaluation by other administrations, particularly
Tuscany Region.
Regions expenditures are higher. The phenomenon that seems to involve the subnational
contribution, in the cinematographic sector, shows its overall growth, with a role that is far
from the marginal positions occupied until a few years ago, and with a recovery proportional
to the actual influence of cinematographic activities carried out in the territory compared to
the value of the overall regional production. As noticed, an accurate calculation of subnational
investments for the development of the cinematographic sectors – given the poor availability
66
Just to simplify, we can mention, among many cases, three paradigmatic cases: Sicily grants 465 thousand Euros to festivals and live shows where, besides the international festival of Taormina, five more
festivals are supported, for an amount of 122 thousand Euros. Marche also feeds (5 thousand Euros)
the Development Fund that Fondazione Libero Bizzarri uses for the production of documentaries. The
Autonomous Province of Trento supports the three festivals taking place in the city every year.
| 89
TABLE 42
DISTRIBUTION OF 2010 NATIONAL AND SUBNATIONAL FUNDS
Distribution of public
funds in 2010 by activity and purpose
PRODUCTION-DISTRIBUTION
NATIONAL CONTRIBUTION AND TAX HANDLE
SUBNATIONAL CONTRIBUTION
Only Fus
With tax cr.
After tax cr. sharing Regional funds only
41,6%
24,2%
59,4%
3,5%
5,2%
7,4%
1,5%
PROMOTION*
15,8%
6,5%
6,5%
10,1%
BODIES-STRUCTURES**
39,1%
26,7%
26,7%
16,2%
-
37,4%
-
-
BUSINESS
TAX CREDIT-TAX SHELTER***
72,2%
*Promotional activities carried out at territorial level have been calculated according to the classification adepte by MiBac. In order to avoid
any possible distorting effects, allocations granted by public admnistrations of Lazio for the organization of the International Film Festival
of Rome have not been considered.
** The item refers to the three institutional bodies (Cinecittà Luce, Centro Sperimentale di Cinematografia and Fondazione Biennale
di Venezia) that are subsidized by MiBac as regards the National contribution; instead, it refers to allocations for structures involved in the
cinematographic sector that are part of the organic map of public bodies as regards the evaluation of subnational contributions.
According to data provided by the General Directorate for Cinema of MiBac, Osservatorio dello Spettaccolo and the regional administrations
and Film Commissions of Piedmont, Friuli Venezia Giulia, Lazio, Marche, Apulia and Sardinia
of reliable and transparent data – cannot be considered completely exhaustive and detailed,
but the survey of each ascertainable allocation is useful to outline a first comparison
framework with the expenditure commitments and the investments that Regions share
among their respective territories (Table 41). Data show that every thousand-Euro
contribution granted by territorial administrations to entrepreneurial and professional
activities, cinematographic sector is given 2.03 Euros (4.42 Euros, instead, are granted by the
government). In terms of public expenditure, considering the unit of measure of one thousand
Euros, industry and services receive 54.7 Euros, but only 11 cents of this amount (compared
to 54 cents of the state framework) is given to the cinematographic sectors. Compared to
the regional GNP, instead, values are so low that become nearly negligible.
Always less than the State. It means that public territorial administrations – even though
they are offering greater contributions, already remarkable if compared to Fus and, most of
all, appreciated by the operators of the sector – still invest in cinema less than they could and
should do (given the extent of the so-called federal public expenditure) if we took the values
given by state commitment as reference parameters. It can be noted that, in the comparison
with indexes referring to the national budget, considering the allocations supporting the
development of industry and services, local bodies assign the film industry a little less than
half of state contributions, but compared to public expenditure, contributions to cinema (equal
to 11 cents) becomes 5 times lower than the contributions granted at central level.
In the name of genius loci. This dichotomy can have two main explanations, connected to the
type of intervention that territorial institutions, in the name of genius loci, have carried out in
favour of cinema.
The first explanation concerns the presence (still marked), among the conditions for the
granting of regional funds, both of constraints for the establishment of structures or
90 |
production processes in the territory and the allocation of resources and production costs
within the circuit (included the recourse to local technical personnel).
These conditions mostly explain the greater incidence of the contributions to cinema on the
total transfers to entrepreneurial and professional realities (1 : 2) compared to the share
recorded at national level as well the share related to the regional public expenditure (1 : 5),
right because they attract the investments carrying-out in loco and foster the localization of
their direct impacts.
The second explanation, instead, refers to the process of formalization of territorial
contributions. It is a recent process, and it has not been fully assimilated by the interventions
programming policies (priorioties setting, strategies) that are strengthening within the
municipal and provincial context, where the interventions for culture and entertainment take
the shape of “capital contributions”, fueled by resources raised among the different budget
issues, then dispersing in the jumble of public expenditure.
The great challenge of the Film Commissions. These issues, along with those stated in the
previous paragraphs, have often led different cinematographic elements to underline the
opportunity to launch a project of formal recognition and valorization of local supports to the
audiovisual sector, thus making them an asset of the national incentives system.
The first fundamental step in this direction was taken in the middle spring 2012 by Ifc-Italian
Film Commission, the representative body which 19 among the main Film Commissions adhere
to, and that approved five agreement protocols to be signed by the General Directorate for
Cinema of MiBac, Cinecittà Luce and the three main entrepreneurial association of the sector:
Anica (National Association of Cinematografic, Audiovisual and Multimedia Industries), Apt
(Association of Television Producers) and Ape (Association of Executive Producers)67.
These protocols aim at searching for a connection point between the different realities and, at
this stage of relationships, the necessity to make communications between national and local
institutions constant is fundamental.
The project is at its first stage, and it will probably need a further step, also with the
acknowledgment by the administrative representation, as Film Commissions are issued by
Regions, Municipalities, Provinces and bodies which are included (beyond their legal form) in
the organic map of the institutional bodies and that operate according to their governmental
and public resources policies. Anyway, it is a particularly important and significant operation,
that could introduce in the Italian film scene some innovative elements in the choices of
collaboration between the different reference subjects as well as in the strategies that foster
the development of the sector activities.
67
The Association underwent a reorganization, and for the two-year period 2012-2013 assigned the role
of President to Silvio Maselli, General Director of Apulia Film Commission, and the roles of vice-presidents to Davide Bracco, Director of the Turin Piedmont Film Commission, and Anna Olivucci, person
in charge of Marche Film Commission.
| 91
Complementary or alternative? On the other hand, it can be understand how roles and
contents of central and territorial contributions can be the expression of complementary –
and not alternative – supports, more subsidiary than supplementary or interchangeable.
That is, they can generate concrete action and common policies synergies, mostly bypassing
the risks of a further framework of rules and parameters that often affect the
harmonization expectations and coordination opportunities (already wished) that
unfortunately could influence the competition spirit that animates every sector, instead of
favouring it.
This trend can be seen when comparing the allocations of national and sub-national funds
(Table 42). This comparison has two main characteristics.
1. In order to delineate a sufficiently reliable allocation of the territorial funding, a sample
has been created according to the availability of reliable data related to funds subdivision
by Regions that document the destination of their allocations. The reference base lies
therefore within the limits of six regional administrations – Sardinia, Apulia, Marche,
Lazio, Friuli Venezia Giulia and Piedmont – with deep investment experiences, and also
operational through Film Commissions and Film Funds, with an overall commitment
share equal to 43.2% of the total resources allocated in 2010 at regional level (Table 39),
which represents the overall reality.
2. As for the National incentive system, the comparison becomes important if the tax handle
(whose importance is now obvious) is considered a dependent variable and an additional
instrument or out of context – and of the possible intervention forms of territorial bodies
– for its particular typology.
If quality is different. The comparison that excludes tax credit and tax shelter refers to a
picture that shows Fus in its traditional form, also meeting the requirements of the three
great institutional bodies supported by MiBac, while it underlines the vocation of local
governments to incentivize the production sectors, except for the business sector that
receives limited support. By introducing the tax handle in the comparison, we move to a
distribution of national resources referring to all types of state contribution (Table 36), and
the framework seems more articulated, with a greater balance between destinations of
allocations and some apparent compensatory effects in the amount of allocations, which
seem partially softened if values generated by the tax handle are assigned to the sectors
that are eligible for them.
The resulting indication seems to point out how the evolution of the sector could be
(positively) influenced by refining the complementarity of national and sub-national support
systems, also considering the relative and different intervention “qualities”.
COMMUNITY AID AND SUPPORT
Harmonization is a very articulated problem. As a general rule, it is the same that the
European Union faced with alternate/different political results, despite the great variety of
92 |
programmes and tools which were set on the front of the communication, cultural and artistic
cooperation, entertainment promotion and the incentives and diffusion of the audiovisual
systems and ICT (Information and Communication Technology).
In particular, EU has been allocating resources to the film sector since 1986, and it has
progressively extended its interventions to the production and distribution, to the screening
and the co-production, both in the Community area and in the Mediterranean region and,
moreover, to the technological innovation and the promotion of films for teenagers and
children. The main programmes, “revisited” and updated in 2009, are Media (which is more
a Community programme) and Eurimages, Media Mundus (since 2011) and Europa Cinemas,
defined as Pan-European as they are connected to the international cooperation of the EU
countries. Every country contemplates the allocation of contributions to the operators of the
TABLE 43
FROM THE MEDIA PROGRAMME OF 2008 AND 2009 TO ITALIAN CINEMA
Funds allocation (Expressed
in thousands of Euros)
Support to producers
Single projects development
Slate funding development
Support to distributors
Selective distribution
Automatic distribution
Export sales agents
Promotion
Festivals
Market access
TV broadcasting works
New technologies
Pilot projects
Interactive works development
i2i Audiovisual
Training
Continuous training
Initial training
TOTAL RESOURCES - SOURCE
Promotion
GLOBAL ALLOCATIONS
Number
Amount
ITALIAN RECIPIENTS
Number
Amount
ITALIAN CINEMA SHARE
Number
Amount
180
100
80
854
619
235
30
142
97
45
58
123
4
28
91
56
46.
10.
1,473
MEDIA PROGRAMME 2008
18,475.0
19
6,790.0
12
11,685.0
7
58,555.5
37
11,035.5
24
47,520.0
13
2,110.0
0
8,380.8
8
3,425.0
6
4,955.8
2
7,724.3
0
5,676.1
3
1,083.0
0
1,400.0
0
3,193.1
3
10,055.0
6
8,980.0
6
1,075.0
0
110,976.7
73
1,401.7
405.3
996.4
3,670.7
1,030.7
2,640.0
379.0
199.0
180.0
90.4
90.4
199.0
199.0
5,740.8
10.55%
12.00%
8.75%
4.33%
3.87%
5.53%
5.63%
6.18%
4.44%
2.43%
3.33%
10.71%
13.04%
4.95%
7.58%
5.97%
8.52%
6.26%
9.34%
5.55%
4.52%
5.81%
3.63%
1.59%
2.83%
1.97%
2.21%
5.17%
265
200
65
808
564
244
75
MEDIA PROGRAMME 2009*
17,048.0
22
7,970.0
21
9,078.0
1
38,200.2
40
13,200.2
28
25,000.0
12
4,270.0
3
920.2
782.4
137.8
5,046.0
2,169.0
2,877.0
115.0
8.30%
10.50%
1.53%
4.95%
4.96%
4.91%
4.00%
5.39%
9.81%
1.51%
13.20%
16.43%
11.50%
2.69%
Segue
| 93
segue TABLE 43
DAL PROGRAMMA MEDIA 2008 E 2009 AL CINEMA ITALIANO
Festivals
Market access
New technologies
VOD and digital distribution
Pilot projects
i2i Audiovisual
Training
Continuous training
Initial training
TOTAL RESOURCES 2009
GLOBAL ALLOCATIONS
Number
Amount
48
27
71
126
16
2
18
90
39
26.
13.
1,384
ITALIAN RECIPIENTS
Number
Amount
1,570.0
2
2,700.0
1
9,423.3
1
12,310.4
4
6,418.4
0
675.0
0
2,189.0
0
3,028.0
4
4,200.0
6
2,400.0
6
1,800.0
0
85,451.9
76
75.0
40.0
54.0
161.5
161.5
217.0
217.0
6,514.5
Number
Amount
4.16%
3.70%
1.40%
3.70%
4.44%
15.38%
23.07%
5.49%
4.77%
1.48%
0.57%
1.58%
5.33%
5.16%
9.04%
7.62%
* In 2009 no funds were granted to export sales agents. Within the contribution for new technologies there are, instead, funds for VOD and
digital distribution.
Data processing according to 2008 and 2009 examinations’ results within the EU Media Programme 2007-2010.
28 EU member states (with further five countries that are “associated” to the programme),
with the Italian ones that demonstrated a good capacity to assert themselves in the traditional
sectors of activity, as proved by the overall data of the last years. These also show how
consistent the community resources for cinema are – even though in very large area (Tables
43, 44 and 45).
From the Media Programme. At first, allocations were subject to a strict selection, as the
Community included few countries (12 in 1986, 15 in 1995).
Then the entry of the new countries, in the 2000s, increased the amount of contributions a
lot, but decreasing their average amount, despite the marked increase in the available
plafonds. In order to avoid too low incentives, since the last three-year period the number of
requests accepted has been reduced again, while the type of interventions has been split up.
For instance, the Media Programme includes seven areas of interest – with contributions to:
producers, distributors, business, promotion, training, new technologies – and for each area
there are different types of interventions, that are more specific mostly for the contribution
for new production projects. Only one is a specific credit intervention: i2i Audiovisual, which
makes the access to bank contributions easier, by paying part of the costs of insurance
guarantees, completion guarantees and financial costs.
A Creative Europe. In 2013, however, the Media Programme will end and it will be replaced
by the new Creative Europe, with a 1.8 billion Euro budget spread over the period 2014-2020,
half of which are for the cinematographic and audiovisual sector, along with further 210
million Euros allocated to the Production Guarantee Fund, for the support to the direct access
94 |
TABLE 44
FROM THE MEDIA PROGRAMME OF 2010 AND 2011 TO ITALIAN CINEMA
GLOBAL ALLOCATIONS
Number
Amount
ITALIAN RECIPIENTS
Number
Amount
Number
Amount
Export sales agents
Promotion
Festivals
Market access
New technologies
Pilot projects
i2i Audiovisual
Training
Continuous training
Initial training
264
200
64
839
564
275
26
64
49
15
54
122
18
5
19
80
40
28.
12
1,409
18,345.0
13
7,970.0
12
10,375.0
1
52,100.2
43
13,200.2
28
48,900.0
15
1,327.0
2
3,766.8
3
1,581.8
2
2,185.0
1
11,299.9
2
13,865.3
2
6,345.1
0
1,512.2
0
2,150.0
0
3,858.0
2
4,503.9
1
2,923.9
1
1,580.0
0
105,208.1
66
547.4
432.4
115.0
4,920.0
2,169.0
2,751.0
130.0
125.0
75.0
50.0
141.0
100.0
100.0
100.0
100.0
6,063.4
4.92%
6.00%
1.56%
5.12%
4.96%
5.45%
7.69%
4.68%
4.08%
6.66%
3.70%
1.63%
2.50%
2.50%
3.57%
4.68%
2.96%
5.42%
1.10%
9.44%
16.43%
5.62%
9.79%
3.31%
4.74%
2.29%
1.24%
0.72%
2.59%
2.22%
3.42%
5.76%
Digit – Cinemas
Promotion
Festivals
Market access
New technologies
Pilot projects
i2i Audiovisual
Training
Continuous formation
Initial training
132
100
32
485
178
307
57
69
23
46
70
15
7
10
38
44
29.
15
926
MEDIA PROGRAMME 2011**
10,085.0
9
3,985.0
8
6,100.0
1
46,604.2
2
3,222.2
2
43,382.0
0
2,500.0
6
94,320.0
2
87,500.0
1
6,820.0
1
9,449.0
1
5,027.0
0
1,697.0
0
1,315.0
0
1,410.0
1
4,541.3
3
2,819.7
2
1,721.6
1
167,499.5
23
432.5
322.5
110.0
170.0
170.0
220.0
150.0
30.0
120.0
50.0
50.0
279.0
199.0
80.0
1,301.5
6.81%
8.00%
3.12%
0.41%
1.12%
10.52%
2.89%
4.34%
2.17%
1.42%
2.63%
6.81%
6.89%
6.66%
3.48%
4.28%
8.09%
1.80%
0.15%
5.27%
8.80%
0.16%
0.03%
1.75%
0.52%
3.54%
6.14%
7.05%
4.64%
0.78%
* In 2010 new funds were allocated to the export sales agents, who were absent in 2009.
** On 31st May 2012 the results of the last examination of 2011, related to the development of single projects concerning the contributions
to producers and works for TV broadcasting were not known yet. No funds were allocated to export sales agents. A special contribution was
introduced – called digit – in order to support the digitalization process of cinemas.
Data provided by the records of 2010 and 2011 public announcements, as regards Media Programmes 2007-2010 of the EU.
| 95
TABLE 45
EURIMAGES FUNDS TO EUROPEAN AND ITALIAN CINEMA
GLOBAL ALLOCATIONS
Number
Amount
ITALIAN RECIPIENTS
Number
Amount
Number
Amount
Support to co-production
Support to distribution
57
149
EURIMAGES 2008
20,200.0
853.8
9
2
4,650.0
11.4
15.79%
1.34%
23.01%
1.34%
55
169
EURIMAGES 2009
19,460.0
865.9
7
3
3,150.0
15.4
12.72%
1.77%
16.18%
1.80%
56
161
EURIMAGES 2010
19,260.0
883.6
6
9
2,200.0
49.4
10.71%
5.59%
11.42%
5.60%
72
116
EURIMAGES 2011
22,350.0
645.3
6
6
2,080.0
33.5
8.33%
5.17%
9.30%
5.19%
TOTAL RESOURCES 2008-2011
240
595
835
EURIMAGES 2008-2011
81,270.0
28
3,248.6
20
84,518.6
48
12,080.0
109.7
12,189.7
11.66%
3.36%
5.74%
14.86%
3.37%
14.42%
* The amount indicated for the Italian companies in the area of funds for distribution results from an estimate, as the specific indications
of the companies’ budgets and the funds allocated are not reported.
Data processing according to 2008-2011 examinations’ results within the EU Eurimages Programme.
TABLE 46
FOUR-YEAR CONTRIBUTION TO EUROPEAN AND ITALIAN CINEMA
Contributions to cinema
GLOBAL ALLOCATIONS
(expressed in thousands of Euros)* Number
Amount
ITALIAN RECIPIENTS
Number
Amount
Number
Amount
Media
Eurimages
TOTAL 2008
1,473
206
1,679
110,976.7
21,053.8
132,030.5
73
11
84
5,740.8
4,661.4
10,402.2
4.95%
5.33%
5.00%
5.17%
22.14%
7.87%
Media
Eurimages
TOTAL 2009
1,384
224
1,608
85,451.9
20,325.9
105,777.8
76
10
86
6,514.5
3,165.4
9,679.9
5.49%
4.46%
5.34%
7.62%
15.57%
9.15%
Media
Eurimages
TOTAL 2010
1,409
217
1,626
105,208.1
22,995.3
128,203.4
66
15
81
6,063.4
2,249.4
8,312.8
4.68%
6.91%
4.98%
5.76%
9.78%
6.48%
Media
Eurimages
Media Mundus 2011
TOTAL 2011
926
188
37
1,151
167,499.5
84,518.6
4,787.5
256,805.6
23
12
3
38
1,301.5
2,113.5
286.5
3,701.5
3.48%
6.38%
8.10%
3.30%
0.78%
2.50%
5.98%
1.44%
Data processing according to 2008-2011 examinations’ results within the EU Programmes supporting the audiovisual sector.
96 |
to bank credit (the remaining 690 million Euros are allocated to the other cultural activities),
compared to 755 million Euros absorbed by Media 2007-2013 and 15 million Euros of the
recent Media Mundus 2011-2013 (with further 400 million Euros allocated to culture).
According to the operational plans, more than 1000 European films will be financed – this
number was nearly reached by Media during its first five years – and 2500 cinema, at least,
that will screen at least 50% of the European films, will be supported.
Little active Italians. These forecasts seem to qualify even more the selection of production
projects and other initiatives connected to the development of the sector. It becomes fundamental,
therefore, the evaluation of Italian operators’ predisposition to use the Community incentives and,
above all, their capacity to interdict resources, that since 2009 has been showing a progressive
drop (Table 46). Only once the contributions to Media producers and Eurimages co-productions
rose in 2011, with higher allocation shares and amounts, compared to 2010, but this is more an
exception than a concrete turnaround, as their total amount is still decreasing: from 6.05 million
Euros in 2008 to 4.07 in 2009, and from 2.74 million Euros in 2010 to 2.51 in 2011.
Besides the concomitant increase in the average budgets requested for the most important works
in the production sector, the erosion of the Community contributions seems problematic
considering a feared but expectable containment of national contributions, and an increasingly
intense competition in which the Italian cinema shows a negative import-export balance on the
main European markets, compared to the other major competing cinematographies.
IMPACT OF PUBLIC FUNDS
Among the folds of the overall evaluation of all public funds, two implications should not be
ignored. The first concerns the Community resources FESR and FAS which, through the
Framework Programme Agreements-FPA and the Regional Operational Prgrammes-ROP,
represent the first source for many interventions and Film Funds of the Central and Southern
Regions.
Importance of the EU. The Community funds they come from are running out, as in 2013 an
entire phase of the intervention policy of the European Union will end (for the so-called
underdeveloped regions). The EU has already planned the new strategies to follow until 2020,
with different funds distribution criteria that, for some areas –like the South of Italy – imply
a marked reduction in the allocation of funds and lower discretion in their use.
Considering the near future, the sub-national contribution could not be in line with the
budgets allowed by the actual scene.
The second implication concerns a more specific aspect of economic analysis that, on the
contrary, throws light on the actual impact of the central and territorial support to cinema
on the national budget. Public accounts of State and Regions are interdependent, as part of
the resources allocated by the regional authorities – like the transfers for incentives for
investments or production – comes from the Government and, during the final accounting
activity, the corresponding assets are balanced by being pooled together into a single asset
| 97
TABLE 47
CINEMA AND NATIONAL/ SUB-NATIONAL CONTRIBUTIONS
Annual amounts expressed in millions of Euros
2005
2006
2007
2008
2009
CONSOLIDATED AMOUNT OF NATIONAL AND TERRITORIAL CONTRIBUTIONS TO COMPANIES
22,279
22,471
25,133
22,338
23,822
12,910
13,070
14,872
15,001
15,435
Total transfers*
35,189
35,471
40,005
37,339
39,257
Global funds for cinema
0.306%
0.349%
0.361%
0.375%
0.342%
2010
20,442
16,040
36,482
0.513%
INFLUENCE OF FUNDS ON THE PUBLIC EXPENDITURE OF THE STATE AND LOCAL AUTHORITIES
Tranfers to companies
5.07%
4.86%
5.35%
4.82%
4.92%
4.60%
0.027%
0.030%
0.034%
0.032%
0.036%
0.040%
Tranfers to companies
FUNDS FOR CINEMA ON THE NATIONAL GNP
0.43%
0.45%
0.36%
0.37%
0.007%
0.008%
0.009%
0.009%
0.38%
0.011%
0.29%
0.012%
* Transfers to companies include all forms of national, regional and municipal contribution allocated both by government and administrative
authorities and other public bodies (agencies, financial institutions and other bodies like the Chambers of Commerce).
EData processing according to the Annual Report - 2010 of Banca d’Italia (Rome, June 2011) and the Report on the use of the Single
Fund for Entertainment - Year 2010, by the Performing Arts Observatory of MiBac (Rome, 2011)
TABLE 48
THE EUROPEAN MAP OF PUBLIC FUNDS FOR CINEMA
Distribution of funds
by territorial level
2004
NUMBERS
2009
57
57
81
70,8%
67
67
128
74,5%
1.289
240
109
21,4%
1.388
258
110
15,3%
1.511
293
141
22,4%
1.634
292
165
21,9%
1.621
320
164
23,0%
NATIONAL SHARES
Supranational funds
Other continental funds
195
5
8
262
7
11
1.638
147
7
1.756
136
12
1.945
127
12
2.091
148
20
2.105
161
12
GRAND TOTAL
208
280
1.792
1.904
2.084
2.259
2.278
National funds
Federal funds
Regional and local funds*
Sub-national shares
FUNDS IN THE PERIOD 2005-2009 EXPRESSED IN MILLION OF EUROS
2005
2006
2007
2008
2009
* Compared to the total number indicated, the purely local funds were 17 (out of 81) in 2004 and 31 (out of 128) in 2009.
Source: Public Funding for Film and Audiovisual Works in Europe, by EAO-European Audiovisual Observatory (Brussels, 2011).
Origin of capital. This circumstance does not imply any material repercussions on the
companies which receive these funds, but compared to the determination of the actual
impact of reductions allowed in different sectors, like the cinematographic one, their real
origin becomes very important, beyond all appearances. In fact, the transfer of resources
from the State to the territorial administrations not only involves a share of national
contributions, but also part of the Community resources used by Regions – like FESR and
FAS funds – for certain purposes, like culture and entertainment, including the direct funding
for cinema.
By reunifying State and territorial funds, as it happens when the balance sheet of the entire
98 |
TABLE 49
THE TEN COUNTRIES WITH THE HIGHEST PUBLIC FUNDS
Top ten European countries
for public incentives
1. France
2. Germany
3. Italy
4. Great Britain
5. Spain
6. Russia*
7. Netherlands
8. Austria
9. Sweden
10. Norway
TOTAL TOP TEN
TOP 10 OUT OF TOTAL
PUBLIC FUNDS EXPRESSED IN MILLIONS OF €
2009
2005-2009
PUBLIC RESOURCES ALLOCATED EXPRESSED IN MILLIONS OF €
Total 2009
National
Territorial
2005-2009
610.09
324.87
126.34
127.82
123.66
74.52
64.01
65.49
56.45
54.87
2,870.34
1,406.30
570.88
745.00
560.70
381.00
246.27
261.06
347.73
299.07
581.20
303.05
145.65
127.82
123.66
74.52
64.01
65.49
56.45
54.87
498.32
152.93
116.05
72.28
75.79
61.48
39.53
41.52
48.73
82.88
150.12
29.60
55.54
47.87
2.52
25.95
14.92
6.14
2,735.62
1,350.93
704.33
683.87
514.63
380.98
279.77
267.22
258.45
241.08
1,628.12
7,015.83
1,596.77
1,143.89
351.88
7,416.78
77.33%
78.62%
83.19%
79.64%
72.84%
83.16%
* The number of the Russian territorial funds is not known. For the total calculation of National and sub-national funds allocated by the
first ten European countries a virtual partition 50/50 has been carried out, in order not to excessively compromise the balance of ratios.
TABLE 50
THE TEN COUNTRIES WHICH ALLOCATE MORE FUNDS
Top ten European countries ACTUAL FUNDS (EXPRESSED IN MILLIONS OF EUROS) ALLOCATED FROM 2005 TO 2009
for funds allocation
2005
2006
2007
2008
2009 2009 share
Totale
for the period
1. Francia
2. Germania
3. Italia
4. Gran Bretagna
5. Spagna
6. Russia
7. Paesi Bassi
8. Austria
9. Svezia
10. Norvegia
TOTAL / TOP 10
TOP 10
OUT OF THE TOTAL
525.16
228.58
159.54
161.17
81.30
66.36
45.64
46.32
46.66
42.74
522.25
217.58
120.34
124.04
100.59
76.11
46.57
45.84
50.53
42.17
540.99
302.80
122.67
138.92
101.32
82.21
60.79
52.90
51.79
48.08
566.02
298.92
156.03
131.92
107.76
81.78
62.76
56.67
53.02
53.22
581.20
303.05
145.65
127.82
123.66
74.52
64.01
65.49
56.45
54.87
30.28%
15.78%
7.59%
6.66%
6.44%
3.88%
3.33%
3.41%
2.94%
2.85%
2,735.62
1,350.93
704.23
683.87
514.63
380.98
279.77
267.22
258.45
241.08
1,403.47
1,346.02
1,502.47
1,567.10
1,596.72
83.16%
7,416.78
85.97%
82.49%
82.92%
81.55%
83.19%
83.16%
83.16%
public administration is drawn up by the State General Accounting Department, a total
incidence different from the sum of the two single allocations is reported.
Every 1000 Euros of transfers to companies, cinema receives national resources
corresponding to 5.13 Euros, compared to the cumulative amount of 6.45 Euros that is
actually granted by the State (4.42 Euros) and Regions (2.03); in the same way, 40 cents can
be assigned every 1000 Euros of public expenditure, compared to the 65 cents that are
| 99
TABLE 51
MAP OF PUBLIC FUNDS IN THE TOP TEN COUNTRIES
Top 10 European countries
as for their funds
1. France
2. Germany
3. Italy
4.Spain
5. Great Britain
6. Russia*
7. Austria
8. Netherlands
9. Sweden
10. Norway
FUNDS ALLOCATED IN 2009 EXPRESSED IN MILLIONS OF EUROS
Totale
Nazionali
Territoriali
Nazionali
581.20
303.05
145.65
123.66
127.82
74.52
65.48
64.01
56.45
54.87
498.32
152.93
116.05
75.79
72.28
39.53
61.48
41.52
48.73
82.88
150.12
29.60
47.87
55.54
25.95
2.52
14.92
6.14
4
5
1
1
3
1
4
3
1
3
NUMERICAL SUBDIVISION OF FUNDS
Federali
Regionali
Locali
0
17
0
16
5
0
14
0
0
0
27
0
15
1
10
0
1
20
10
17
0
1
0
0
1
4
4
0
0
* The number of regional funds active in Russia is not known. As a consequence, neither the partition of available resources is known.
materially granted to the sector (54 by the State and 11 by the Regions).
This means that the actual supranational contribution is higher than the direct contribution
of the EU. In fact, compared to the Gross National Product, the value of all national and subnational funds received by cinema corresponds to 1.2 cents every 1000 Euros of GNP, that
is, more than the values of 0.8 and 0.2 cents at national and regional level, resulting in an
amount of 1 cent.
Who loses and who wins. During the last years the sub-national funding gained in
importance while the supranational one, that is, Community funds, remained concealed.
Therefore, looking at the future, it is essential to establish a relationship between them even
from the point of view of the attention.
In times of restrictions on the public finance – the general and local one – stressing the
direct recourse to funds of the Media Programme today, and to those of the Creative Europe
tomorrow, is really important for the Italian cinema.
In fact, the capacity to interdict supranational resources is strictly connected to the
competitiveness on international markets: the funds that operators are able to get increase
their production potential, but this basically corresponds to a lower support to competitors.
As regards the comparison between the actual availability of public funds for European
cinematographies, there are some uncertainties. The EAO (European Audiovisual
Observatory) has recently carried out a large-scale research involving 38 countries.
Based on the so-called adhesion survey, it shows an approximate picture of the overall
institutional support to cinema, in Europe, even though in front of the objective difficulty in
finding more detailed information.
As for Italy, the action of the tax handle does not seem relevant yet, as the report refers to
2009. The total amount of incentives also includes funds allocated directly by national
televisions of some Countries, in compliance with the Community Directive “Television
100 |
TABLE 52
USE OF FUNDS FOR CINEMA IN EUROPE
Funds
allocations
NATIONAL FUNDS TERRITORIAL FUNDS SUPRANATIONAL FUNDS OTHER FUNDS
Million €
SHARE Milion €
SHARE Milion €
SHARE
Milion€
SHARE
CREATIVE PHASE
40.11
2.8%
Screenplays
10.96
0.8%
Projects development
29.15
2.0%
PRODUCTION
970.20 67.6%
DISTRIBUTION
105.81
7.4%
BUSINESS
107.05
7.5%
PROMOTION
51.48
3.6%
FESTIVALS
37.76
2.6%
TRAINING
19.42
1.4%
OTHER INITIATIVES
103.64
7.2%
Film libraries
24.46
1.8%
Companies development
5.17
0.4%
Schools-education
14.65
1.0%
Culture-research
27.36
1.9%
Videogames-VOD
7.89
0.6%
Awards
3.44
0.2%
Other purposes
18.65
1.2%
TOTAL *
1.435.50 (69.6%)
25.49
5.3%
6.42
1.3%
19.07
4.0%
337.43 70.2%
16.86
3.5%
8.25
1.7%
11.20
2.3%
8.68
1.8%
5.99
1.2%
66.96 13.9%
5.56
1.2%
4.18
0.9%
11.61
2.4%
28.90
6.0%
2.60
0.6%
0.81
0.2%
13.27
2.8%
480.90 (23.3%)
22.30
0.03
22.27
26.90
48.63
8.97
9.20
3.50
8.55
10.99
3.05
0.80
6.41
0.04
0.67
139.07
16.0%
0.0%
16.0%
19.3%
35.0%
6.5%
6.6%
2.5%
6.2%
7.9%
2.2%
0.6%
4.8%
0.0%
0.5%
(6.7%)
0.43
0.33
0.10
3.38
1.31
0.90
0.69
0.07
2.32
0.31
0.01
0.29
9.44
TOTAL RESOURCES
Milion €
SHARE
4.7%
88.35
4.3%
3.5%
17.75
0.9%
1.2%
70.60
3.4%
35.8% 1.337.92 64.8%
13.9% 172.61
8.4%
9.5% 125.18
6.1%
7.4%
72.59
3.5%
0.8%
50.03
2.4%
24.6%
36.29
1.8%
3.3% 181.92
8.8%
32.02
1.6%
12.41
0.6%
28.26
1.3%
57.07
2.8%
16.92
0.8%
0.2%
4.30
0.2%
3.2%
32.90
1.6%
(0.4%) 2.064.39 (100%)
* The percent values between parentheses correspond to the share represented by the different types of public funds compared to the grand
total of the resources allocated in 2010.
without Frontiers”, while it is not possible to quantify the financial commitment expressed
in other countries by the networks – like Mediaset and Rai in Italy or Telecinco and Antenna
3 in Spain – through their own production and distribution structures (Table 48).
After France and Germany. In general, Italy is far from the levels of public resources
availability of France (which are unreachable) and Germany, while it contends for the third
position with two other members of the so-called club of the continental big five, that is,
Great Britain and Spain (Tables 49, 50 and 51).
The comparison would have become even more important if other detailed information had
been given, above all by EAO, that is, the allocation of European Union’s funds – in particular
of Media Programmes and Eurimages funds – to the member states of the European
Community (thus confirming the prevailing position of the French cinema and, secondly, the
German one). Moreover, it should be considered that sometimes the specific nature of funds
can undergo, mainly as regards their possible use, discretional evaluations (Table 52), like
the nature of FUS (part of MiBac), considered almost entirely for its support to production,
and not for the same amount of its actual contribution to the sector. As for the global
summary of National and sub-national funds’ endowments, we can only notice that Italy,
among the 27 countries of the European Union, can rely on 6.7& of the National resources
that are globally allocated.
| 101
CHAPTER 3
This chapter was written by Federica D’Urso, Giovanni Gangemi,
Andrea Marzulli and Francesca Medolago Albani for Anica-Ufficio Studi
Resources
for the Italian cinema
1. Overview: starting points
The double cultural and commercial nature of the cinematographic product lies at the origin
of the complexity of its market and the industrial process that develops around its
production and marketing. Moreover, it is an intangible product, whose economic value is
determined by the exploitation of the different rights of economic use it generates.
The main activity of the producer – the linchpin of the whole process – is the making up of
the creative and economic resources which are necessary for the realization of each project.
This activity entails a double competence and a great fundraising capacity for a subject
whose capital rarely corresponds to the required cash.
As everybody knows, it was different until the 1950s, the glorious period of the Italian
cinema, when the only exploitation chain of films was the screening room, in a shorter and
simpler process compared to the modern system, which instead develops through
consecutive exploitations on the so-called “windows”: in the past, a cinema could sell 800
million tickets per year, equal to about seven times today’s average amount. In such a
market, the producer/financier could soon collect the film proceeds, capitalize them and
reinvest them into new works, in a simple industrial process, similar to the process of most
consumer goods.
With the spread of the competing media, starting from the television, the classical business
model undergo a crisis, due to the physiological decrease in the audience, which could
finally choose between different media, to the increasing unforeseeability of revenues on the
higher number of broadcasting platforms, to the extension in the time of the revenues’ flow.
At legislative level, this redefinition resulted in the introduction of regulations which aimed
at correcting a market that, for its structure, entailed the tangible risk of ”squashing” the
movie sector, along with the risk of its survival. During the last forty years, therefore, there
have been several normative intervention by the central State in favour of the film sector, in
order to protect/promote an activity that is considered important for its cultural value, from
a point of view that included the support to culture in its different artistic expressions1.
REASONS AND EVOLUTION OF THE PUBLIC INTERVENTION
The condition that justifies and explains the national public intervention in favour of the film
industry, in particular for the production sector, has a cultural origin. From the 1990s, the
debate over the reasons of this intervention has always been heated and led to a gradual
evolution of the approach of the legislator who, according to the continuous redefinition of
the reality of the sector, has integrated and amended the existing regulations. In order to
prove that the theme of the technological evolution and the product’s destination is very
important, also beyond national borders, at the end of the 1980s the European Union adopted
the regulations, by issuing some innovative measures to support the development of the
industrial fabric of cinema and audiovisual in the member States. Many initiatives appeared
and developed from the early 2000s, making the normative framework of the sector even
more articulated and complex. These initiatives were sometimes unclear but interesting, and
they were promoted at sub-national level by Regions and local authorities.
The specific goals and the operating modalities of each measure issued at territorial level
change according to the nature of the promoting authority, but also according to the
continuous reassessment of the overall view, in which the film industry oscillates between a
cultural position, the acknowledgment of its industrial value, and the more widespread
reputation as leading sector for the development of adjoining sectors like the tourism one.
According to other approaches, cinema is the ideal tool for the cultural and landscape
valorization of a specific territorial area, as well as for the training of skilled professional
figures, with the consequent effects on employment.
With this wide range of goals, which the film industry lends itself and answers to, by
demonstrating a great versatility and adaptability to the different strategic lines that are
pointed out, the administrations of all territorial levels carry out interventions in favour of the
sector, with great differences for their nature and the extent of the measures taken.
As a result, today there are many different types of public support to the film industry, each
1.
104 |
First of all, the basic law of cinema, Law no. 1213 of 1965 – which has been amended for several decades until the reform of 2004, with the Legislative Decree no. 28, the so-called Urbani Law – and Law
no. 163 of 1985, which established the Single Fund for entertainment, the FUS (Fondo Unico per lo
Spettacolo).
one included in a development project that considers cinema as a tool for the economiccultural development of the community. The heterogeneity of the many measures sometimes
makes them complementary, sometimes reciprocally incompatible, according to the nature
and the extent of the supported projects, as well as to the restrictions issued by the single
promoting administrations. In this context, the ability of the producer lies in his capacity of
appropriately grasping the opportunities offered by the institutions and the market, according
to the specific features of every single project.
On the whole, in the course of time, the increase in these tools has balanced the contractions
of the amounts of the available direct resources for each single measure and, in general, we
are shifting from a form of direct support (allocation of funds and/or contributions), focused
on culture and characterized by selective allocation criteria, to a form of indirect support
(based on the activation of the tax and/or financial handle), characterized by more
sophisticated processes and automatic allocation criteria, to support the product through the
consolidation of the industry economic autonomy. This is a turning point in the history of this
sector, marked, more than produced, by the public intervention of the last ten years, a kind
of “promotion”: from a handicraft sector based on the public support, to an industry that tries
to free itself from the cultural restrictions and creates the instruments for its own
sustainability within the market.
“PRIVATE” RESOURCES
Along with the public instrument, the process of the film budget closing is based on sources
that are conventionally defined as “private resources”, which include the capital allocated to
the sector in different ways by private subjects. These resources can be divided into two
groups, which will be defined here as “spontaneous” and “induced”.
The spontaneous private resources are those allocated to the project by subjects who decide
to invest their capital in a specific cinematographic product, in view of its expectable profit
and according to the many possible contract types. They are defined as “spontaneous”
because they are motivated by a purely entrepreneurial initiative.
In this category are mainly included the capital allocations carried out by the producer himself
or by other subjects of the sector, who are interested in acquiring the right of use for one or
more exclusive work exploitations.
Along with the producer, the subjects that often choose to carry out this kind of investment
are the film distributors, more or less integrated in the production companies.
The return of the investment, in this case, is the acquisition of an exploitation license, or an
ownership share of the work, which is proportional to the extent of the investment.
Also the instrument of the product placement should be included among the spontaneous
private resources. It involves the companies which are not in the sector and decide to invest
a certain amount of money in the production in order to give visibility to a brand or a product
within the film.
Product placement was introduced in Italy for the first time when the 2004 Urbani Law entered
into force: it is, therefore, an investment which does not entail any economic revenue, but
| 105
only revenues from the communication point of view.
The second typology of private resources used by the producer for the making up of his film
are the “induced” ones. These are investments carried out by private subjects who, according
to more or less free contractual dynamics, are obliged or stimulated to carry out this
investment by the regulations in force. A particular reference should be made to two
instruments: the compulsory investment of the broadcasters, since 1998, and the more recent
investments of external companies that are attracted to the activation of specific tax incentives
which are in force from 2009, but operational from 2010.
The most important, in terms of economic volumes generated, is the first one. The
compulsory investments of TV broadcasters in Italian films, operational from 19982, induced
the two main operators of the TV market to structure themselves with production and
distribution companies linked with them, which operate within the film market and constitute
an important economic and commercial linchpin. As everybody knows, they are Rai Cinema
and Medusa Film, through which Rai and Rti-Mediaset fulfil other duties as provided by Law.
The contribution of these subjects to the production of Italian and foreign films is fundamental,
as we will see later on.
In a different but significant way, another law has recently developed, in private companies
which are not in the film and audiovisual sector, an inclination to invest in the film production.
This is a very innovative section – even compared to the European and International contexts
– of the regulatory framework related to the indirect public support, that is, the tax credit for
external investors, which is in force only from April 2010.
In the attempt of outlining a development trend for these processes over the time, it can be
noticed how the same tendency recorded in the evolution of the public support, which entails
the gradual contraction of the direct intervention in favour of the indirect one, can be also
seen among the private investments in the sector.
Also the private “induced” funding sources are developing: from the prevalence of the
compulsory investment of broadcasters to an increasing incidence of the private investment
of third companies which could introduce their brands in the films (product placement) and,
above all, from the recent introduction of the tax incentives system for external investors
(external tax credit).
A further step forward should take place with the amendment, which took shape through the
study of the film production sector – another new, public initiative3 – of the operational
regulations of the Central Guarantee Fund for the small and medium-sized companies of the
Ministry of Economic Development. The management committee, in May 2012, deliberated
an intervention on the modalities to access the Fund for companies with multi-year production
cycles and involved in order jobs or fixed-term jobs like the production companies. The
2.
106 |
Law no. 122/1998, repealed after being included in the Testo Unico dei Servizi Media Audiovisivi e radiofonici (Single Text for audiovisual and radio media services), Legislative Decree no. 177/2005 and
the following amendments, article 44.
TABLE 1
Territorial level
Direct resources
Supranational
- EU Media Programme
- Eurimages Programme (European Council)
National
Sub-national
FUS
Indirect resources
Internal tax credit
External tax credit
Regional funds
TABLE 2
Counterpart
Rights
Spontaneous resources
- Producer’s capital
- Distributor’s capital
Profit
Communication
Resources induced by regulations
Broadcaster’s obligations
Private investments (external tax credit)
Product placement
amendment of the regulations of the Fund, which operates through direct guarantees or
counter-guarantee of loans taken with Italian banks by small and medium-sized businesses
of every sector, should get to the extension of the credit granted to companies having specific
features, even without real guarantees.
In other words, the perspective of the emancipation of the film industry from assistance
regulatory restrictions – which were reduced due to the economic situation – and from the
search for new business models based on the involvement of private capital coming from
third sectors is taking shape, considering the development of the entrepreneurial structure
of the single production companies, which are increasingly forced to face the market.
OVERVIEW: RESOURCES AVAILABLE TODAY
The resources producers can use in order to make up the production budget of the film can
be public or private. Italian public resources are available at the three main territorial levels
and can be divided into direct and indirect support instruments.
Private resources can be classified as spontaneous resources available on the market and
resources that get to the sector after being induced by the regulatory framework. In return
for the investment, the producer offers shares of ownership rights or exploitation licenses,
profit shares or communication spaces.
3.
The first announcement was given during the panel discussion Access to bank credit – Instruments to
support the European audiovisual companies, organized by Anica along with the Ministry of the Economic Development, during Cannes Film Festival 2012.
| 107
We will not go into the technical functioning for each of the aforementioned resources
available. However, it is useful to quickly mention the reference framework in which the most
important of these instruments operate and are used by the operators of the sector.
PUBLIC RESOURCES
Supranational public resources. The available instruments at Community level are Media
Programme and Eurimages Fund.
Media Programme. The Media Programme (Mesures pour encourager le développement de
l’industrie audiovisuelle) is the main Community programme to directly support the European
audiovisual industry, managed together by the Directorate-General for Education, Culture,
Multilingualism and Youth of the European Commission and the Education, Audiovisual and
Culture Executive Agency4.
This Programme is part of a European Union policy launched at the end of the 1980s, which
aimed at the formation and the development of a strong industrial system in Europe, which
could produce audiovisual and cinematographic contents to compete with the increasing
number of products coming from the USA. The Media Programme aimed at structuring an
industrial sector made up of small and medium-sized businesses operating in the European
area which, according to the original intentions, should have favoured the development of a
free market, within which some of the basic principles of the Union would have been
implemented, favoured by the open market regime: pluralism, valorisation of cultural
identities and linguistic differences of the European territory, strengthening of the cooperation
between operators in the different countries, incentive to the competitiveness within the
sector.
The Media Programme was launched in 1991 and, since then, developed through four multiyear programmes, the last of which – media 2007 – is still active. The endowment of the
current programme, expiring on 31st December 2013, is 755 million Euros for the whole 7
year period.
Currently, the Media Programme develops through 5 lines of action:
1. Formation, which is assigned 7% of the total budget of the Programme.
2. Works production, 20% of the budget.
4.
108 |
Cfr. http://ec.europa.eu/media. For the seven-year period after the expiration of Media 2007 Programme, the European Commission proposed reshape of its intervention within the sector: the new
Creative Europe Programme will be established, which will include the experiences of both Media Programme and Culture Programme. It will be in force for the period 2014-2020. In front of an expected
total endowment of 1.8 billion Euros for the whole Creative Europe Programme, the current regulation
draft proposed by the Commission, which is now being examined by the European Parliament (the discussion on it will be held in summer and autumn of 2012), states that the film and audiovisual sector
(currently covered by Media Programme) will be given over 900 million Euros.
3. Distribution of cinematographic and audiovisual works, also through the digital
technologies, with 55% of the budget.
4. Promotion of cinematographic and audiovisual works, with 9% of the budget.
5. Pilot projects (4% of the budget) and transversal actions (5%).
One of the aspects that characterize the spirit of the Media Programme is the attention paid
to the previous and the following stages of the production, from the perspective of the
incentives to establish solid companies (support to the making up and the development of
projects) and for the circulation of European works within the European Union (support to
distribution and promotion). From the European point of view, in fact, the fundamental and
necessary presupposition for the development of this sector is the consolidation of the
entrepreneurial fabric even before the direct support to the production of the single work.
Therefore, from the point of view of the Italian film producer, during the making up of the film
budget, the most suitable line of action is the one related to the development of projects or
projects “packages”, which are supported by Media through non-refundable grants equal to
50% of the development budget. However, this amount is subject to the finding of the
remaining part of resources on the market. The support mechanism is selective and it is
based on criteria concerning the solidity of the beneficiary company and the compatibility of
the projects with the general principles of the Programme.
Eurimages. Eurimages5 is a fund promoted by the European Council, which was established
in 1988 for the co-production, distribution and the business of the European cinematographic
works. It has an annual endowment of about 20 million Euros, resulting from the contributions
of the member States. The beneficiaries of the contribution are the independent European
companies, and the eligible projects are: fiction, animation and documentary films (70 min.
minimum).
The Eurimages’ lines of actions are four: Support to production; Support to digitalization;
Support to distribution (for the member States which are not included in the Media
Programme); Support to the business.
About 90% of the fund’s resources is allocated to co-production, and this line of action can
represent one of the possible sources for Italian producers when making the budget for his
film. A fundamental condition for the projects’ eligibility is the European origin of the work
and the involvement of at least two co-producers coming from different member States of
the fund. Moreover, at the moment of the candidacy, at least 50% of the financial plan must
be already confirmed, in each country involved in the co-production. Eurimages’ support is
similar to a loan that will be repaid proportionally to the proceeds generated by the beneficiary
film. As everyone knows, Italian producers (more than their foreign colleagues) have difficulty
in obtaining the Eurimages’ support. The reasons usually lie in the difficulty to meet the
5.
Cfr. http://www.coe.int/t/dg4/eurimages/default_en.asp.
| 109
TABLE 3
ITALIAN CO-PRODUCTIONS SUPPORTED BY EURIMAGES 2006-2012
Number of supported co-productions
2006
2007
2008
2009
2010
2011
2012
(as of 03/14)
16
Total
56
61
57
55
56
72
of which: with Italian participation
15
11
10
7
10
6
1
26.8%
18.0%
17.5%
12.7%
17.9%
8.3%
6.3%
% italian
Source: Eurimages
requirements of the fund, that is, the planning of a multilateral international co-production
and finding out at least half of the resources to make up the budget. In addition, there is a
qualitative problem, related to the tendency to plan films whose contents and form have a
“European nature”.
The inefficiency in the use of the opportunities offered at community level is often ascribed
to the weak international propensity that characterize the Italian industry. The main reason
of this “sluggishness” lies in the structure of the whole system, which would not stimulate
producers to realize products for the European market.
Much has been done by Italian producers in the last years to stimulate a greater and better
use of Media and Eurimages. The difficulties arisen in the internal market and, in particular,
the reduction in the traditional resources used to make up the budget, did not favour the
initiative of the involved subjects to develop co-production projects.
Conversely, the inexperience in working in a co-production regime, in collaboration with
international partners, is actually one of the most urgent gap to be filled for the Italian
industry, not only for the access to supranational resources, but also to extend the
exploitation areas.
The increasing complexity of the global industry also shows, in the multilateral co-production,
above all for high and very high budget films, a way to obtain financial and tax incentives of
other countries, not only the European ones. Some films with a high artistic level, such as
This must be the place, by Paolo Sorrentino (2011), could be realized only through very
sophisticated financial processes, and by involving technical energies and financial resources
of European countries and the American tax credit.
It seems obvious, therefore, a development process of the industry in the last years; this
proves an increasing awareness of the need to compete within a market that exceeds the
national borders. The results will probably show up in the following years.
NATIONAL PUBLIC RESOURCES
Direct resources. The national public direct resources are the resources allocated directly
to companies according to criteria and principles as provided for by law, in the shape of
contributions or grants.
The amount of the resources destined to cinema is set every year by the Fianancial Law (with
a three-year plan) that provides for the endowment of the Single Fund for Entertainment6, a
110 |
share of which is destined to the film industry.
The modalities for the contributions allocation are provided for by Urbani Law (Legislative
Decree 28/2004 and related implementing decrees), which is the reference law for this
sector. The management of funds and the contributions allocation is assigned to the General
Directorate of Cinema of the Ministry of Cultural Heritage and Activities.
During the last years, the FUS share destined to cinema always corresponded to around
18.5% of the total resources. FUS endowment for 2011 was 428 million Euros (allocation +
further funds); the share destined to cinema, equal to 18.6%, amounted to 75.8 million Euros.
As for 2012, FUS destines to cinema an amount of 76.5 million Euros. It should be
remembered that the allocation of FUS for cinema is not destined only to the production
activity, but also to the promotion and support of relevant national authorities (Fondazione
Biennale di Venezia, Centro Sperimentale di Cinematografia, Istituto Luce-Cinecittà).
The Urbani Law (Legislative Decree 28/2004) reformed the support system for the film sector
in Italy; among the most important innovations, as regards the impact on the market, the
introduction of the so-called reference system should be remembered. This defines the
standards for the allocation of the contributions to production, following the intention to
select products and companies that could achieve good results on the market.
The system provided for by the law of 2004 entered into force, even though partially, in 2005:
the last implementing decree, concerning the “technical modalities for the support to the
film production and distribution”, which leads to the total enforcement of the law, entered
into force on 31st May 2007.
Therefore, the final shift to the new national system for the support to film production took
place in 2008: loans are not disbursed anymore (bank loans are not taken out anymore), but
there is a direct contribution to production. This contribution, however, is not a true
assumption of risk by the public administration that, as a guarantee for the return of the
disbursed amounts, takes a priority share of the proceeds derived from the exploitation of
the film, once the industrial cost has been covered.
The producer, therefore, in order to obtain the total ownership of the movie’s rights, must
return the entire amount paid by banks.
The support to production through FUS resources addresses to:
1. Production of cultural films.
6.
The Single Fund for Entertainment (FUS) is used by Italian Government to manage the public intervention in the entertainment sectors (cinema, theatre, music, lyric, dance, circuses and travelling
shows). FUS was established with article 1 of the Law of 30th April 1985, no. 163, in order to support
authorities, institutions, associations, bodies and businesses operating in the film industry or in the
music, dance, theatre, circus and travelling shows sector, as well as for the promotion and support of
shows and initiatives that are important both in Italy and abroad. According to article 15 of Law no.
163/85, FUS is financed every year through the Financial Law, and it is then shared among the different
sectors through a decree of the Minister for Cultural Heritage and Activities.
| 111
TABLE 4
ITALIAN INVESTMENTS IN FILM PRODUCED IN THE PERIOD 2004-2011
Data expressed in millions of Euros 2004
2005
2006
2007
2008
2009
2010
2011
Direct National
public investment
Indirect National
public investment*
Private investment and other
Total Italian investments
29.5
43.3
63
71
38.1
35.4
29.8
10.3
40
68
247.7
296.1
236.9
312.3
235.2
333
Data expressed in percentages
94.8
189.6
284.4
184.9
214.4
214
257.3
249.4
312.4
259.1
330.1
2004
2005
2006
2007
2008
2009
2010
2011
Direct National
public investment
Indirect National
public investment*
33.3%
13.8%
16.8%
20.2%
21.5%
12.9%
11.3%
8.9%
3.5%
12.8%
20.4%
Private investment and other
66.7%
86.2%
83.2%
79.8%
78.5%
83.7%
75.9%
70.6%
Total Italian investments
100%
100%
100%
100%
100%
100%
100%
100%
* tax credit (interno ed esterno) e tax shelter richiesti.
Fonte dell’elaborazione: Dati Anica/Direzione Generale per il Cinema del Ministero per i Beni e le Attività Culturali.
2. Production of cultural first and second works.
3. Screenplays development.
4. Shorts production.
Besides this direct support to the product, regulations also provide for the so-called
“subsidies according to revenues”, in favour of the producer. These are calculated on the
basis of a staggered system on the box office results of the Italian films released on the
market.
By observing the 2004-2011 trend, we can notice that the amount of the direct public support
to production, both in terms of absolute value and influence on the total investments, tends
to progressively reduce.
Public resources objectively decreased, not only for the economic crisis that reduces the
State’s available assets, but also for a new strategy of the central administration that led to
the introduction, along with the direct support measures, of tax concessions in favour of the
sector. As for the state direct subsidies allocated during 2011, the deliberations for cultural
films gave the support to 21 projects with an average contribution of 500,000 Euros; the first
and second works supported were 40, with an average contribution of 187,500 Euros only;
also the average contribution for short films and screenplays was reduced, compared to the
previous years. Ii is interesting to notice how the choice of the public administration in the
management of the direct contribution, in front of the reduction of the economic availability,
goes towards the reduction of the amount destined to the single work in order to maintain
a high number of supported projects. As a result, the average contribution is markedly
decreasing, compared to the previous years, with the risk – according to some producers –
of challenging the usefulness of such a contribution. Instead, as for films produced in 2011
(which, therefore, received the state subsidies also in the previous years), those which
112 |
TABLE 5
STATE CONTRIBUTION FOR PRODUCTION AS SET FOR 2011*
Type of work
Number of financed projects
Cultural films
21
Contribution amount (€) Average contribution (€)
10,500,000
500,000
First and second works
40
7,500,000
187,500
Shorts
33
1,200,000
36,364
Original screenplays development
14
490,000
35,000
* Including the 2012 resolutions for projects submitted within the 2011 expiration dates.
Source: Italian cinema in numbers - Year 2011, Studies unit DG Cinema/Anica on data provided by the General Directorate for Cinema
of the Ministry of Cultural Heritage and Activities
TABLE 6
ITALIAN FILMS PRODUCED (2011-2010) – PUBLIC CONTRIBUTION FOR CULTURAL FILMS AND FIRST AND SECOND WORKS
Year
2011
2010
Number of films produced with the contribution for cultural films.
22
23
Number of films produced with the contribution for first and second works.
26
17
31%
28%
Total films with public contribution out of the total film produced
of the Ministry of Cultural Heritage and Activities
received a direct contribution for the production corresponded to 31% of the total: 22 films
received the subsidies as cultural films and 26 for first and second works.
Indirect resources. With the 2008 Financial Law (no. 244/2007) a system of tax incentive
measures7 in favour of the film industry was introduced in Italy for the first time. These
measures were all addressed to the main active subject of the sector (production,
distribution, business) and also to the companies operating in third sectors and investing in
the cinematographic products.The management of this system lies within the competence
of the Ministry of Cultural Heritage and Activities, along with the Ministry of Economy and
Finance. The path that led to the issuing of the implementing decrees of such regulations
was quite articulated, as it was necessary to wait for the approval of the measures from the
European Commission. It was necessary, in fact, to include these measures in the principle
of “cultural exception”, by derogation of the prohibition, for the member states, to issue any
form of “state aid” that could distort the principles of the free trade and free competition
within the community market. The long process of approval and issuing of the implementing
decrees ended in April 2010, when the whole legislative package became operational.
The different forms of tax incentives, which were initially forecast for a three-year period,
7.
Cfr. DCG-MiBac, Anica, Luiss Business School, Le ricadute del tax credit. L’impatto economico delle forme
di incentivazione alla produzione cinematografica, May 2012.
| 113
TABLE 7
MEASURES AND RESTRAINTS OF INTERNAL TAX CREDIT
TAX CREDIT
PRODUCERS
DISTRIBUTORS
Max. annual amount (€)
15% of film production cost
3,500,000
15% cost for the distribution of cultural works
1,500,000
10% cost for the distribution of original Italian language works
2,000,000
20% investment in the production of cultural interest works
1,000,000
OPERATORS
30% introduction and purchase of digital machinery and equipment
20% investment in the production of cultural works
PRODUTTORI ESECUTIVI 25% of expenses incurred on the Italian territory
(Maximum Italian expenditure allowed: 60% of the total film budget)
50,000
1,000,000
5,000,000
(per film)
Source: MiBac, Anica, Luiss Business School, Le ricadute del tax credit. L’impatto economico delle forme di incentivazione alla produzione
cinematografica, May 2012, p. 84.
TABLE 8
ITALIAN FILMS PRODUCED (2011) – REQUESTED TAX CONCESSIONS
Tax concessions
% out of the total number of films produced
Number of films produced
Films for which at least one form of Tax credit
and Tax shelter has been requested
65.2%
101
Films for which Tax credit and Tax shelter have been requested for
the production out of the total number of films produced
63.9%
99
43 million Euros
Required Tax credit and Tax shelter * for production
Films for which the external Tax credit has been requested
21.3%
Films for which the Tax credit for distribution has been requested
Requested Tax credit for distribution
33
10 million Euros
External Tax credit requested
25.2%
39
4 million Euros
* Only one tax shelter request amounting to about 3.5million Euros.
of the Ministry of Cultural Heritage and Activities.
have been extended until 31st December 2013.
Actually, the scheduled tax incentives are tax credits8 for:
1. Film producers, for film production.
2. Film distributors, both for the production and distribution of films.
3. Operators, both for the production of films and the technological updating (introduction of
digital projection equipment).
4. Companies which are not in the film sector, to invest in film production.
8.
114 |
It is pointed out that, originally, according to regulations, the tax shelter for film producers (which was initially
approved and entered into force in May 2009 with the first of many implementing decrees of the law) was
also foreseen. Tax shelter was repealed in November 2011 (law no. 183/2011). The original regulations also
provided for the tax shelter for external distributors and businesses, but these measures were never approved finally.
The eligibility process for the different incentive forms is basically automatic: some cultural
eligibility score tests must be passed.
Eligible films for the tax credit are Italian (their nationality must be recognized) or foreign films
(for the part of film shot on the Italian territory, incentives go to the Italian executive production
companies working on order for foreign production companies) which are destined to the
exploitation in cinemas.
The types of eligible films are: full-length films, shorts, documentaries and animation films. A
special attention is paid to the “difficult” films (namely, first and second works, documentaries,
shorts, works produced by accredited schools of cinema) and to low-budget films (that is, with
a production cost lower than 1,500,000 Euros).
The amounts and restraints of the different forms of internal tax credit are reported in the Table
below. According to an evaluation of the impacts of tax credit on National economy, in favour of
the film industry, that was recently published in a research carried out by the General
Directorate for Cinema of the MiBac (Ministry of Cultural Heritage and Activities) along with
Anica and Luiss Business School9, an estimate shows that this sector could return an amount
higher than the indirect investment deriving from the lowest tax revenues to the State, thanks
to the proportional increase in the investments of the sector fostered by tax concessions.
As you can see, two-thirds of the 155 films produced in Italy in 2011 (co-productions included)
applied for the tax credit or tax shelter (for the period they were in force) for production, for a
total amount of 43 million Euros; 10 million Euros should be added for the requests of external
tax credit (see below) for 33 films and 4 million Euros requested for the tax credit for the
distribution of 39 films. These are substantial amounts, that show how all films which get to
the market, and were produced in the period in which regulations were in force, applied for at
least one for of tax concession. The one-third of films that did not apply for it are probably the
films produced before the period in which regulations were in force, or ultra-low budget films
that do not have the requirements to get to the distribution market.
SUB-NATIONAL PUBLIC RESOURCES
In 2003, with the first Film Fund of Friuli Venezia Gulia, started the period of the regional and
local public contribution in favour of the film and audiovisual industry. In the following ten-year
period, initiatives by sub-national authorities increased, in an irregular and uncoordinated way,
however significant, in a chase for investments that undoubtedly made industry think over its
potential, often unexpressed but able to meet the territory’s requirements.
The origin, nature, goals and size of the different interventions are varied, but beyond the
common awareness of the need for a systematization of the many active initiatives, the liveliness
of the regional legislative activity on this subject cannot be a significant datum.
9.
Cfr. DGC-MiBac, Anica, Luiss Business School, Le ricadute del tax credit. L’impatto economico delle
forme di incentivazione alla produzione cinematografica, May 2012.
| 115
The macro-tendency that emerges from a general consideration of this phenomenon confirms
the trends that were already noticed at higher territorial levels, which show the progressive
shift from a cultural-supporting approach to a more economic approach that stimulates the
industrial development. In addition, there are some collateral matters, important for the
detection of a trend for the future, that consider the cinema as the driving force for the
development of contiguous or connected economic sector, like tourism and infrastructures, or
as an occasion for the creation of employment and the training of specialized professional
figures. The most important data is that the Region considers cinema as a response to a
development need related to areas of expertise that are pointed out each time. In fact, the thing
in common between all instruments is given by some restrictions of a territorial nature that, in
different forms and extents, bind the beneficiary to carry out the whole work, or part of it, in the
regional territory, and to use local labor. In particular, the fundamental condition set by each
administration for the activation and the allocation of resources is that, according to one’s own
economic exposure, the results obtained on the territory should be at least equal or – usually
– higher than the investment itself. They are, therefore, initiatives that consider cinema not like
the destination of a support policy, but like an important instrument for the territorial
development. It should be also noted that the Regions’ approach to the support to industries
includes, among its basic lines, some innovative points of view that, in the logic of an
instruments’ systematization within and between the different territorial levels, can represent
interesting ideas: first of all, the almost general tendency to imagine interventions for the whole
film and audiovisual sector, also extending the intervention to the non-cinematographic
audiovisual production. Currently, it is difficult to coherently quantify the amount of available
resources at the sub-national level, due to the fragmentary interventions and the lack of a
common model that makes measures comparable with each other. Each support line, in fact,
is different from the others for competent administration, nature of the support, stages of the
process, type of eligible project, beneficiaries. Once the methodological complexity for a real
quantification of sub-national public investments on the sector has been pointed out, Anica10
estimated that in 2010, in Italy, 28 instruments were active in 14 regions, for an amount of
resources of about 23 million Euros. Among the many initiatives that are constantly evolving,
changing and increasing, it is to be reported that, in 2011, Lazio Region launched a new fund
with a considerable endowment compared to the previous measures implemented by former
administrations: 15 million Euros per year. The results of such a significant intervention by the
Region which, despite the delocalization process of the activities on other areas, fostered by the
development of sub-national funds, still hosts most Italian film companies and productions,
will be certainly significant and will affect the trends of the market and the current policies of
the competing Regions.
10.
116 |
Cfr. www.anica.it/online/index.php/fondi-regionali.html. For a close examination: Bruno Zambardino
and Federica D’Urso, Prove di federalismo audiovisivo. Fondi regionali in Europa e in Italia, in «Economia della Cultura», no. 2, 2011, published by Il Mulino.
PRIVATE RESOURCES
“Spontaneous” private resources in exchange for rights: subjects within the film industry
As already mentioned, private resources that get to the sector basically come from the
investments of two of the protagonist actors of the film industry: the producer and,
increasingly often, the distributor. The average size of the independent companies and,
therefore, the producer’s ability to invest his own resources in his films, is quite limited.
Therefore, he tends to find in the market the necessary resources, using the available public
instruments and transferring rights to operators that are active on the different exploitation
platforms.
Within this process, the first figure is the distributor that – unlike what happens in other
audiovisual markets – becomes really important within the film industry, as he manages the
intermediation between the producer and the operator in the first exploitation market of the
film, that is, the screening room, and all the launch activities related, starting from the
production of copies and promotion (the so-called P&A, Print and Advertising).
The typical distribution contract refers to the film release in the screening rooms, according
to agreements of “copy rentals” between the distributor and the operator, work by work and,
later on, an intermediation fee that the distributor applies to the producer on cinemas
turnover, net of VAT, small music rights paid to SIAE, operator’s share. Moreover, the
distributor pays the print and promotion expenses for the release of the film in advance,
through often high investments, that are recorded and recovered along with the commission.
In view of the high investments forecast, the distributor increasingly often decides to act
before the production of the film, by negotiating (with the producer) a compensation that could
consist in the acquisition of a share of ownership or exploitation rights (co-production) or the
exclusive right for the film distribution in the screening rooms and, in case, on the following
platforms (pre-purchase).
“SPONTANEOUS” PRIVATE RESOURCES IN EXCHANGE FOR COMMUNICATION:
PRODUCT PLACEMENT
The 2004 Urbani Law introduced the possibility to place brands for communication and
promotion purposes of products within the movies, in accordance with restrictions and
standards which basically follow the accuracy of the advertising communication and the
adequacy of the product placement with the film script (Legislative Decree no. 28/2004, article
9, paragraph 3, and the related implementing decree of MiBac of 30th July 2004).
At the beginning, the introduction of the so-called “product placement” was welcomed like a
possible occasion to strongly increase the economic flows in favour of the film industry, thanks
to the investments in the communication by companies that are not in the film sector.
The result of the implementation of the measure was actually minor than the initial optimism.
Organizational and qualitative obstacles emerged in the practicality of the trade agreements
between producers and investing companies: the first compatibility problems between time
and needs of companies usually operating on the consumer goods market arose, as well as
the complexity and the unpredictability of the production process of a film, whose commercial
| 117
life is influenced by variables that cannot be easily planned before the process, and by the
realization time that is often not compatible with that required by companies operating in
other sectors. However, despite the operational difficulties, it should be noted that now the
product placement has an incidence, though not an essential one, on the composition of the
film budget. There are not numerical data available on this matter, also because the
qualitative variables of the film are fundamental for the investment in the product placement:
the film genre, the popularity of the director or the cast, the producer’s capacity to meet the
organizational time and models in a reliable way, strongly influence the companies’ propensity
to invest. However, according to the estimates of the different operators of the sector, the
product placement’s influence on the production budget oscillates, on average, between 5%
and 25%11 of films that, for their script and artistic and productive elements, lend themselves
to a coherent and balanced product placement. The number of films that has recourse to this
instrument is not the majority, even though in the last ten-year period several product
placement models and styles have been tested, in a sort of trial stage and evolution of the
cinematographic language that is slowly learning to integrate the brand in the early stage of
the script. The impression is that the potentials of the product placement development are
still great and require a strong commitment, by producers and external investors, to
understand the partner’s times and language.
“INDUCED” PRIVATE RESOURCES IN EXCHANGE FOR RIGHTS:
BROADCASTERS’ OBLIGATIONS
The contribution to the composition of the film production budget, by film production and
distribution companies integrate with the National broadcasters, is the most considerable
part of the amount of the so-called “private resources” invested in the sector. According to
the provisions of the Consolidated Text on radio and audiovisual media services (Legislative
Decree 177/2005 and following amendments, article no. 44, reference law for the television
sector), all TV networks (the satellite ones included) must allocate part of the broadcasting
time and a share of their own profit to the broadcast and the investment in Italian and
European films, respectively. As for the television public service, the Consolidated Text refers
to more urgent obligations to be included in the Service Contract between Rai and the Ministry
of Economic Development. Agcom, the Italian communications authority, must supervise the
implementation and the respect of the aforementioned shares by the involved subjects. In
order to fulfil these obligations, which were introduced for the first time in Italy through Law
no. 122/1998, that adopted the provisions of the community directive “television without
frontiers” no. 89/552/EEC, the main broadcasters – also to maximize the product’s revenue
11.
12.
118 |
Cfr. Product placement, in I Quaderni dell’Anica, no. 1, 2008.
Cfr. Italian cinema in numbers – Year 2011, Study Unit DG Cinema-Anica according to data provided by
the General Directorate for cinema, which is part of the Ministry for Cultural Heritage and Activities.
in the whole sector – decided to intervene directly on the film market through the activity of
integrated production and distribution companies: Rai Cinema and Medusa Film, that are
related to Rai Group and Mediaset Group, respectively.
The contractual arrangements through which these integrated companies support their
investment can be different: co-production, joint venture, purchase or pre-purchase of
broadcasting rights. So, the two main broadcasters, through the subsidiaries, optimize their
resources, thus fulfilling the legal duties and, at the same time, obtaining the rights to
broadcast national cinematographic contents to insert in the TV schedules, not only the
general ones. There are no analytical data available on the investment carried out by these
great subjects (see next chapter) in favour of this sector; however – according to analyses
and estimates conducted by Anica, calculated over the companies’ balance sheets – this
amount should be about 150 million Euros, for 2011. The trend observed during the last years
shows a progressive reduction of this value, basically due to the crisis of the TV market.
“INDUCED” PRIVATE RESOURCES IN EXCHANGE FOR A PROFIT SHARE:
EFFECTS OF THE EXTERNAL TAX CREDIT
With the introduction of the tax concession measures, in 2010, for the companies (that are
not in the film sector) which would like to invest in the film production, a new way has been
opened to attract resources to the sector, according to which high money inflows will justify
a deep redefinition of the economic patterns that drive the Italian film industry.
This measure is still too recent in terms of application time and too young in terms of real
comprehension of all the related potentials to allow a judicious estimate of its actual impact
on the market. The first results, however, justify the industry’s marked optimism. In fact,
this opportunity is the real “conceptual” novelty that involved the sector, at a normative level,
in the last ten-year period, for its capacity to foster open dialogue between operators and
other industrial sectors, placing the film producer at the centre of a “developed” commercial
dynamic, which is made up of the exposure to business risk and comprehension of
macroeconomic dynamics that, up to now, were collateral compared to its sector of interest.
In fact, driven to use private resources deriving from the investment of third investors through
joint venture or profit-sharing contracts – that, besides the tax credit for the investing
companies, provide for the sharing of profit deriving from the film exploitation – the producer
has now to face his capacity to support and optimize the product on the market, as well as to
enter into the investment in the production, also in view of the contracts’ renewal and the
consolidation of relationships with third entrepreneurs for future projects. The third company
that decides to invest in a film, in fact, is attracted not only to the opportunity to obtain the
tax credit for the invested amount, but also to the new opportunity represented by cinema –
that combines business with communication.
The first data about the use of the external tax credit are quite interesting, as they describe
a varied range of investors, with different geographical positions, size and activity sector of
the business12. The Regions that saw the greater involvement of third companies in the sector
were, not surprisingly, Piedmont and Lazio; however, t should be noted that the distribution
| 119
FIGURE 1
EXTERNAL INVESTORS TAX CREDIT FOR FILMS IN 2011 – SPLITTING UP OF THE TOTAL NUMBER
OF COMPANIES BY ACTIVITY SECTOR
Wholesale and retail trade,
cars and motorcycles repair
services 7
2 Rental, travel agencies, business
support services
10 Scientific and technical
Constructions 1
professional activities
Electric energy, gas, vore 1
and air conditioning supply
Manufacturing activities 5
1 Real estate activities
Accommodation and food 3
service activities
Information 5
and communication
services
8 Financial and insurance activities
of initiatives on the territory is quite varied and involves ten Italian Regions.
As regards the activity sector of external investors, unlike in the first months of the law
enforcement, not only banks or financial institutions invest in the cinematographic product,
even though they still represent most of the investments.
Here follows an investment split-up by activity sector of companies that, in 2011, invested in
the film production:
As pointed out, in 2011 the external tax credit requested amounted to 10 million Euros for 33
films. The value of the contribution of a single external investor was 100,000 Euros, as
frequently observed in the limited number of cases available.
SUMMARY AND VALUES
Resources development over time
In the following figure, the sequence of the normative interventions which, in a direct, indirect
or induced way, contributed to create the opportunities the producer can grasp in order to
make up the budget for the production of his film. The overview confirms the progressive
increase, during the last twenty-year period, in the sector’s standardization process which,
from community initiatives, sees the involvement of the competent administrations at lower
territorial levels. At the same time, as highlighted before, it is possible to notice an evolution
of the spirit that animates the intervention and that sees the public support to the sector
towards the development of the industrial structure.
Data and numbers of Italian production in 2011. The detailed study of the single resources
brings out the fact that the complexity of systems, the heterogeneity of the available
instruments and sources, along with an availability of data that is not always complete, make
120 |
FIGURE 2
TEMPORAL SEQUENCE OF THE NORMATIVE INTERVENTIONS CONCERNING THE FILM SECTOR
2010 –
2011 –
2009 –
2007 –
2006 –
2005 –
2004 –
Launch and quick
development of the
regional funds
2003 –
2002 –
2001 –
1997 –
1996 –
1995 –
1994 –
1993 –
1992 –
1991 –
1990 –
1989 –
2000 –
Urbani Law
Legislative
Decree 28/2004
Law
122/1998 TV
obligations
1988 –
1986 –
1987 –
1984 –
1985 –
FUS
Law
163/1985
Reference System,
contributions,
product placement
1999 –
Launch of Rai
Cinema and
Medusa Film
Tax credit for
internal and
external
companies
implementing
decrees April
2010)
1998 –
Eurimages
Programme
European
Council
Law 244/2007
Tax
incentives (last
2008 –
Media
Programme UE
Commission
Note: it is pointed out that Law no. 244/2007 has also amended the Legislative Decree no. 177/2005, extending the calculation of the
taxable base for the compulsory shares to the revenue from subscriptions and to pay-TV offers. The successive Romani Decree no. 44/2010
has finally introduced the concept of investment and planning of “original Italian cinematographic works”, which is still to be implementes
through a joint order between the ministry of Economic Development and the Ministry for Cultural Heritage and Activities.
the comparison between the values of the different allocations to cover the production costs
of the film produced difficult. This difficulty is worsened by the fact that the film production
and distribution process is long and difficult to foresee, that is why the availability of resources
during the year is never comparable with the composition of the resources involved in the
production of films that will be released within the same year.
Once these methodological difficulties have been stated, it is possible to show a picture of
the resources that composed the production budgets of the films produced within the year
(but probably financed and shot in the previous years). According to the General Directorate
for Cinema of the Ministry of Cultural Heritage and Activities and Anica, the investments of
Italian capital in films produced in 2011 (100% Italian films and co-productions) amounted to
333 million Euros. 155 films were produced, 132 of which with Italian capital, 14 majority coproductions and 9 minority co-productions. In the following figure, it s possible to see a
summary of the origin of the resources that made up de budgets for the production of films
shot in 2011. It emerged that, in 2011, most of the resources that composed the production
budgets still comes from the contributions of companies related to national broadcasters
(about 45%), and that the national public direct funding does not exceed 8%. Community and
regional funds contribute for 6% and 2% of the total resources, respectively. The real
innovative data, compared to previous years, concern the private investment that, fostered by
the tax credit, involves 21% of the resources, divided into a 13% coming from investments of
| 121
companies operating within the sector, and a 8% coming from external companies. As these
measures have been recently introduced and are deeply innovative, we can expect a significant
increase in the amounts they allocate. A deep redefinition of the business models of the sector
is also expected.
2. Proceeds of the cinematographic products in Italy
THE PERIMETER
The analyses of the composition of the film proceeds along the different sections of the
exploitation chain are usually carried out according to two different methods.
In the first method, a sample film is chosen and its economic life is followed, highlighting the
revenues achieved through the different marketing modalities, from the screening room until
the first exploitation cycle on the free television, that corresponds to the 5 years following the
first broadcast on the free TV, which starts from the 24th month, and therefore, 7 years after
the release in the cinemas. This system, even though very difficult, allows to obtain an
accurate datum concerning the relative weight of the different windows.
Instead, data are not that accurate in the second method, the one we will adopt here, that is,
the analysis of the market data for the calendar year, which, therefore, cannot show the
evolution of revenues of the same product over time, as it spends its economic life on more
business sectors. However, it gives an estimate of the value of the film “content” in its
different channels, highlighting its relative weight and getting to an economic quantification
of cinema in its capacity to gather resources in the different “sources”. This quantification
can be analyzed over time and compared to other economic magnitudes of the cultural
FIGURE 3
ITALIAN FILMS PRODUCED IN 2011: COMPOSITION OF ITALIAN CAPITALS (DATA EXPRESSED IN
MILLIONS OF EUROS; PERCENTAGE OUT OF THE TOTAL)
Companies’ contributions
(producers)
Community and
supra-national funds 5; 2%
Regional funds 20; 6%
61; 18%
Tax concessions requested
for production
42,79; 13%
25,22; 8% Contribution of external
investors that requested the tax credit
17,8; 5% Support to cultural
interest full-length films
11; 3%
150; 45%
TV networks’ investments
Support to cultural
interest First
and Second Works
122 |
industry or economy in general. This method, then, suffers from the lack of sufficiently
disaggregated data to isolate the economic phenomenon we are interested in, leading to
compulsory estimates for some segments of the market. The quantification of the
cinematographic product’s revenues within the chain can be carried out on a double
perimeter, distinguishing a “small perimeter” and a “large perimeter” or, taking some terms
that are commonly used in the sector of telecommunications and tangible consumer goods,
a wholesale perimeter (sell-in) and a retail perimeter (sell-out). The first perimeter, the small
one, is created for those who have the editorial and productive responsibility of the film:
producers and distributors (sometimes they are the same subject) take their revenues from
the box office receipts, net of the operator’s share. Home-video editors (often coinciding with
film distributors, but not with producers, above all if they are independent) benefit from a
percentage out of the rental or sale cost, net of the fees for the distributor/wholesaler and
the operator. The right holders (usually the producers, but also the distributors) sell the
exploitation rights for the VOD (a share out of the selling price, net of the intermediation of
the platform), for the pay-TV and for the free TV. The total of these revenues is the wholesale
perimeter.
In the retail perimeter, the resources gathered by the film system on all the different channels
are quantified. These channels are:
• Business sector: total box office receipts, along with the additional expenditure of
consumers in this sector (like food services) and the cinema advertising;
• Video On Demand: consumers’ expenditure for the real video on demand (transactional
VOD) or for the purchase of the digital copy (electronic sell through);
• Home video: consumers’ expenditure for the rental and the purchase (distinguishing the
normal trade channels and the newsagency channels, among which the collateral and the
collectible channels) of physical copies;
• Pay-TV: the share of revenues deriving from subscription, and specifically, from the sale
of “film packages”, or partially if the subscription cost is not segmented; the expenditure
for the vision of films in pay-per-view and SVOD (Subscription VOD) modalities; the
advertising associated to pay-per-view film channels;
• Free-TV: advertising revenues deriving from the film broadcast on the free-TV and, as
regards Rai, a share of the television fee proportional to the commitments in the film
production as provided for by the Law (considering that the public television also use that
fee to fund the Italian and European film production, even though the accounting data show
that the commercial revenues partially finance the public service activities, in accordance
with the provisions of the service contract).
SCENARIO
The retail perimeter, from the point of view of the final clients, includes both the direct
expenditure of consumers for the consumption of movies through all the possible modalities
on the market, and companies’ investments (in the shape of advertisement) associated with
the film offer. According to estimates, in 2010 (the last year available for the definitive data of
| 123
FIGURE 4
CHAIN OF THE CINEMATOGRAPHIC SECTOR
PRODUCER
DEVELOPMENT
CREATIVE
DISTRIBUTOR
PRODUCTION
PROMOTION
DISTRIBUTION
PRE-PRODUCTION
ITALY
FINANCIAL
FOREIGN
COUNTRIES
SHOTS
EXPORTER
POST-PRODUCTION
SCREENING
ROOM
OPERATOR
TECHNICAL INDUSTRY
HOME VIDEO
HV EDITOR
VOD
VOD PROVIDER
PPV-PAY TV
BROADCASTER
FREE TV
BROADCASTER
Source: Anica.
all segments) these two categories of subjects (three, if we distinguish the amount people
paid for the television fee) paid 2152 million Euros for cinema: 1760 million Euros (82% of the
retail value) was the consumers’ direct expenditure (in the cinemas, home-video products,
VOD and pay-TV subscriptions); advertising investments (cinemas and television) associated
with cinema amounted to about 342 million Euros (16%), while 50 million Euros (2%) is the
share of the television fee.
This expenditure fell over cinemas for 912 million Euros, over the home video for 488 million
Euros, over the pay-TV for 482 million Euros, over the free TV for 255 million Euros and only
for 15 million Euros over the VOD.
From these channels, about 942 million Euros were paid back to producers, distributors or
right holders. This amount is the wholesale value of the market, equal to nearly 44% of the
retail value.
Revenues from exports should be added. They have been considered separately, and not among
the resources gathered only on the Italian market (we can tell in advance that it’s a 45 million
Euro amount for the five-year period 2006-2010).
Finally, the turnover generated by any other use of the cinematographic product is not included,
as the particular rights related to airlines, cruise liners and other non theatrical public
representations, licensing and merchandising, remake, spin-offs and sequels’ rights, besides
the revenues from public funding and private sponsorships in favour of the film festivals’
organizers (that, according to OIFEC’s data, could be further 70-80 million Euros per year).
124 |
FIGURE 5
FLOW OF CINEMA RESOURCES IN ITALY, 2010 (AMOUNTS EXPRESSED IN MILLIONS OF EUROS)
THE RETAIL VALUE OF CINEMA IN ITALY IN 2010:
INSERZIONISTI
PUBBLICITARI
(342)
16%
ACQUIRENTI
(1.760)
82%
850
62
ESERCIZIO
CINEMATOGRAFICO
(912)
15
488
CITTADINI CHE PAGANO
IL CANONE (50)
2%
407
HOME VIDEO
(488)
75
2.152 M€
PAY TV
(482)
205
50
FREE TV
(255)
VIDEO
ON DEMAND
(15)
244
194
10,6 PRODUTTORI-DISTRIBUTORI 169
RIGHT HOLDERS
LEGENDA:
SPESA DEI CONSUMATORI
44%
325
IL VALORE WHOLESALE DEL CINEMA IN ITALIA NEL 2010: 942 M€
INVESTIMENTI DELLE IMPRESE
ACQUISTO DEI DIRITTI
Fonte: elaborazioni e stime su varie fonti (Siae, Nielsen, Univideo, Agcom, Screen Digest, bilanci degli operatori).
In the absence of regulations for the chronological sequence of the windows, as, instead,
happens in France, the exploitation chain found its balance through standardized practices
(that sometimes can be infringed) which, after the theatrical exploitation, provide for 12-15
weeks for the VOD (in the window of the almost exhausted home-video rental), followed after
about one month (or more) by the home-video sale. VOD is usually not available because of
the protection of the pay-per-view window (from 8 to 12 months after the first release) and
pay-TV (12 months after the first release). It is then available again on the market along with
the free TV exploitation, 24 months after the first release.
This flexible mechanism is subject to a contraction process according to which windows are
getting closer to each other. Absolute and relative weight of the different exploitation
windows is important to the film market, in which there are some particular phenomena
that go through the worldwide film industry.
For instance, it is true that almost everywhere the home-video market is decreasing, but in
many countries this is a limited drop that is more evident for rentals and it is due to average
prices decrease more than the decrease in the amounts used, which are increasing in several
areas. In Italy the marked drop in the turnover and the decrease in the number of rentals and
purchase are parallel, mainly due to the massive illegal downloads and streaming and to the
lack of a legal digital offer with attractive quality and quantity, which is the real factor for the
replacement of the home video system. The Italian VOD, in fact, still shows negligible values
| 125
FIGURE 6
EXPLOITATION OF THE CINEMATOGRAPHIC PRODUCT ON DIFFERENT CHANNELS (WINDOWS)
SALA
HV RENTAL
HV RETAIL
VOD/EST
PPV
PAY TV
FREE TV
3
4
8
12
24
mesi
Source: data by P. Del Brocco, Elementi dell’industria e del mercato cinematografico
as regards the VOD spread by pay TV offers and the online sector. The TV-based VOD pays for
the very low penetration of point-to-point distribution networks, that is, those that allow the
so-called True-VOD, the release of the audiovisual flow when the user requires it: there is
not a cable and the IPTV shows a low number of subscribers (a little more than 600 thousand
in 2011) and, furthermore, in counter-tendency compared to the most important foreign
markets, this number if decreasing.
The Push-VOD (that is, the download of contents, through terrestrial or satellite frequencies,
on the hard disk of the user’s decoder, to be seen at the desired time) has also experienced
a quite limited spread. The internet VOD, that is, the internet protocol VOD open to everybody,
not managed and destined to subscribers only as in the case of the IPTV, shows even lower
values: again, due to piracy but also to a certain distrust of online payment systems, a lower
penetration of the internet and the broad band also due to infrastructural delays (there are
still few connections at a higher speed than 10Mbps, all concentrated in the big cities), to the
low availability of users to pay, to a little diffusion of over-the-top devices, which allow the
visualization of the content broadcast online on the home television, and a low, though
increasing, diffusion of smart-TVs, that is, televisions which can be connected to the Internet.
Finally, the circulation of VOD exploitation rights of the film that is still looking for its own
balance, among the often opposing needs of the rights holders and the service suppliers,
between the protection of the market value and the need to find out new commercial
opportunities.
126 |
Another phenomenon, shared by other markets, is the weakening of the relationships
between cinema and free television, which have always been strong in Italy.
During the last years, however, television continued to broadcast films, mainly on specialized
channels, and the number of viewers gathered by the cinema offer did not undergo a great
decrease. But the free television influences the film’s revenue with a share that is
progressively decreasing, also because of its low use on the prime time, the moment in which
the advertising resources are higher, like the network goals and the necessity to offer a new
product, not partially “worn-out” by all the previous visions like in the case of the
cinematographic movie.
As for the pay-TV, for which cinema is still fundamental, this is a different matter. Here the
product is used massively, thus contributing to make subscribers renew their subscription.
Sky and Mediaset Premium, at the end of 2011, numbered a little more than 7 million
subscribers, more than a million prepaid cards still active, with subscriptions’ revenue of
about 3 billion Euros. More revenues, more subscribers and a decreasing cost for
cinematographic rights: cinema is a fundamental element in the launch of new offers, while
its purchase cost tends to decrease as we get close to its full development. Nonetheless, the
competition between two big platforms can represent, even in the future, a factor of the
development or maintenance of the rights’ value. Finally, the first of the film exploitations, in
a chronological order: the screening-room, which s the historical fundamental channel for
the valorization of the product in the following windows.
Despite the annual fluctuations in the results, the screening room became, during the last
years, the place in which the movie generates the highest relative share in a film revenue,
thanks to the home video downturn and keeping pay-TV separated by the free-TV. The
increase in the screening room, and the simultaneous “obfuscation” of the free television,
without forgetting the reduction of public contributions to production and their “conversion”
into indirect forms that stimulate the market more, are not involved in the success of the
Italian film of the last years, while until not many years ago the film production focused on
the profitability of free-to-air runs, perhaps overlooking the attractiveness of the product
during the primary exploitation. This is probably the reason of the “repositioning” of the Italian
film offer, with an evolution of the popular comedy besides the Christmas product, a larger
number of films for the young, a renewed freshness of the art comedy, the crossover art
house film that can combine quality with attractiveness. Therefore, the screening room is
more important today than in the recent past, and more important is the quality of the vision
experience, at least for films that aim at reaching large audience brackets.
CHANNELS
The value of the Italian retail market has basically dropped between 2006 and 2009, with a
partial recovery in 2010 (last year available). The final data of 2011 will be probably negative
again and will be equal to a little less than 2 billion Euros (it would be the lowest datum of
the analyzed period) due to the downturn experienced by cinemas and the further downturn
experienced by the home video, besides the decreasing TV advertising revenues and a slow| 127
FIGURE 7
MOTION PICTURE FILM REVENUES (RETAIL) 2006-2010 (AMOUNTS EXPRESSED IN MILLIONS OF EUROS)
2.298
2.317
287
279
2.178
2.162
2.077
278
2.000,0 –
255
245
397
348
444
481
462
1.500,0 –
818
900
688
488
557
1.000,0 –
15,2
8,3
8,0
14,0
12,3
500,0 –
2006
2007
Cinema
2008
Vod
Home video
912
–
799
–
–
–
0,0 –
757
813
–
755
2009
Pay tv
–
2.500,0 –
2010
Free tv
Source: data processing and estimates according to different sources (Siae, Nielsen, Univideo, Agcom, Screen Digest, operators’ balance sheets).
down of pay-TV subscriptions. The result of the calculation between the 2006 and 2010 data,
however, is negative for about 150 million Euros.
The drop in the total revenue is basically due to the home-video revenues – of which, the share
only related to motion-picture films13 – that nearly halved, going from 900 to 488 million Euros.
The free-TV segment also experienced a downturn, due to the drop in advertising revenues,
both the total revenues and those related to the film offer14, which went from 287 to 255 million
Euros. Instead, an increase was experienced by channels like the cinema which, in 2008,
surpassed the home video and, in 2010, experienced a real boom, exceeding 900 million Euros,
as well as the pay-TV, which went from 348 to 481 million Euros (this datum also includes
the advertising broadcast by pay-per-view cinema networks), with a 38% increase in an
13.
In the absence of detailed public data, 95% of rental turnover was ascribed to films, while the share
of films and a part (the most significant one) of “animation” were taken from Univideo’s data related
to sales (by ascribing a minority under-share to TV animation).
14.
The datum was obtained by comparing the audience results for the broadcast of motion picture films
on the free TV with the overall audience results including all genres, and by obtaining the percentage
to be calculated over the advertising revenue (not a weighting of the massive advertising of films, which
is usually lower than the average). It is the same method used by the British Film Institute (which absorbed the goal of the UK Film Council) in its annual Statistical Yearbook, in which the films’ revenue
along the whole exploitation chain is estimated.
128 |
FIGURE 8
MOTION PICTURE FILM REVENUE (RETAIL) 2006-2010 (%)
100,0 –
90,0 –
80,0 –
12,5
12,0
12.8
11.8
11,9
15,2
17,1
20,4
22,3
22,4
39,2
35,3
31,6
26,8
22,7
70,0 –
60,0 –
50,0 –
0,7
40,0 –
0,4
0,3
30,0 –
20,0 –
42,4
38,5
34,7
35,1
32,9
0,7
0,6
2006
2007
Cinema
2008
Vod
Home video
2009
Pay tv
–
–
–
–
–
0,0 –
–
10,0 –
2010
Free tv
Source: data processing and estimates according to different sources (Siae, Nielsen, Univideo, Agcom, Screen Digest, operators’ balance sheets)
average annual rate of nearly 7%. If data about cinemas show marked seasonal fluctuations,
the datum related to the pay-TV is more structural and – once the current crisis has been
overcome, where new subscriptions decrease and the churn rate increases – should keep on
increasing in the future.
From the point of view of the relative weight, in the five-year period cinema gained and
strengthened its leadership, getting to represent 42% of the total revenue (from the 33% of
2006), gaining nearly 10 points. Home video lost more than 16 points, as it went from 39% to
22.7%, next to pay-TV, which increased from 15% to 22.4% and, by 2011, will exceed it. FreeTV is basically stable at about 12%. VOD went from 0.3% to 0.7% and it is strongly
under-dimensioned.
The comparison with the richest market in Europe, that is, the United Kingdom, whose sociodemographic composition is similar to the Italian one, points out like the Italian market is
worth half of the British one and, above all, it shows a different absolute and relative influence
of the different channels: besides a much more developed VOD market, a good performance
of the video market is recorded. This market still represents the channel with the audience’s
highest expenditure, and the free television becomes marginally important, with its 5% weight,
which is destined to be soon exceeded by VOD.
The 2011 box office results amounted to a little less than 700 million Euros (according to data
provided by Cinetel about the total of the market, which is, instead, monitored by SIAE). This
is a little more than 10% regression compared to data of 2010, when the total was nearly
| 129
FIGURE 9
FILM REVENUE IN THE UK AND ITALY, 2010 (VALUES EXPRESSED IN MILLIONS OF EUROS AND %)
4,500 –
4.255
100 –
4,000 –
251
90 –
–
705
80 –
22,4
70 –
–
60 –
–
–
1.690
2.152
2,000
255
–
1,500
–
22,7
0,7
40 –
481
186
39,7
50 –
4,4
30 –
488
1,000 –
20 –
15
1.423
500 –
10 –
–
–
UK
–
912
0–
0–
UK
Italy
Cinema
42,4
33,4
Vod
Home video
Pay tv
–
2,500
–
3,000
11,9
16,6
–
3,500
5,9
Italy
Free tv
Source: Data processing and estimates according to BFI, Dodona Research (UK) and other sources (Italy).
equal to 773 million Euros, however, higher than 601 million Euros of 2006. 2010 was,
therefore, the peak year also for the total expenditure of the audience, which amounted to
almost 850 million Euros. The additional expense of the viewers oscillated between 60 and
80 million Euros.
The total value of the home-video market practically halved in 5 years. Piracy is definitely the
main factor of this drop, that not only involves the revenue, but also the purchase/rental
activities. In the other countries, the turnover basically decreased due to the decrease of
average costs, but the transactions’ volume usually records few cases (and, some years, a
moderate growth), that corresponds to reduced losses and, sometimes, an increase in values.
Rental is the segment that felt the effects of the home-video crisis more than others, and it
reduced by more than two-thirds of its value in five years. Besides piracy, the high cost of
rental, in terms of time, has a decisive influence (it is necessary to go to the video store twice,
to rent and return the film), compared to more immediately available home entertainment
like pay-TV and, of course, streaming and illegal download. However, the newsagency channel
also halved, after the saturation and the subsequent decline of the products related to the
traditional paper publications, while the normal trade also lost one-third of its value. The
motion picture film, which is the main home-video product, has consequently seen the value
of sales and rentals going from 900 to 488 million Euros. Due to the limited margins of the
product (after deducting the amount for the operator and the distributor, there are production
costs – authoring and mastering), proceeds from this market have become extremely low for
the parties entitled today. This is particularly true for Italian films: according to data provided
130 |
TABLE 9
BOX OFFICE RECEIPTS AND ADDITIONAL AUDIENCE EXPENDITURE, 2006-2011 (M€)
Box Office receipts
Additional audience expenditure
Total audience expenditure
2006
2007
2008
2009
2010
2011
601.2
669.6
636.7
664.1
772.8
*695.4
77.6
73.8
61.9
79.2
77.0
nd
678.8
743.4
698.6
743.3
849.8
nd
* According to Cinetel data.
Source: data provided by SIAE.
TABLE 10
VALUE OF THE HOME-VIDEO MARKET, 2006-2010 (M€)
Rental
Sale (Normal Trade)
Newsagency
Total
of which films (estimate)
2006
2007
2008
2009
2010
272.4
464
301
1037.4
900.2
218.4
473.4
306.7
998.5
818.5
160.6
406.4
260.7
827.7
687.9
114.6
364.2
200.7
679.5
556.8
90.0
336.0
164.0
590.0
487.7
Source: data processing and estimates according to Univideo’s data.
by Univideo during the Forum on Italian Cinema15, the share of the domestic product out of
the first 1000 films available for sale was lower than 10% (compared to the share of cinemas
exceeding 30%). A top-title like Welcome To The South (2010), which grossed 30 million Euros
at the box office, grossed a little more than 2 million Euros on DVD rentals. The National
product usually achieves lower market shares for the video, compared to movie theatres (in
France, where the theatres’ share oscillates between 35-40%, according to the years, the
share of video varies between 21-24%), given the penetration capacity of American products
(which are even more varied in terms of genre and, therefore, able to reach niches of filmlovers, and more suitable to a young audience), but the share of Italian film is definitively too
low. The influence of piracy seems sufficiently related to the fall in transactions in all the
main European countries. The international comparison points out that, in general, the higher
the download volumes, the highest the decrease in purchase/rental activities was.
As already pointed out, the Italian market stands out for the low values related to the VOD.
As for the cinematographic products (excluding, therefore, TV programs and sport), revenues
only amounted to 15.2 million Euros in 2010, mainly coming from the so-called TV-based VOD,
that is, the VOD brought by TV offers and for subscribers only. The online VOD (or Internet
VOD), which includes the offers available on the open Internet networks, recorded revenues
of 1.5 million Euros only, though increasing compared to the infinitesimal values of the
previous years. Moreover, the Italian market distinguish itself for a very low penetration of
15.
It was held at Anica on 19th April 2012 for the first time.
| 131
FIGURE 10
TREND OF HOME-VIDEO TRANSACTIONS AND DOWNLOAD VOLUMES
29
295
9
71
153
152
539
99
6
224
158
228
252
97
16
-4,8%
-16,9%
-21,4%
Films and TV serials download (millions files) 2008
Films and TV serials counterfeiting (millions items) 2008
Purchase/Rental (expressed in millions) 2010
Var. purchase/rental 2005/2010 (%)
-47,1%
-57,9%
Source: data processing according to National surveys on the home-video sector (Univideo, Bva, Bvv, Cnc, Uve, Sgae) and Tera Consultants
(according to download data only, usually provided by Ipsos).
devices connected to the network which can transmit the flow conveyed on the Internet
protocol to the domestic television (connectible televisions, videogames consoles connected
to the internet, dedicated set-top boxes). The first estimate of 2011 show that the VOD film
market nearly reached the amount of 20 million Euros, as a consequence of the drop in TVbased VOD and the increase in Internet VOD.
The comparison with the main European markets is particularly penalizing: in 2010, the VOD
film reached a more than 185 million Euro value in the united Kingdom; 123 million Euros in
France; more than 30 million Euros in Germany and Spain. In all countries, except Germany
(where premium pay-TV has a little success) the VOD gets the greatest amount of resources
through television offers. But in the United Kingdom the online film nearly reached a 50
million Euro revenue, which will be probably exceeded in 2011 final balance (during this year,
also a boom of the VOD was recorded in France; according to the first estimates, it probably
increased by more than 50%, thus exceeding 200 million Euros).
In all markets, except Italy (above all), VOD managed to compensate, fully or partially, the
decline of the physical home-video rental (the mode of consumption that is the most direct
competitor of VOD, by temporality and vision experience), which structurally took place almost
everywhere. Only in Italy, among the top 5 European markets, digital transactions had a very
low impact on the overall economy of the different windows. The increase in the television
offer, due to the increasing success of specialized channels on the digital terrestrial television
132 |
FIGURE 11
VOD MARKET IN ITALY (MOVIES ONLY), 2006-2010 (M€)
16 –
15.2
14.0
14 –
1.5
0.5
12.3
0.4
12 –
9.3
10 –
0.3
8.0
13.7
0.2
13.5
8–
11.9
6–
9.0
7.8
2006
2007
2008
Tv-based Vod
2009
–
–
–
–
–
0–
–
4–
2010
Online Vod
Source: Data provided by Screen Digest.
FIGURE 12
VOD MARKET IN EUROPE (FILMS ONLY), 2010 (M€)
200.0 –
185.8
180.0 –
160.0 –
48.0
140.0 –
12.3
120.0 –
7,1
100.0 –
137.8
60.0 –
116.2
36.1
31.0
1.5
21.0
–
–
UK
–
15.1
0.0 –
France
Germany
Tv-based Vod
15.2
29.5
13.7
–
20.0 –
Spain
1.5
–
40.0 –
–
80.0 –
Italy
Online Vod
Fonte: elaborazioni su dati Screen Digest.
and as a consequence of the strengthened competitiveness of Mediaset Premium towards
Sky Italia as for the pay-TV, increased the number of motion picture films’ runs on TV.
In 2011, the total number of runs on satellite TV networks (Sky and MGM) reached the record
| 133
FIGURE 13
FILMS TV RUNS, 2007-2011
60,000 –
52,300
50,955
50,000 –
38,303
40,000 –
35,586
34,386
30,000 –
20,000 –
9,082
2007
2008
2009
General TV
4,056
–
–
–
0–
4,253
–
3,991
2010
Specialized DTT
–
4,088
3,995
–
10,000 –
2011
Satellite channels
Notes: As for the years before 2011, detailed data about the specialized DTT channels are not available.
Source: Data provided by Anica/Studio Frasi.
FIGURE 14
FILM VIEWERS ON TV, 2007-2011 (EXPRESSED IN MILLIONS)
4,500 –
4,000 –
3,500 –
3,000 –
3,988
3,798
3,565
605
542
559
166
60
5
3,937
4,027
615
766
361
657
2,500 –
2,000 –
1,500 –
3,217
3,196
3,001
2,960
2,604
1,000 –
2007
2008
2009
2010
General TV
Specialized TV
Pay-TV
–
–
–
–
–
0
–
500 –
2011
Source: Estimates according to data provided by Anica/Studio Frasi.
number of 52,300. While the seven main general TV networks showed a slight drop – which,
however, kept the total beyond the threshold of 4 thousand runs – we should add more than
9 thousand runs on specialized channels for the free TV (this datum is not available for the
previous years). In total, therefore, there were over 65 thousand TV runs in 201116.
134 |
FIGURE 15
FILM VIEWERS ON TV, BY NETWORK AND GROUP, 2011 (EXPRESSED IN MILLIONS)
900 –
By network
2,500 –
By group
2.107
2,000 –
741
672
700 –
1,500 –
939
1,000 –
600 –
766
500 –
287
300 –
272
–
–
384
400 –
283
0–
–
500 –
–
766
–
272
226
200 –
158
135
84
100 –
16
–
–
–
–
–
–
–
–
–
–
–
–
–
21
0–
–
800 –
Source: Estimates according to data provided by Studio Frasi, Anica.
Instead, the capacity of each TV run to reach a large audience decreased as well as, in
economic terms, the unit value of each run. The average audience of the TV runs on general
TV networks decreased from 752 thousand to 642 thousand viewers between 2007 and 2011.
As for Italian films, the average audience went from 469 thousand to 415 thousand in the
same period. Therefore, the number of viewers gathered by films broadcast on TV is
decreasing on general networks, but it is increasing on the whole, thanks to the increase in
the audience of the specialized, free and pay-per-view channels. The number of people
watching films (= 1 viewer watches 1 film), in fact, increased from 3.56 billion to over 4 billion.
We could define them as the ticket for the cinema related to TV. This was due to the drop
related to general TV networks, where films lost more than 600 million viewers in the last 3
years, and to the strong increase in specialized free TV channels (which increased by 5 to 657
million viewers in a 5 year period) and the pay-per-view ones (2011 recorded a strong
increase, by more than 150 million, up to 766 million viewers). Therefore, films for TV keep
on assuring the same size audience as the previous years. Of course, there are still the same
problems concerning the broadcast of films on general TV networks, where the most
16.
This datum still excludes MTV, Mediaset Premium’s channels, local TV networks and several minor
satellite networks.
| 135
important audience data and the highest advertising revenue are recorded, mainly in terms
of TV programme schedule and broadcasting strategies, but the product still seems to keep
its television appeal and, as a consequence, to guarantee editors the adequate resources.
Moreover, in terms of viewers/film, Mediaset is the editor that generates the highest number
of viewers, with more than 2.1 billion (except for Mediaset Premium) in 2011. Mediaset alone
produces over half of the number of film viewers that can be measured according to the public
Auditel data, mainly due to the massive broadcast on the minor general TV networks such as
Italia 1 and Rete 4. The number of viewers of films broadcast by Rai is more than 900 million,
mainly on Rai Tre and Rai movie. Films on Sky Cinema recorded 766 million viewers, while
La7 and La7d (with the exception of MTV) 283 million. The main free channels, specialized in
cinema, Rai Movie and Iris, record the same amount of 272 million viewers/film, more than
Rai Uno, Rai Due and La7. The sharp difference between the two main networks should be
noticed: Canale 5 recorded a number of viewers which was nearly three times higher than
Rai Uno’s one.
If we consider the time consumption then, Italian television, as a consequence of the increase
in the average audience (that is, a higher television consumption, which became more marked
during the last years, probably due to the economic crisis which negatively affected other
types of consumption and the widening of the television offer due to the digital terrestrial),
went from 78.7 to 89.2 billion hours/viewer per year (in a five year period), according to Auditel
data. Films on TV, in 2011, produced 6.7 billion hours/viewer – 800 million more than 2007 –
with a 7.5% percentage out of the total TV consumption, the same as 2007 (after a 8% peak
of 2009).
As for the actual time consumption, therefore, films kept their weight within the overall
television offer.
ITALIAN FILM EXPORT
Export can be an important end market for the Italian film production, not only because, from
the cultural point of view, films are a fundamental instrument to spread Italian culture and
ideas, but also because this market has been explored only partially, and it is a source of
further revenue for the producer, who starts seeing the saturation of the main traditional
markets. However, for different reasons, the Italian film export is still residual and cannot
express its potential fully: among the recent productions, the films that manage to cross
national borders correspond to 60% of the total. The international market tends to favour the
Italian films having specific characteristics: those entered in international festivals and
markets, director-driven films, or films with an internationally recognizable cast. The most
successful genres are the art film and comedy, but also historical and biographical films.
During the last years, the trend of the market was also influenced by the economic crisis,
which led to some reduction in the budgets available to buyers.
However, some positive signs seem to come from the expansion of the VOD market, which
offers new spaces for films’ exploitation, and from the development of the emerging markets,
mainly the Eastern European, Asian and Latin American ones17. In general, the export of the
136 |
Italian cinematographic product is not regulated by best practices, but it follows the caseby-case negotiation. Usually, the producer transfers the exploitation rights for all platforms
and territories to a specific subject – this could be a national distributor specialized in the
sale of rights abroad, or a foreign company – entrusting it with their marketing. More rarely,
the producer chooses to distribute his product autonomously. In this case, the subject that
acquired the licenses for all territories sale them to another subject, which could be a
broadcaster, a distributor or an intermediary. Usually, the sales agent charges a commission
fee corresponding to 15-25% of the sales value.
PUBLIC CONTRIBUTION FOR EXPORT IN ITALY AND EUROPE
In Italy, the Legislative Decree no. 28 of 22nd January 2004 also introduced some public funding
instruments supporting the distribution of Italian films abroad, whose actual influence over
the market development is quite residual. A first instrument is a subdivision of the Single
Fund for Entertainment (FUS), completely dedicated to the activities for the distribution
abroad, for those companies which distributed films of cultural interest abroad. This fund
originally had a 50 thousand Euro endowment but, from 2009, resources ran out and the
contribution has basically stopped. Another contribution for the distribution abroad is the one
provided within the Fund for production. This fund aims at supporting the production of films
of cultural interest in general, partially covering the “industrial cost”, which includes the
production costs, the national distribution costs and, finally, the costs for the distribution
abroad. The latter is only a minor part of the total, with an acceptable cost equal to 4% of the
fund total, compared to 16% of Italian distribution and 80% of the production cost. If the
producer asks to use the Fund for production only for the distribution, the sharing will took
place with shares of 75% for the national distribution costs and shares of 25% for the
international distribution costs (the last hypothesis, however, is very rare). Another
instrument in favour of export is provided by the Ministry of Economic Development – MiSe
and by Ice, through activities for the promotion of Italian films abroad, both using the
promotional Italian funds and partnership activities with the main category association.
Besides the national support, the film export can rely on two instrument at European level:
the support to foreign sales provided by Media Programme and Eurimages fund. Within the
17.
Anica, along with MiSe and Ice, dedicated a thorough study published in August 2010 to this issue.
This study examined the export of films produced in the three-year period 2006-2008. The second edition of the study, updated with productions of 2009 and 2010, will be published soon, and some data
are shown in advance in this paragraph. However, it should be remembered that data about films produced in 2010 cannot be considered as definitive, as in order to really know the actual size of the international revenue it is necessary to wait at least 3 years since the film release in Italy (therefore, the
total datum is certainly conservative for the year 2010). See the “Quaderni dell’Anica”: L’export del cinema italiano, no. 5, was published in August 2010; the second, was published in August 2010, L’export
del cinema italiano, seconda edizione is expected to be published in summer 2012.
| 137
Media Programme, there is a fund supporting sales abroad, with 25 thousand Euros to
reinvest in the promotion of European films (advances for the international sale or marketing
and advertising expenditures for new European films). In Italy this fund is used very little18.
This is mainly due to the features of Italian companies, which basically market national films,
while Media Programme favours those companies with a more international catalogue, which
can distribute the product over a large number of territories besides the national one.
Moreover, within the Media Programme, there is another fund aimed at supporting the
distribution and meant for those companies which distribute non-national European films.
According to data provided by Anica, 14 of the films distributed abroad received this
contribution, for a total of about 4.8 million Euros, in the five-year period 2006-2010. The most
receptive country towards our art cinema is France, with 13 films distributed by 10
distributors, for a total contribution of 1.215 million Euros. Contributions related to Eurimages
Fund should be added, as it operates complementarily with Media Programme. The
contribution is a support for the distribution of films abroad, in those countries which do not
benefit from the Media Programme, but are included in the Eurimages Programme. This
support covers 50% of the distribution costs in these territories, up to a maximum of 8,000
Euros. In 2008, funds allocated to the Italian films within this Programme amounted to 854
thousand Euros.
INTERNATIONAL MARKETING
As already mentioned, about 60% of films produced in Italy – aside from releases and box
office results – goes beyond national borders. The main film festivals and the markets of the
sector represent the main promotion channels and a fundamental occasion for visibility, in
view of the sale in the different territories and platforms. From the point of view of the
distribution strategies, during the last years a tendency toward increase in the number of
foreign companies exporting Italian films was recorded, at the expense of companies based
in Italy. This depends on the greater opportunity of foreign subjects to set better prices, as
well as their capacity to operate on more markets and to market film packages with
commercial films along with niche films. However, it should be also noticed that foreign
sellers could not guarantee the same attention to the product as Italian sellers do. The Italian
film export considerably felt the effects of the economic crisis from the distribution point of
view, due to different factors like the systemic crisis of the home-video market and the crisis
of TV networks, with a particular reference to commercial networks depending on advertising.
This determined a general decrease in the prices of rights, which are only partially balanced
18.
During the last years, only Adriana Chiesa Enterprises received this contribution and, on the whole,
Italy uses a little more than 1% of the total fund: 90 thousand Euros compared to a total of 5.9 million
Euros, more than half of which are absorbed by French films (about 3.2 million Euros).
19.
That is, Italian productions and co-productions with at least a 15% Italian participation.
138 |
FIGURE 16
PICTURE OF THE EXPORT MARKET IN THE FIVE-YEAR PERIOD. NUMBER OF COMMERCIAL
TRANSACTIONS CARRIED OUT IN THE FIVE-YEAR PERIOD, BY MACRO-AREA
1.200 –
1.000 –
964
800 –
600 –
400 –
213
Europe
Far
East
North
America
Australia
and New
Zealand
106
128
84
Latin
America
Middle East
–
–
5
–
–
–
–
0–
–
109
–
200 –
Africa
Fonte: Anica su dati Survey, database Lumière, Mojo International, Imdb.pro
by an increase in minimum-guarantee sales and by the increase in the VOD market. On the
whole, the value of the export market of Italian films produced in the five-year period 20062010, according to Anica’s estimates, amounted to 45 million Euros. Usually, the market is
strongly focused on some films, which ensure the great majority of revenue: in the five-year
period 2006-2010, out of a total of 612 films produced19, for which export data are available,
198 films generated a little more than 30 million Euros out of the total 45 million Euros. It is
easy to imagine that the European markets are the natural channel for the Italian films
abroad. The Far East is the second among the most important markets for number of films
exported, followed by North America. Within Europe, excluding Switzerland, which is
particularly receptive due to the presence of the Italian-speaking community, France is the
most important market for the Italian films, and it is also the country in which Italian films
are projected more. Looking at the future, the Eastern European markets should be pointed
out. Even though they have not given significant values yet, during the last years these
markets demonstrated a trend of consistent increase in the purchase volumes. It is interesting
to note that in these countries, due to a weak distribution in cinemas, the TV market has a
great importance: about 40% of contracts concerns the transfer of TV rights. As for the value
of sales, France is the country in which Italian films gets the best results, with a range
between 60 thousand and 200 thousand Euros, and peaks up to 350 thousand Euros for the
most important films. In the other great countries of Western Europe, values are usually
lower, with a range between 50 thousand and 100 thousand Euros, and peaks up to 170
thousand Euros in the United Kingdom. In the other countries of Western Europe the sales
range is between 25 thousand and 50 thousand Euros in Scandinavia, and between 10
| 139
thousand and 20 thousand Euros in the Benelux, while in the Eastern Europe this values
oscillate between 2 thousand and 10 thousand Euros, on average. Far Eastern markets, due
to their nature, are particularly difficult to the Italian export (and not only), but they are
certainly the markets with the greater potential expansion. Countries like Japan and India
show a high production of national films, and this reduces the market for foreign productions.
Other countries like Indonesia and Philippines are intensifying actions protecting the national
products, while the Chinese market, characterized by a very strong piracy and a very strict
censorship, is still quite unexplored. Korea distinguishes itself for an increasing number of
transactions. Latin American markets represent an important channel for the Italian product,
due to cultural and linguistic similarities, even though in the last years the situation is quite
static. Both commercial films and art films are sold, and the TV market is quite important
here too.
As for the North American market, the usual difficulties with the penetration of foreignlanguage films into the market were even more stressed by the consequences of the
economic crisis, which reduced the budgets available for the new projects. In general, films
are included in art-house circuits, and the box office trend is more connected to the presence
of internationally successful Italian films than to stable factors and system factors.
3. Current trends and evaluation hypotheses
TERRITORIAL SPECIALIZATION
The increase in the funds sources is fundamental for each operator of the sector, as it obliges
to reshape the company model and strategy, in order to better adapt them to the changing
conditions. In particular, this process is made more dynamic by the increase in initiatives, both
public and private, that rise at regional and local level: not only the well-known diffusion of
regional support funds, not only the new interest demonstrated by external private companies
that invest in films for the tax incentives, but also the innovative system visions that consider
cinema as a means for the requalification of dismissed industrial areas and that, inverting the
traditional point of view, focus on the investment in infrastructures and services on the territory.
The effect of this varied flourishing of phenomena, which would certainly require a suitable
coordination, seems to go towards the territorial specialization: this trend appears from the
observation of the market and from the type of initiatives that authorities and institutions are
planning for the future.
The historical starting point shows a quite simple geography for the film sector, with a nearly
total concentration of production and distribution activities in the territory of Rome and, only
partially and for what concerns the distribution and technical industries, in the area of Milan.
Instead the business, for its nature of “point of sale” for people, has been always widespread in
the territory, though with obvious differences between Regions, as a consequence of the
historical-political and economic-commercial dynamics. Now a “spontaneous” organization
seems to be taking shape, after a long period of territorial liveliness, in order to avoid dispersing
140 |
energies in the horizontal competence among territories providing the same services. The
specialization is favoured by the vocation of each territory for a specific processing stage or a
specific type of product. The vocation is the entirety of financial, professional, infrastructural,
“cultural” resources that each area lets emerge in a natural way. As for the stages of the
cinematographic chain “preferred” by the different territories, a picture of the actual reality
shows the tendency of the Regions with a greater tradition to take part in the most “creative”
and typical stages of the industrial process:
• Development and production are still mainly located in Lazio (and mainly in Rome) and
Lombardy. Then come Piedmont (one of the first Regions, in chronological terms, that
invested in the sector in a structural way) and Apulia (whose instrument of regional support
has one of the best structures, even though it has been recently established).
• Post-production, which requires a technical apparatus of important size, remains located in
the traditional areas, Lazio and Lombardy, and some emerging areas that endowed
themselves with quality infrastructures and services within the context of requalification of
dismissed industrial areas. This is the case of Piedmont, Apulia and, with different results,
of Sicily.
• A different consideration should be made for the studios, which are historically located in
Rome. Along with the initiative of some Regions, like Apulia and Sicily, which, also thanks to
the use of community funds have recently endowed themselves with cineporti and studios,
or Piedmont in the aforementioned context, the most important phenomenon shows the
increase in cinematographic and audiovisual works filmed “on location”. Therefore, the
function of studios itself is undergoing a crisis, due to the high costs for the maintenance of
the structures and the increasing efficiency of the Film Commissions in their original role of
attracting productions towards their territory and simplifying their activities also from the
bureaucratic-administrative point of view. A different consideration should be made for the
territorial specialization according to the genre of audiovisual work produced. In this case,
traditional geography is more articulated and the new phenomena confirm some trends
which became increasingly strong over time.
• The capital of the motion picture film is still Rome, with the centrifugal processes described
above. However, in 2011, Lazio Region strongly confirmed its primogeniture by activating the
Regional Fund with the highest financial endowment in Italy (45 million Euros in 3 years).
• The TV series, which implies an industrial process similar to the film one, but with a more
recent story, is mainly located in Rome, even though it is also quite strong in the areas in
which the administrations, at the end of the 1990s – when a real industry of independent TV
production started taking shape – started being interested in this sector: Piedmont, Friuli
Venezia Giulia and, for shorter and limited periods, Campania, Umbria and Tuscany.
• Advertising, a particular area of the audiovisual production, regulated by logics which are
different from the film’s ones, is historically concentrated in Lombardy.
• The documentary, an atypical product due to the structure and size of its market, is a quite
uniform product in all the national territory, with peaks of concentration in those Regions
which offer specific direct funding lines: Piedmont and Emilia Romagna.
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FIGURE 17
ITALIAN FILMS RECEIPTS ACCORDING TO PRODUCT CATEGORIES, 2001-2011 (M€)
220 –
200 –
180 –
160 –
140
120
100
80
60
–
–
–
–
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Comedy blockbusters
Teen movies
Author
Art comedy
2nd bracket comedy
Others
–
–
–
–
–
–
–
–
–
–
–
0–
–
40 –
20 –
2011
Notes: only films whose receipts exceeded 1 million Euros have been considered (90-95% of the total receipts of Italian films, according to the years).
Source: surveys by 100autori based on data provided by Cinetel, Anica.
Even though these phenomena of internal delocalization which increase the variables in the
producer’s work show both lights and shadows, it is certain that the territorial specialization
is an important opportunity for the development of the whole sector in the whole national
territory. The virtuous competition among services and opportunities offered by different
subjects, of course, promises to lead to an intensification of the maturation process of Italian
industry, which always has to compare itself with international high-level standards and to
defend itself from the competitiveness of other media and other entertainment platforms.
VARIETY OF ITALIAN PRODUCTS
2011 has been a record year for box office receipts of Italian films. It can be considered the
peak of the process which officially started with the regulatory changes of 2004, but is the
result of a period of the sector renewal – searching for a strong relationship with the audience
– which came from some of its more lively artistic and productive components. The share of
Italian films increased, mainly for a wider range of offers concerning genres, targets and
themes. This variety experienced both expansion and contraction, but it paradoxically reached
one of its lowest points on the market related to movie theatres during the most profitable
year for the box office.
In a document submitted by the association 100autori to the Guarantor Authority for
Competition and Market (May 2012) a survey of the results of the Italian films which earned
more than 1 million Euros at the box office over the last 10 years was introduced. These were
divided into 6 categories, pointed out by the association of authors according to more
142 |
FIGURA 18
CONCENTRATION OF ITALIAN FILMS
24.2
14.2
18.7
18.4
19.2
21.9
17.9
21.5
22.7
16.8
13.9
16.3
19.2
19.8
17.7
12.5 16.5
20.0
10.7
24.6
18.8
20.0
21.0
18.7
20.9
20.0
20.0
25.3
18.7
20.5
22.8
22.5
19.3
14.9
10.9
20.6
70% –
17.9
80% –
20.3
90% –
20.6
100% –
16.8
% admissions for the first 10 and 20 Italian films (+cop) by Region (year 2011)
60% –
50% –
57.4
66.7
59.9
59.4
57.9
69.8
63.0
71.0
60.2
64.7
61.3
60.3
59.1
54.7
58.4
57.0
61.4
71.2
62,6
30% –
64.8
40% –
20% –
% first 10 films, by number of admissions
% 11-20 films, by number of admissions
–
Veneto
–
Aosta Valley
–
Umbria
–
–
Trentino-Alto Adige
Tuscany
–
Sicily
–
Sardinia
–
Apulia
–
Piedmont
–
Molise
–
Marche
–
Lombardy
–
–
Liguria
lazio
–
Friuli Venezia Giulia
–
Emilia Romagna
–
Campania
–
Calabria
–
Basilicata
–
–
0% –
Abruzzo
10% –
% other films, by number of admissions
commercial than genre-related logics: comedy blockbusters; 2nd bracket comedies; art
comedy; author; teen movies; others20.
Besides the taxonomic criterion adopted, the results of the research show a sensation on
which the internal debate was recently opened21. First of all, blockbusters represent the
centre of the market, with stable receipts and few oscillations: in few words, they are the
most mature and less dynamic segment. Along with blockbusters, another category is proving
to be able to understand the audience’s needs for entertainment and escape, with a greater
attention to plots and themes, called “2nd bracket comedy”. This is the segment which
increased more in the last 5 years. It has not eroded blockbusters’ shares yet, but it will
probably compete with the category “art comedy” and partially satisfy the same tastes and
needs. In 2011, amounts earned by a category were lost by another one. In general, 2011 set
the record of the decade in terms of Italian films’ revenue, and the most negative values in
terms of results’ variety were recorded. All other categories (with the exception of the first
two) earned receipts lower than the positive values reached in 2007 and 2008, even though
20.
21.
For closer examinations, the whole document s available at www.100autori.it
See the video with the interventions of the First Forum of the Italian Cinema, that took place on 19th
April 2012 among the different categories of operators at Anica, www.anica.it.
| 143
with a slight pick-up over the two previous years of the categories “teen movies” and “author”.
In particular, the first category which finally seemed to be an opportunity for the
“rejuvenation” of the Italian films audience in a new meeting between supply and demand,
seems looking for new themes and styles after the downturn which followed the success of
2007. The same consideration can be made by analyzing, on the territory, the results of the
Italian films in 2011. The concentration of admissions for the first 10 films also shows, other
than an obviously decreased distributive force in the Regions with a very small number of
movie theatres (this is a great obstacle for every attempt to enlarge the market), an evident
polarization of consumptions (at least 55% of the total, the lowest share, and in Lazio, the
most served Region), which does not leave – in the current economic situation – much space
to the support to experimental operations or attempts to foster a less popular and less “sure”
audience’s taste. This reasoning goes along with the shortness of the cinematographic season
for the national cinema: given the strong drop in consumption since the beginning of 2012,
bets on the summer season could only be made by companies which could balance a negative
summer result with “guaranteed” successes.
Today, this condition is not even given to great companies.
THE PROTAGONISTS OF THE NATIONAL FILM MARKET
For the two vertically integrated Italian groups, the crisis of the television core business, in
terms of decreased advertising revenues and, as for Mediaset, also in terms of sustainability
of the pay-TV offer, will certainly affect the film production. As for Rai, in particular, the high
structural costs make cuts concentrate around the product, as it had already happened for
the TV series and as it could happen for cinema. Mediaset also planned a three-year 250
million Euro saving, announcing horizontal cuts in all the areas. The effects, for Rai Cinema
and Medusa Film, could find expression in a reduction and optimization of investments. In
both cases, cuts to investments in full rights are expected, in order to guarantee the
investment in production, by concentrating distribution on less broad lists. Therefore, it is
possible that a contraction of investments leads the two groups to concentrate the decreasing
economic resources over the genres they have relied on up to now, that is, according to the
categorization proposed by 100autori: blockbusters and 2nd bracket comedies for Medusa
Film, art comedies and some of the 2nd bracket comedies for Rai Cinema, with the risk of
stressing the strengthening more than the variety of films offer, as well as of rapidly taking
the successful sectors to exhaustion, due to their unwillingness to risk. From the normative
point of view, the decrees which set the subdivisions for the investment in the Italian film,
still pending, once they have been approved, should at least give the production industry (for
which the broadcasters are a primary source of funds) a minimum ground to operate on and
under which the integrated groups cannot fall, despite the economic crisis. Independent
producers, instead, as they rely on a reduced amount of resources coming from television
groups, face the increase in the trend, that was already highlighted during the last years, of
the budgeting “complexification”. The variety of public funds – at all government levels – tax
concessions, which turned many external subjects into interlocutors, as well as the
144 |
opportunity of the product placement – which should be considered from its development
stage – along with the necessity, in many cases, to get the deferral of the most important
cachets and to make use of the increasing variety of the exploitation channels, made the
financial plan extremely complex compared to the past. The contraction of television
resources will accentuate this complexity and will increasingly make producers need to
acquire an increasing number of specialized competences, more or less combined in the
same professional figure in the case of minor structures. One of the competences producers
will be mostly looking for, within this changed context, is the competence related to the
financial component and to the credit market, which could also enable operators to make the
best use of tools that had never been considered until the recent past. The first step was
taken with the external tax credit which, for the first time, involved financial institutes and
banks in the film product and took them close to the sector, thus reducing the historical
distrust of such an atypical and little “modelable” industry, and showing positive results both
for the State and the companies involved, which are demonstrated by careful studies on the
economic effects of tax incentives22. The second step is being taken thanks to the wider
involvement of the Administration. Besides the increasingly useful dialogue with the Ministry
for Cultural Heritage and Activities and Regions, the dialogue with the ministry of Economic
Development also contributed to the success of the logic of sharing and partnership
public/private: paying attention to the requirements of companies and pointing out innovative
administrative solutions demonstrated the validity of the method and paved the way for closer
examinations and improvements (also structural). This happened with tax incentives, which
were strongly required, supported and defended by the Ministry for Cultural Heritage and
Activities; it happened with the international promotion which, from 2012, involves in an
integrated project, the ministry for Cultural Heritage and Activities, the Ministry of Economic
Development, the Foreign Ministry and the Department for Tourism of the Council23. It
happened again and recently after the amendment of the operational measures that regulate
the use of the Central Guarantee Fund for Small and Medium-sized Companies of the Ministry
of Economic Development. This amendment, allowed by the Fund Management Committee,
which deliberated the introduction of qualitative elements in the process for the evaluation
of companies that request the public guarantee for the ordinary bank credit. At a national
level, this is an important innovation. A precedent can be found in the Media Production
22.
In June 2012 the research is made available, supported by the General Directorate for Cinema of
MiBac, in collaboration with its Study Centre, carried out by Anica and Luiss Business School, on the
falls of tax ncentives for cinema. The research had a multi-year development: some partial data were
made available in an introduction and some papers in October 2010, but the complete version, related
to year 2010 and anticipated by an international survey, was finished at the beginning of 2012.
23.
The project “Italia in Luce” was announced during Cannes Film Festival 2012, in order to manage,
unitarily, the economic resources and operational instruments that had been already foreseen by the
single institutions.
| 145
Guarantee Fund, a guarantee fund for the audiovisual production which was made operational
by the European Commission in 2011, in order to facilitate access to ordinary credit for small
and medium-sized companies of the sector through resources recorded in Media’s balance
sheet. The Commission, considering the achieved results as positive, reserved an important
space to the access to credit, even in its proposal of Regulations for the new Creative Europe
Programme, which will involve Media and Culture Programmes for the period 2014-2020,
aiming at expanding the guarantees system also to small and medium-sized companies
operating in other sectors of the cultural and creative industries. The Guarantee Fund
Management Committee for small and medium-sized companies of MiSe (Ministry of
Economic Development) approved, instead, a very important amendment to the normative
provisions of the instrument, by intervening on the possibility to access also for companies,
like the film ones, characterized by multi-year production cycles and operating on commission
and, therefore, not able to pass the evaluation based on quantitative indicators only. After a
technical close examination, it was possible to point out the problems to be solved: these
were related to the temporal misalignment of financial flows (costs concentration in the initial
stage and more or less gradual flows recovery). The introduction of the business plan and
the replacement of the “turnover” parameter with the parameter “production value”, besides
a limited allocation of own means, were introduced to favour the use of the Fund by the
category of companies in which cine-audiovisual production plays an important role24. It
should be noted that this is a Copernican revolution, even compared to the important initiative
of Media Programme (and the future Creative Europe Programme): no more funds based on
a sectorial specialization, given the cultural nature of the product, but a horizontal and transsectorial Fund which adopts additional evaluation parameters, given the direct knowledge of
economic and production dynamics of a specific sector of activity. Also in this case, like in the
case of tax credit, these are automatic mechanisms which facilitate the structural
development of the sector through greater knowledge and openness. The result is
complementary: a measure fosters the entry of new private investors attracted to the tax
credit and the gain (both economic and related to communication) of the investment; on the
other side, the company’s structure gets stronger, the trust and openness of the bank system
(which reduces or nearly achieve a zero risk) are increased, a production sector is qualified
by pointing out its value and the income capacity of its own mechanisms, a new planning
process is fostered. The normative and market evolution, which obliges producers to a greater
specialization and, in general, the whole industry to rely more on the market resources, is
producing a kind of “selection”. The production companies which are able to face this
complexity will have more opportunities to survive and flourish within the market. These will
24.
146 |
The announcement was made by the President of the Fund Management Committee, Claudia Bugno,
during Anica’s workshop “Access to bank credit – Exploring instruments supporting EU audiovisucompanies”, which was held in Cannes on 23rd May 2012.
be probably the companies based on management. Companies based on talent, which are
very popular, will probably find more support within the big integrated groups. Niche talent
companies, instead, will have more possibilities by relying on the construction of highly
creative and low-cost cross-media projects, with the capacity of earning revenues in different
ways. The pressure over costs and the need for the maximization of the margin increasingly
drove small and mid-range distributors to integrate themselves, directly entering production
or establishing circuits within the sector. This way, distributors could control the cinemas’
film schedule and assure a good visibility to their films – visibility is necessary to obtain
adequate antenna rights if they had not been pre-sold and are bound to the box-office result.
Once the passage to the digital system has been completed, distributors will enjoy the savings
from the film prints (and the developing and printing industries will have to be converted) and
they will probably formulate more flexible launch and distribution strategies, trying to
optimize revenues from less attractive films.
VIDEO ON DEMAND AND REMOTE MARKET
Along with the box-office results, a new market could be developing, most of all for national
films which cannot achieve good results within a market dominated by blockbusters, on
different platforms, typically the ones at a certain distance, which are gradually joining the
physical home video all over the world. The success of consumption on demand, in Italy, is
currently slowed down, among other technological factors, by a low penetration of devices to
view films on demand on TV, both for TV and online films. The availability of contents is
another important element which can speed up or slow down the development of the market.
Current practices include the transfer of non-exclusive VOD rights: the market is still limited
and the producer/distributor’s choice to be connected only to one service is neither convincing
nor gainful for the platform, which does not find (within the market) the results that allow to
pay for an exclusive. On the other hand, platforms (particularly the IPTV ones) historically
complain about the “contractualization” of the minimum guaranteed revenue for the VOD
films which show that the acquisition of rights is at a loss (in the past, this loss was faced by
relying on an increase in the number of subscribers that actually did not take place).
Moreover, as shown by the data about the international market, VOD develops more easily
through TV offers (the audience aims at seeing films on TV easily and inexpensively). In Italy,
with a marginal penetration of IPTV and few development opportunities, VOD could be
supported by the offer of the two main operators: Sky Italia and Mediaset Premium. The latter
has integrated the former services Premium on demand and Premium Net TV within the new
service Premium Play, whose capacity to generate revenues through an on-demand offer of
films is still to be verified. Sky, along the lines of the British subsidiary, is launching an ondemand service on internet protocol (access through one’s own home connection) with the
My Sky HD decoder as storage device. Unfortunately, the launch of the service is based on a
concept that is attractive to the audience, but devastating for right-holders: «The new Sky On
Demand is the free service that gives you access to a movie library with hundreds of programs
you can see whenever you want. You can choose between movies, TV series, entertainment,
| 147
sport, documentaries, children’s programs and many others, according to the type of
subscription».
As these two operators are also active in the acquisition of pay and free TV rights, we should
see how this “handle” will be used to acquire the exclusive VOD rights in bundle, thus reducing
the development opportunities for all other operators, in particular those active online,
especially over mainstream products. Pay-TV’s operators are worried to compete with the
new subjects that are active in the VOD subscription, like Netflix, and to face (like in the USA)
phenomena, even though limited, of cord cutting or cord-shaving, that is, the total withdrawal
(or limited to cinema) of subscription from the audience, which is instead satisfied by a flatfee cinema on demand offer.
Though limited, this phenomenon could be dangerous during a stage of saturation and slow
growth, or even downturn, in the number of Italian subscribers. On the other hand, the only
example of Netflix currently testifies how the development in the S-VOD business is connected
to a subscribers-base coming from the physical rental and then migrated to the digital
subscription (not present in Italy), and how the development also gets through considerable
investments in original products or in exclusive rights with studios whipped away from payTV operators, whose medium-term sustainability has not been evaluated yet. The possibility
of a triumphal entry of Netflix (or similar companies) in the Italian market, is slowed down
by the profitability of services that are typically based on the widespread diffusion of
guaranteed broadband which allows a broad and regular use of streaming or download. If
Agenda Digitale Italiana (Italian Digital Agenda) is not implemented within a reasonable time,
subscribers with “capable” connections could hardly increase enough to make a commercial
service successful.
About this issue, the alliance between connectivity providers and content providers which are
not vertically integrated should be a urgent imperative (or better, categorical).
A further deterrent to the extension of the remote market is the diffusion of piracy on a large
scale. Unfortunately, Italy is at the top of the world lists of countries with the highest piracy,
unable to think about its own cinematographic and audiovisual heritage as a reason to
improve. If the business of the organized piracy is based on the ancient model of the sale of
contracts to advertising investors, the intrinsic value of the single product or the commercial
ability and the capacity to plan and develop different products addressed to different audiences
have no importance. Audience will have free movies, while the film industry will be brought
to its knees. “Everything free means everything closed” simply sums up the concept, which
is blunt but true25.however, some experimental initiatives are being concentrated on the VOD,
aimed at the redefinition of the chronology of film releases all over the world.
American studios – in a technologically and legally different context compared to the European
25.
148 |
At the beginning of June 2012, see the point of view of authoritative columnists such as Corrado Augias in «La Repubblica» and Pierluigi Battista in «Corriere della Sera».
one, and mainly the Italian one – are trying to cut the VOD window, by suggesting films on
demand simultaneously to the video rental, or few weeks (3-8) after the first release (with
prices corresponding to the money spent by a whole family at the box office: 60 US$), or in
the premium VOD modality, that is, simultaneously or before the release (as the case of
Melancholia, 2011; Id., distributed by Warner in the USA). Similar attempts have been also
carried out by independent studios. Of course, besides the worry of operators and rental
stores’ owners to lose part of their revenues and the distributors’ attempt to support the
business cinema/video during the weeks in which the promotional activity is more intense,
there are also doubts and problems related to the real will of audience (or parts of it) to
change from the experience of the big screen to the experience of the domestic screen, to
the availability to pay and to the genre of films. According to the most sensible exponents of
the different categories, VOD should be introduced in a flexible model, integrated with cinemas
and video, according to the types of product and their success, real and expected, at the box
office. The density of screens (and movie rental stores) in a specific geographical area could
be also a diriment element in the choice for a flexible digital distribution, through a cautious
management of IP addresses. In the long term, the remote offer could overcome some of the
obstacles of the current market, also managing to improve the remarkable national library
in the world. If the digitalization of the Italian cinematographic heritage speeds up, the
availability on one (or more) legal platform for the digital distribution on the web, that could
be recognized by brands and with a wide, varied and improved offer, it could assure the
national production visibility and marketability, and it would also cross national borders, that
is, an impassable limit in the physical world, but negligible in the digital one.
Therefore, the circle is closed if we go back to the issue of the ownership of rights over films,
the only significant asset in the film industry. The fragmentation of resources and the need
to compose increasingly complex puzzles, other than introducing a survival challenge, since
the development of a project, lead to an effort of a prospective vision that can only foster the
industry’s consolidation.
| 149
CHAPTER 4
«WE SHOULD NOT PRODUCE WHAT WE COULD SELL,
BUT SELL WHAT WE CAN PRODUCE»
Franco Cristaldi (1924-1992), producer, founder of Vides
(from Le botteghe dell’immaginario, by Tonino Pinto, Rome, 1986)
Business activity
A
fter obtaining the best box-office results of the 2000s in 2010, in 2011 Italian cinema recorded the highest production volumes since 1960, by producing 155
works, and also exceeded the former record of Italian films produced with national capital only: 132 films compared to the 130 films of 1980 (as already mentioned in the second chapter). The balance sheet data related to 2010 financial
year confirm the positive trend of the business management in the production sectors; only
the negative trend of the home-video channel penalized the distribution one. The considerable support given to one’s own activity confirms the operators’ predisposition – not expectable, as noted in other sector – to reinvest the capital gained in the product and it is the
fundamental element in the analysis of the resources distribution within the national cinematography. This is proved by the total amount of internal funds for produced and co-produced films. Compared to a total amount of investments (private, public and foreign) of 423
million Euros, which is not the highest amount ever, the total amount for domestic funds corresponded to 333.1 million Euros, exceeding by 3.0 million Euros the recent record of 2008. A
share of 77.5% of these resources was given to Italian films produced and, with 258.0 million
absolute value, it is again the best performance ever. According to these two parameters –
number of films and invested capital (Table 1) – we can measure the coordinates per unit of
product, which allow to assess the real consistency of national production and the business
strategies of its companies more accurately. The partition of resources used (Table 2) highlights, for instance, the decreasing allocation of FUS contributions and shows how the highest number of works realized (155 were launched on the market, 13% more than 2010) and
capital used have generated for national films a relatively low average investment: with 1.97
million Euros, it is the lowest investment of the last eight years (Table 2).
TABLE 1
HOW NATIONAL FILM PRODUCTIONS AND CO-PRODUCTIONS ARE FUNDED
Amounts expressed in millions of Euros
Private capital share
FUS public contributions *
Public contributions share *
TOTAL RESOURCES
FUS public contributions **
Total Italian resources
Italian resources share
Foreign private resources
Foreign resources share
TOTAL RESOURCES
FUS out of total resources **
FUS out of Italian resources **
2003
2007
2008
2009
2010
2011
INVESTMENTS IN FILMS PRODUCTIONS
138.4 114.0 130.2 150.5 179.5
58.4% 57.8% 85.7% 80.3% 81.3%
98.9
83.4
21.8
37.1
41.5
41.6% 42.2% 14.3% 19.7% 18.7%
237.3 197.4 152.0 187.6 221.0
204.0
80.6%
49.3
19.4%
253.3
194.4
88.9%
24.5
11.1%
218.9
228.8
89.8%
26.0
10.2%
254.8
238.4
92.4%
19.7
7.6%
258.1
INVESTMENTS IN FILMS CO-PRODUCTIONS
54.6
75.6
54.7
63.5
69.8
55.1
9.9
11.4
7.7
6.2
21.5
21.6
64.5
87.0
62.4
69.7
91.3
76.7
44.1% 28.3% 32.1% 33.3% 30.6% 42.3%
82.1 220.1 132.1 139.7 207.6 104.8
55.9% 71.7% 67.9% 66.7% 69.4% 57.7%
63.6
13.5
77.1
35.0%
143.5
75.0%
48.1
9.4
57.5
34.0%
111.8
66.0%
71.8
3.2
75.0
45.5%
90.0
54.5%
220.6
6.1%
17.5%
169.3
5.5%
16.3%
165.0
1.9%
4.3%
146.6
6.9%
15.3%
2004
307.1
3.7%
13.1%
2005
194.5
3.9%
12.3%
2006
209.4
2.9%
8.9%
298.9
7.1%
23.4%
181.5
11.9%
28.1%
* The calculation of FUS contributions (Single Fund for Entertainment) also includes the contributions deliberated during previous years
for films produced later on.
** Funds related to 2011 correspond to Eurimages’ contributions.
Source: The Italian cinema in numbers (years 2003-2011) by Ufficio Studi/Ced Anica until 2010. in collaboration with the General
Directorate for Cinema of MiBac (Ministry for Cultural Heritage and Activity) in 2011.
1. Product investment
The division into budget classes actually shows the high influence of low-cost works (29.5%)
which, along with the medium-budget ones correspond to 56.9% of the total products’ volume
(Table 3). As a consequence, the importance of the Italian film production of the year
decreased. Instead, while their number increased (+27.5%), the level of their average
investment decreased (-11.9%) up to 71.0 thousand Euros, as well as the level of the medium
range works, which decreased (-3.8%) up to 803.7 thousand Euros, despite their total number
decreased by one unit (Table 4).
THE BUSINESS MODEL
Actually, a further decomposition of this classification shows even lower dimensional values.
The majority of the 36 medium-budget works (21, for a total cost of 10.268 million Euros) is
under the 800 thousand Euro threshold for a unit investment of 489 thousand Euros, while the
remaining 15 (18.668 million used) have an individual cost of 1.245 million Euros.
Within the upper category of 100% national films that were produced, it is possible to note that
16 films out of the 57 high-budget films belong to the range that reaches up to 2.5 million
Euros (29.678 total millions), for an average cost per capita equal to 1.855 million Euros. Other
152 |
TABLE 2
AVERAGE COST OF PRODUCTIONS AND CO-PRODUCTIONS
Amounts expressed in millions of Euros
2003
2004
2005
2006
2007
2008
2009
2010
2011
Number of films produced *
Average investment
Film supported by public funds
Average FUS contributions **
NATIONAL FILM PRODUCTIONS
98
96
68
90
90
2.42
2.06
2.24
2.08
2.45
53
41
18
21
29
1.90
2.03
1.21
1.76
1.42
123
2.05
41
1.20
97
2.25
26
0.94
114
2.23
40
0.83
132
1.96
48
0.39
Number of films co-produced
Average investment
Film supported by public funds ***
Average public contributions ***
Average Italian contribution
Average foreign contribution
ITALIAN FILM CO-PRODUCTIONS
19
38
30
26
7.68
8.07
6.48
8.05
4
5
4
3
2.42
2.28
1.92
2.07
3.38
2.29
2.08
2.68
4.30
5.78
4.40
5.37
31
5.85
15
1.44
2.47
3.38
34
6.48
12
1.13
2.26
4.22
27
6.27
9
1.04
2.13
4.14
23
7.18
8
0.41
3.26
3.92
31
9.64
17
1.26
2.94
6.70
* Films produced are those films that received the rating in the reference year; explicitly pornographic films are excluded. Italian films are
those films that have been entirely produced with Italian capital.
** Among FUS contributions (Single Fund for Entertainment) those deliberated during the previous years are included.
*** Public contributions related to 2011 correspond to community contributions of Eurimages.
Source: Italian cinema in numbers (years 2003-2011) by Ufficio Studi/Ced Anica until 2010, in collaboration with the General Directorate
for Cinema of MiBac (Ministry for Cultural Heritage and Activity) in 2011.
TABLE 3
THE THREE TYPES OF BUDGET FOR NATIONAL FILMS
Productions by type of project costs *
Low budget - Up to 200,000 Euros
Medium budget - From 200,000 to 1,500,000 Euros
High budget - More than 1,500,000 Euros
Total films produced - With Italian capital only
2007
2008
2009
2010
2011
5
40
45
90
29
44
50
123
25
28
44
97
27
37
50
114
39
36
57
132
* The classification includes the films produced with 100% Italian capital only (co-productions are, therefore, excluded).
FSource: Italian cinema in numbers (years 2003-2011) by Ufficio Studi/Ced Anica until 2010, in collaboration with the General
Directorate for Cinema of MiBac (Ministry for Cultural Heritage and Activity) in 2011.
10 films are included in the range that reaches up to 3.5 million investment by showing a
financial commitment of 3.02 million Euros per capita. Therefore, the works that received
resources for more than 3.5 million Euros are 31 and, considering a 166.522 million Euro total
budget, they declare a unit cost of 5.372 million Euros.
The point is that the 31 most important films (equal to 23.48% of the total) obtained during
the year 90% of resources destined to the Italian cinema, that is, a little more than 210 million
Euros, which allowed production companies – once the amounts destined to distribution and
business have been deducted, they can be estimated in 123.9 million Euros – to recover their
financial exposures in a short time. The most successful business model at the box-office is
to be found within international co-productions. In 2010, Italian contribution was lower than
the foreign one by 48.6% (that is, it corresponded to a little more than half of the foreign
investment) and actually represented 34.0% of the average cost per film. In 2011, this gap
| 153
TABLE 4
IMPORTANCE OF WORKS PRODUCED WITH ITALIAN CAPITAL ONLY
Investments expressed in Euros
Number of works produced
Invested capital
Annual variation
Average investment
Annual variation
Invested capital
Annual variation
Average investment
Annual variation
Invested capital
Annual variation
Average investment
Annual variation
2007
2008
2009
2010
2011
LOW BUDGET – UP TO 200,000 EUROS
5
29
25
265,443
2,602,489
2,412,332
-17.8%
+980.4%
-7.3%
53,088
89,741
96,493
-16.1%
+68.8%
+7.5%
27
2,174,860
-9.8%
80,550
-16.5%
39
2,772,000
+27.5%
71,000
-11.9%
37
30,923,945
+57.5%
835,782
+19.2%
36
28,936,000
-6.4%
803,778
-3.8%
50
223,544,450
+13.5%
4,470,889
-0.1%
57
226,400,000
+1.3%
3,971,930
-11.2%
MEDIUM BUDGET – FROM 200,000 TO 1,500,000 EUROS
40
44
28
34,252,175
35,864,600
19,622,584
+13.6%
+4.7%
-45.2%
856,304
815,404
700,806
+17.2%
-4.7%
-14.0%
HIGH BUDGET – MORE THAN 1,500,000 EUROS
45
50
44
186,537,960 214,887,450 196,887,680
+11.8%
+15.2%
-8.3%
4,145,288
4,297,749
4,474,720
+1.0%
+3.6%
+4.1%
was reduced to 16.6% and its share, compared to the average cost of each co-production,
increased up to 45.5% (Table 5)However, the Italian contribution gap remains remarkable if
we separate the majority co-productions (in which the foreign participation is below 20%)
from the minority ones, in which national capital covers less than 20% of the total resources.
The average investment for the first ones – 14 out of 23 with a total budget of more than 80
million Euros, 64 of which are Italian – amounts to 5.75 million Euros, while for the latter
(only 9, but with a total budget of nearly 86 million Euros, 74 of which are foreign) the unit cost
amounts to 9.40 million Euros.
If FUS does not help. In this picture, we can see the declining support to production by FUS,
which has now reduced its contribution to less than 20 million Euros. Only in 2007 public
contribution amounted to 48.28 million Euros (60.3% more) and to 43.40 million Euros in 2008
(Table 6)
STRUCTURE OF USES
During the presentation of the joint study on the trend of the sector in 2010, carried out by the
General Directorate for Cinema of MiBac and Ufficio Studi of Anica, the investment structure
was outlined in its most heterogeneous articulation. The support of TV networks seems
predominant, through their structures and the TV rights exploitation pre-sale agreements,
154 |
TABLE 5
COMPARISON BETWEEN THE AVERAGE COST OF PRODUCTIONS AND CO-PRODUCTIONS
Italian films produced *
Average investment
Annual variation
2007
2008
2009
2010
2011
ALL NATIONAL FILM PRODUCTIONS
90
123
97
2,456,173
2,059,793
2,256,934
+17.8%
-16.1%
+9.6%
114
2,234,590
-1.0%
132
1,960,000
-12.3%
MEDIUM AND HIGH-BUDGET NATIONAL FILM PRODUCTIONS – MORE THAN 200,000 EUROS
85
94
72
87
93
Average investment
2,597,531
2,667,575
3,007,087
2,903,086
2,745,559
Annual variation
+18.1%
+2.7%
+12.7%
-3.5%
-5.4%
ONLY HIGH-BUDGET NATIONAL FILM PRODUCTIONS – MORE THAN 1,500,000 EUROS
45
50
44
50
Average investment
4,145,288
4,297,749
4,474,720
4,470,889
Annual variation
+1.0%
+3.6%
+4.1%
-0.1%
Number of films co-produced
Average investment
Annual variation
Average Italian contribution
Annual variation
Average foreign contribution
Annual variation
CO-PRODUCTIONS WITH FOREIGN PARTNERS
31
31
34
9,641,176
5,853,402
6,488,455
+9.0%
-39.3%
+10.8%
2,947,628
2,475,983
2,267,857
+9.8%
-16.0%
-9.2%
6,693,548
3,377,419
4,220,588
+24.5%
-49.5%
+24.9%
27
6,270,548
-3.3%
2,129,808
-6.1%
4,140,740
-1.9%
57
3,971,930
-11.2%
23
7,173,912
+14.4%
3,260,869
+53.1%
3,913,043
-5.5%
* Films produced are those films that received the rating in the reference year; explicitly pornographic films are excluded. Italian films are
those films that have been entirely produced with Italian capital.
with a share equal to nearly 45.1% (150 million Euros out of 333.1 million Euro total funding
of national productions and co-productions), compared to the capital share – 61 million Euros
corresponding to 18.4% of the total – used by production companies and to the share of
resources gathered through the public contribution system: 12.9% (43 million Euros) of
internal tax credit; 7.5% (25.22 million Euros) of tax credit for external investors; 6.0% (20
million Euros) of regional funds; 5.3% (17.8 million Euros) for the support to full-length films
of national cultural interest; 3.3% (11 million Euros) for the support to first and second works;
1.5% of community funds.
2. Investments of the cinematographic chain
Investments in distribution. According to a research carried out by Multimedia Lab
department of the Cattid of “La Sapienza” University in Rome, which is directed by Gianni
Celata, in collaboration with the General Directorate for Cinema of MiBac, the resources for
the typical film production are equal to 78%, while a percentage of 20% is destined to
| 155
TABLE 6
PUBLIC CONTRIBUTIONS TO INVESTMENTS IN FILMS
FUNDS GRANTED IN 2009
Number Total (in Euros) Average Euros
43
24,900,000
FULL-LENGTH FILMS – ENGTHULTURAL INTEREST)
579,070*
38 15,000,000
394,736*
21 10,500,000
500,000
30
9,600,000
FIRST AND SECOND WORKS (OPERE PRIME E SECONDE – EPS)
320,000
40 10,500,000
250,000*
40 7,500,000
187,500
28
960,000
34,286
CULTURAL INTEREST SHORTS – CO
30 1,200,000
40,000
33
1,200,000
36,363
20
700,000
35,000
ORIGINAL SCRIPTS DEVELOPMENT – OSO
20
700,000
35,000
14
490,000
35,000
108 19,690,000
182,314
121
36,160,000
TOTAL INDIRECT SUPPORT TO PRODUCTION
298,843
128 27,400,000
214,062
* Among the 43 full-length films eligible for FUS funds in 2009, 16 films only received the “cultural interest” certification, with no amount of
money. Therefore, the average unit amount of the contribution for the remaining 27 projects actually corresponds to 922,222.2 Euros. Also in 2010
27 films actually received a contribution, therefore the real average is 555,555 Euros. In 2010, the financed first and second works were 34 out
of 40; therefore, the real average contribution amounts to 308,823 Euros.
Data processing by Osservatorio dello Spettacolo according to data provided by the General Directorate for Cinema of MiBac (Report on
the use of FUS, years 2007, 2008 and 2009).
distribution and the remaining 2% to collateral initiatives related to the launch of films on
the market. The survey is based on the economic and financial reports of a sample of 25 out
of 126 films funded by MyBac through FUS, in the period 2006-2009, randomly taken among
the 80 films distributed in the circuits with more than 150 copies, and shows how, in front of
a public contribution of 38.6 million Euros, the 25 films under examination could assure the
State, after being projected, revenues of 12 million Euros. The operational write-offs on
revenues from other distribution channels will be also added.
INVESTMENTS IN THE SECTOR
If Multimedia Lab’s research is useful to have an idea of the resources destined to the
distribution section, which (for 2011) would amount to 66.6 million Euros compared to 259.8
million Euros for works realization only, there are not any surveys that could quantify the
funds that foster the development and the technological updating of the sector. As for the
projection companies – the most involved in merger & acquisition operations during the last
two years, with average improvement of 8.8 million Euros per 8-10 screen multiplex –
resources are mainly used for four activities: real estate, for the construction and opening of
new cinemas or the reconversion of single-screen cinemas into multi-screen cinemas;
digitalization, with the further option of adapting the screening rooms to the projection of 3D
films; advertising, as the sector management remains the role for the diffusion of promotional
announcements related to movies; marketing and co-marketing operations simultaneously
with the release of new films or aiming at loyalizing the audience or at acquiring new
audiences.
156 |
From real estate to promotion. As for the appearance of new complexes, it should be noted
that, in 2011, a sharp slowdown was recorded, as a result of the start-up of four multiplexes.
Considering that other four are being realized, the funds used amount to about 24 million
Euros for the finalization and the start-up of multiplexes that are already active and for
ongoing works of the other ones. As regards the advertising activity, the media research
company Nielsen ascribe to the sector management investments for 5.6 million Euros, after
the fifth consecutive downturn in value and a new decrease in the number of advertising
companies (from 331 in 2010 to 295).
The value of marketing and co-marketing activities is similar.
Digital credit. However, the most intense activity is carried out for the technological innovation
for the digitalization of cinemas. This is a transformation process that involves movie theatres
all over the world and that is constantly analyzed by Media Salles, as proved by the table in
the final section of this Report (Table 7).
Its development is fast in Italy too: cinemas with a digital system increased from 46 in 2009 to
290 in 2010 and to 474 in 2011, adapting 80, then 434 and finally 912 screens, respectively, in a
ratio cinemas/screens equal to 1.7, then 1.5 and finally 1.9, respectively. Moreover, out of these
cinemas, 842 screens are suitable for 3D projections (they were 400 in 2010), with a covering
range of 92.3%. According to Media Salles’ surveys, the most active section is the Multiplexes
one: 103 (equal to 35.5%) had been already digitalized in 2010 and became 120 in 2011.
Besides the incentives set by many Regions at territorial level, to support the commitment of
the companies involved also the tax credit was allowed. In front of 514 requests for tax credit
submitted by 309 companies, for a total of 514 cinemas and 760 screens, in 2010 a 20.4 million
Euro credit was granted, compared to a total expenditure of 66.59 million Euros incurred by
operators. Given the unit investments of 219.78 thousand Euros per company and 87.62
thousand Euros per screen, the access to the tax handle represented an expenditure reduction
of 67.69 thousand Euros per company and 26.98 thousand per screen. Instead, the total amount
of the contribution granted to distributors on the basis of the joint financing model for the
technological adaptation of cinemas called VPF (Virtual Print Fee) cannot be estimated fully.
Within these four main financing activities, it is possible to estimate that investments carried
out by the sector during the year amounted to a little more than 100 million Euros, partially
covered, for a share of nearly 20%, by the tax handle.
3. Resources distribution
Compared to the composition of the investment capital, it is important to estimate the
resources distribution throughout the different sections, as noted in the analysis carried out
by Anica’s Ufficio Studi in the previous chapter. The research conducted by the Multimedia Lab
department of “La Sapienza” University of Rome, for instance, assessed that for the sample
of 25 films supported by FUS contribution – with probable good results, as they are included
| 157
TABLE 7
ALL THE DIGITAL SCREENS IN THE WORLD
Continent
Africa-Middle East
Asia & Pacific area
Europe
Latin America
North America
Total
2004
2005
2006
2007
2008
2009
2010
2011
Var %
2009
/2008
Var %
2010
/2009
Var %
2011
/2010
61
30
10
80
181
1
138
55
11
86
291
1
207
204
16
173
601
3
354
527
21
1,957
2,862
3
786
897
26
4,576
6,288
27
75
289 800.0% 177.8% 285%
1,458 3,469 8,237 85.5% 137.9% 137%
1,535 4,684 10,335 71.1% 205.1% 120,6%
48
485 1,670 84.6% 910.4% 244%
5,660 7,934 15,654 23.7% 40.2%
97%
8,728 16,647 36,185 38.8% 90.7% 117%
* Data refer to 1st January of each year.
Source: Media Salles.
TABLE 8
I MULTIPLEX IN ITALIA
Schermi Sale
Luogo
Provincia
24
18
18
16
16
16
14
14
14
14
14
14
13
13
13
13
13
13
13
12
12
12
12
12
12
12
12
12
12
12
Fiumicino
Milan
Rome
Florence
Moncalieri
Vimercate
Fiumara
Limena
Ostia Lido
Pioltello
Prato
Rome
Afragola
Foggia
Marcianise
Mestre
Paderno Dugnano
Quartucciu
Rozzano
Belpasso
Lunghezza
Marcon
Molfetta
Parma
Pradamano
Ravenna
Rimini
S. Giovanni Lupatoto
Savignano sul Rubicone
Sestu
Rome
Milan
Rome
Florence
Torino
Milano
Genova
Padova
Rome
Milan
Prato
Rome
Naples
Foggia
Caserta
Venice
Milan
Cagliari
Milan
Catania
Rome
Venice
Bari
Parma
Udine
Ravenna
Rimini
Verona
Rimini
Sestu
Ugc Ciné Cité Parco Leonardo
Uci Bicocca
Space Cinema Parco de' Medici
Uci Campi Bisenzio
Ugc Ciné Cité 45° N
Space Cinema Torri Bianche
Uci Fiumara
Cinecity Multiplex
Cineland
Uci Pioltello
Multiplex Omnia Center
Ugc Ciné Cité Porta di Roma
Happy Maxicinema
La Città del Cinema
Big Maxicinema
Uci Mestre
Multiplex Le Giraffe
Space Cinema Le Vele
Space Cinema Medusa
Space Cinema Etnapolis
Uci Roma Est
Uci Marcon
Uci Molfetta
Cinecity Parma
Cinecity Pradamano
Cinecity
Le Befane
Uci Verona
Ugc Ciné Cité Romagna
Cinecity Sestu
Posti a sedere Apertura
5 998
5 524
4 104
3 800
3 912
4 000
3 125
3 200
3 254
3 025
3 137
2 500
2 500
2 600
2 500
2 425
2 763
2 971
2 920
2 470
2 500
2 500
2 078
2 500
2 500
2 500
2 500
2 254
2 475
2 000
2005
2004
1998
2002
2004
2001
2001
2005
1999
2001
2009
2007
2002
2008
2001
2004
2004
2001
2006
2006
2007
2000
2006
2008
2001
2003
2005
2001
2002
2007
Segue
158 |
segue TABLE 8
Schermi Sale
Luogo
Provincia
12
12
11
11
11
11
11
11
11
11
11
11
11
11
11
11
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
9
9
9
9
9
9
9
9
9
9
9
9
9
Silea
Spoltore
Casoria
Cerro Maggiore
Corciano
Florence
Lissone
Marcianise
Messina
Montano Lucino
Montesilvano
Naples
Reggio Emilia
Salerno
Turin
Torreano di Martignacco
Assago
Bellinzago Lombardo
Borgo San Dalmazzo
Brescia
Castel di Lama
Due Carrare
Ferrara
Fiano Romano
Genova
Guidonia Montecelio
La Spezia
Milan
Perugia
Piacenza
Rome
Rome
Sesto San Giovanni
Ancona
Andria
Beinasco
Bologna
Cagliari
Casalecchio di Reno
Casamassima
Castelletto Ticino
Chieti
Colleferro
Curno
Fiume Veneto
Frosinone
Treviso
Pescara
Naples
Milan
Perugia
Florence
Milan
Caserta
Messina
Como
Pescara
Naples
Reggio Emilia
Salerno
Turin
Udine
Milan
Bellinzago Lombardo
Cuneo
Brescia
Ascoli Piceno
Padova
Ferrara
Rome
Genova
Rome
La Spezia
Milan
Perugia
Piacenza
Rome
Rome
Milan
Ancona
Bari
Turin
Bologna
Cagliari
Bologna
Bari
Novara
Chieti
Rome
Bergamo
Pordenone
Frosinone
Cinecity Silea
Multiplex Arca
Uci Casoria
Medusa Cerro
Space Cinema Gherlinda
Uci Firenze
Uci Lissone
Cinepolis
Uci Messina
Uci Como
Space Cinema Porto Allegro
Space Cinema Med
Uci Reggio Emilia
Space Cinema
Uci Torino
Cinecittà Fiera
Uci Cinemas Milanofiori
Multiplex Arcadia
Cinelandia Borgo
Oz - Il Regno del Cinema
Multiplex delle Stelle
Cineplex Dream Park
Uci Ferrara
Cineplex Feronia
Multiplex Porto Antico
Planet
Megacine La Spezia
Space Cinema Odeon
Giometti Multiplex
Uci Piacenza
Adriano
Starplex Gulliver
Uci Skyline
Giometti Multiplex
Cinemars Andria
Space Cinema Le Fornaci
Space Cinema Medusa
Cineworld Cagliari
Uci Casalecchio
Space Cinema Casamassima
Multiplex Metropolis
Multiplex Giometti
Ariston
Uci Curno
Uci Fiume Veneto
Multisala Sisto
2 500
2 500
2 228
2 422
2 480
2 462
2 326
2 500
2 080
1 954
2 500
2 740
1 847
2 486
2 355
2 400
2 148
2 660
1 650
2 388
1 642
2 268
2 156
2 184
1 838
2 452
2 093
2 546
2 000
2 034
1 969
1 780
2 500
1 963
1 949
2 455
2 212
1 495
2 264
2 022
1 450
1 926
2 365
2 389
2 400
2 700
2000
2005
2003
2002
2000
2003
2003
2007
2005
2005
1999
2003
2007
2002
2002
2000
2009
2007
2000
1998
2002
2000
2004
2001
1997
2001
2004
1986
2008
2002
2000
2002
2004
2007
2004
2001
1999
2002
2002
1997
1999
2005
1997
1999
2004
2009
Segue
| 159
segue TABLE 8
Schermi Sale
Luogo
Provincia
9
9
10
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
Livorno
Mercogliano
Modena
Montebello della Battaglia
Nola
Pontedera
Porto Sant'Elpidio
Ragusa
Ravenna
Rome
Rubiera
San Giovanni La Punta
Sinalunga
Surbo
Terni
Torrecuso
Torri di Quartesolo
Varese
Fermo
Bari
Aprilia
Arezzo
Avezzano
Bellinzago Novarese
Campobasso
Casale Monferrato
Cortefranca
Faenza
Forlimpopoli
Formia
Gallarate
Gioia del Colle
Iglesias
Lugagnano di Sona
Milan
Montevarchi
Padova
Rome
Rome
Rome
Rovigo
San Benedetto del Tronto
Turin
Tortona
Livorno
Avellino
Modena
Pavia
Nola
Pisa
Ascoli Piceno
Ragusa
Ravenna
Rome
Reggio Emilia
Catania
Siena
Lecce
Terni
Benevento
Vicenza
Varese
Fermo
Bari
Latina
Arezzo
Aquila
Novara
Campobasso
Alessandria
Brescia
Ravenna
Cesena/Forlì
Latina
Varese
Bari
Cagliari
Verona
Milan
Arezzo
Padova
Rome
Rome
Rome
Rovigo
Ascoli Piceno
Turin
Alessandria
Space Cinema
Movieplex
Victoria
Space Cinema Montebello
Vulcano Buono
Cineplex Pontedera
Giometti Multiplex
Cineplex Ragusa
Astoria Multiplex
Lux MultiScreen
Emiro Multiplex
Cinestar Catania
Uci Cinemas Sinalunga
Space Cinema
Planet Terni
Torre Village Multiplex
Space Cinema Le Piramidi
Multisala Impero
Multiplex Super 8
Showville
Multiplex Village
Uci Arezzo
Astra
Movie Planet Multiplex
Multisala Maestoso
Cinelandia Casale
Nexus Multiplex
Cinedream Multiplex
Cineflash
Multisala del Mare
Cinelandia Gallarate
Seven
Multisala Cineworld
Space Cinema La Grande Mela
Uci Certosa
Multisala Cine 8
Multisala Porto Astra
Andromeda
Multisala Madison
Stardust Village
Cinergia
Palariviera
Space Cinema Medusa
Megaplex Stardust
Source: Media Salles. Data as at 1st January 2011.
160 |
2 206
1 487
2 107
1 990
2 456
1 988
1 800
1 200
2 884
1 200
2 360
2 444
1 712
2 462
2 130
2 000
2 106
1 133
1 290
1 789
1 270
1 774
1 567
1 283
1 990
1 180
1 200
2 150
1 816
2 060
1 460
1 288
5 536
1 244
1 244
1 240
892
1 200
905
1 512
1 300
2 166
1 295
1 205
2003
2001
2008
2001
2008
2003
2004
2005
2004
1999
2002
2007
2002
2001
2009
2006
1997
2006
2010
2010
2001
2004
2001
2003
1999
2003
2003
2000
2002
2002
2003
2006
2004
1997
2006
2003
2004
2008
2003
2002
2004
2009
2002
2003
in the high-budget works range – the total unit investment per film equal to 5.4 million Euros
(an average range included between 0.98 and 9.5 million Euros, with a specific destination to
production of 4.2 million Euros) generated a revenue from the diffusion within cinemas of 3.9
million Euros. Only a share of 2.3 million Euros (58.9%) of these average revenue (resulting
from proceeds oscillating between 1.25 million an 14.3 million Euros) remained for the
business management, 0.4million Euros (10.3%) for the distributor and 1.2 million Euros
(30.8%) for the producer. Since the allocation of public contributions entails, for the verification
of any return of the subsidies granted, the observation of the whole commercial course of
the supported films, also the extra-cinema proceeds that then joined the amount of the boxoffice receipts have been monitored. These results were definitely greater, with an average
value of 2.3 million Euros per film (from a minimum of 0.8 million Euros to a maximum of 6
million Euros), these proceeds brought the production companies an average total revenue
of 3.5 million Euros. With relation to this income amount, the theatres’ revenue can be
estimated as 34.3%, while the remaining 65.7% is to be ascribed to five main additional
sources: 18.4% (644 thousand Euros) from pay-TV; 12.5% (437 thousand Euros) from freeTV; 21.0% (736 thousand) from the pre-sale of other ownership rights; 7.9% (276 thousand)
from the distribution through the home-video channel; 2.6% (92 thousand Euros) from the
transfer of exploitation rights abroad; finally, 3.3% (115 thousand Euros) from other different
sources, like product and location placement.
| 161
Third part
The supply market
Companies and business activity
CHAPTER 5
«IF A FILM IS A GREAT SUCCESS, IT’S A BUSINESS;
IF NOT, IT’S ART»
Carlo Ponti (1912-2007), producer
The production system
I
a pulverized production system like the film sector in Italy, the ongoing balances and
trends are determined by the few large (0.3%) and medium-sized (0.9%) companies
that reach a total of 51.9% of activity. If we also include the joint-stock companies
(which have to deposit and file their own balance sheets) with more than 1 million
Euro revenues, also 16.0% of the whole entrepreneurship and 89.3% of the total production value are covered. Therefore, the whole film industry develops through the data
contained in their financial reports and its main features are delineated, even when the
analysis of the companies’ economic shape is not necessarily based on the balance sheets of the last year ended, but on the previous year’s ones. The overall picture of the company reports related to the 2010 financial year, for instance, delineates the difficult trend
experienced by the Italian cinema today, in terms of market results and development of
its own production sector. Within the sample of companies that has always been the reference point of this report, we could observe that eight companies out of ten showed a profit, while a “modest” 20.37% showed a negative result. However, only 46.23% could improve
their accounts compared with 2009, in terms of revenues and balances, against a 38.21%
which underwent substantial recessions and a 15.56% which confirmed the previous 12
months’ performance. As proved by the notes to the balance sheets and to the income statement, this means that a large number of operators launched reorganization initiatives,
starting from the assets front in which the companies that are structured with more busi-
nesses proceeded, in the most frequent cases, with the mergers by acquisition without using
their capital reserves (but with a positive impact on the assets) and then extending the effects to the managerial and organizational fronts.
As an alternative, the active subjects with a single company name, according to data reported
in the balance sheets themselves, transferred some collateral assets or reduced their
presence in non-strategic segments.
1. The sector map
Within the sector, the specific situation of the different sections, besides the common and
constant goal of containing costs and protecting the business profitability, concurred to make
up a more or less dark mosaic.
For instance, production companies, which are the fundamental linchpin of every
cinematography, are going through that cycle of financial commitment that will lead to the
production record achieved in 2011: the financial data related to the interlocutory 2010 season
(awaiting the results of their own investments) show a substantial balance with the 51.48%
increase and the 44.11% decrease – always in quite moderate percentage ratios – and an
additional 4.41% in line with the results achieved in 2009.
The down turn in television series. On the other hand, the difficulties of companies dedicated
to the TV series and TV movies clearly emerge. Not only for the downturn (43.75% of cases,
compared to the 46.87% increase; the remaining 9.38% is related to unvaried positions), but
for the size of the gaps, almost always double-digit values, and above all for the definite
withdrawal of some companies – mainly the smallest ones – which are verging on inactivity
(ten went out of the group of subjects with more than 1 million Euro turnover, even falling
below this threshold in just one year).
Home video at risk. Another phenomenon that involves the distribution sector seems even
more marked. If the operators dealing with the theatrical diffusion (where also the
production companies themselves are active) do not show any particular difficulties, the
crisis of companies dealing with the home video channel marketing is clear.
This distribution segment, which has been gradually undergoing a recession since 2006, in
2010 recorded the first cases of implosion.
After the 2010 balance sheet, De Agostini Communications liquidated a historical brand like
Dolmen Home Video (100% controller through Mikado) and sold the stock to CG Home Video
of the group owned by Marco Duradoni, who had already taken over the similar branch of the
Cecchi Gori group.
The continuous and progressive drying up of the channel was also reflected, as sharply, on
the assets of the foreign major companies which, through the home video, have been
expressing their physical presence on the Italian market for years.
166 |
Revenues. Favoured by the brilliant results achieved in terms of revenues, the business
circuit experienced a new growth in 2010. Seven projection companies out of ten increased
their turnover and two kept it on the previous levels, while only 10% of operators suffered a
little setback. Even in the presence of a positive trend, the balance sheets analysis show the
latent financial weakness of the companies, above all the medium-sized ones (more than
80% declare less than 1 million Euro revenues), which not even a new earning capacity is able
to solve.
The impasse of technical industries. In any case, the business is the section that in 2010
recorded the lowest percentage of debit balance in the income statement: 8.77% compared
to the general average index of the sector, equal to 20.37%, as already said. On the contrary,
data related to distribution (26.53%) and, even more, to technical and service providing
industries (28.57%) are higher than average.
Considering that, within the last activity sector, the number of companies with an increasing
turnover is equal to the number of companies with a decrease in business (contrary to the
distribution), it is possible to understand the state of uncertainty that characterizes it, given
the technological development that involved the whole sector with the replacement of the
film with the digital process.
2. Analysis of balance sheets and results
Compared to the reference coordinates shown by every section, there is an important
structural datum that the analysis of the balance sheets and results concur to situate in its
proper dimension. It refers to the activity of the international groups that during the last
decades have been playing a fundamental role within the national cinematography and that
are now undergoing an evident and unexpected (for its size) fall. It is possible to see, in the
descending curve of their turnover, the combined effect that most problems in each single
section can generate for the whole sector and with regard to the market assets that had
always permeated it.
HOLDING AND DOMINANT GROUPS
In the table dedicated to the production value expressed by the largest entrepreneurial
groups in the different sections through the companies whose majority is controlled by them,
a general setback of the foreign holding companies, compared to former years, is recorded.
If, in 2008, getting to the twelfth box was enough to number the top ten foreign corporations,
now it is necessary to get to the twentieth box (Table 1).
Foreign leaders in difficulty. Moreover, it can be noted that the turnover of the top two
national groups, Rai and Fininvest-Mediaset, corresponded in 2010 to 48.06% of the turnover
achieved along with the top ten foreign companies, while four years ago it corresponded to
| 167
TABLE 1
THE MAIN GROUPS OF THE SECTOR BY REVENUE (EXPRESSED IN EUROS)
Groups of the sample
SECTOR
1 Gruppo Rai
2 Fininvest-Mediaset*
3 The Walt Disney Company*
4 Uci-United Cinemas International
5 Viacom (Paramount-Blockbuster)
6 Quinta Communications
7 Thomson-Technicolor
8 B&D Holding-De Agostini*
9 Mediacontech
10 Time Warner (Warner Bros,)
11 Kodak*(MI)
12 Edizione-Benetton Group*
13 Italian Entertainment Group
14 Comcast (Universal)
15 Cattleya
16 Fandango-Procacci
17 Rainbow-Straffi
18 The News Corp, (20th Century Fox)*
19 De Luxe Italia Holding
20 Mondo TV-Mondo He
21 Iif-Lucisano
22 Bertlsmann A,G,*
23 Sony Italia*
24 De Angelis Group
25 Filmauro-De Laurentiis*
26 Movie Magic International
27 Gruppo Mercurio (Fanfani-Pistorio)
28 Gruppo Parenzo-Videa Cde*
29 FG Holding-Ferrero*
30 Gruppo Quilleri
31 Centro Sperimentale Cinem,
32 DDD-Gruppo Duradoni
33 Iven-Colorado
34 Anteo SpA-Gruppo Cerri
35 Circuito Cinema
36 Messaggerie Italiane
37 Gruppo Poccioni-Valsania
38 VR&MM Park-Lumiq
39 Panalight
40 Nexo-Di Sarno-Nove
P-D
P-D-E
P-D
E
D
P-D
I
P-D
I
D
I
E
P-I-S
P-D
P-D
P-D
P-D-I
P-D
I
P-D
P-D-E
P-D
D
P
P-D-E
P-S
P-D
D-S
P-E
E
P-S
D
P
P-E
E
D
P-D
P-S
I-S
P-D-E
2010 REVENUE
RESULT
OPERATORS
512,299,668
475,679,104
248,504,901
139,904,497
107,505,005
106,705,393
103,868,528
93,622,270
93,240,425
92,859,952
90,831,144
87,385,400
71,226,963
67,910,014
60,536,278
56,948,568
56,030,088
52,513,402
51,216,720
48,245,234
42,276,254
39,821,850
32,851,146
29,971,991
26,350,670
22,651,767
19,840,744
19,373,501
19,364,233
18,322,735
17,432,767
17,372,200
15,196,294
14,786,081
12,493,734
12,156,205
10,929,647
8,750,917
7,960,137
7,503,492
60,346,469
58,862,996
3,724,134
7,102,948
-11,973,617
8,527,920
-3,033,517
-8,555,347
7,571,219
-269,224
1,335,089
3,998,400
-31,156
-859,059
574,712
339,016
10,411,296
-40,895
1,200,285
3,270,067
-156,636
814,446
-1,360,149
20,014
-3,229,691
-14,435
899,097
438,476
-21,491,809
2,035,095
8,303
917,855
1,695,235
822,971
554,797
546,089
1,534,486
26,583
145,423
1,005,343
109
405
398
943
909
130
314
192
421
119
85
1,170
251
52
22
75
117
49
166
66
32
87
45
8
129
13
15
60
83
75
155
13
5
43
74
73
3
15
16
19
Segue
34.35% only. In absolute terms, the turnover lost by foreign holding companies within the
period nearly reaches the amount of 125 million Euros – in fact, it is equal to 124.34 million
Euros – and it corresponds to an average annual erosion of little more than 31 million Euros.
168 |
segue TABLE 1
THE MAIN GROUPS OF THE SECTOR BY REVENUE (EXPRESSED IN EUROS)
Groups of the sample
SECTOR
41 Ambrosini & Associati
42 Gruppo Furlan
43 Minerva Pictures Group-Curti
44 Outline
45 Red Film Group-Rossini
46 Gruppo Levi
47 Circuito Giometti
48 Sacher-Moretti
49 Arco Program-De Pedys
P-S
E
P-D
I-S
P-D
P-D
E
P-D
P-E
2010 REVENUE
RESULT
OPERATORS
6,107,425
5,760,803
5,514,267
5,465,778
5,184,817
4,932,610
4,796,060
4,679,610
4,081,532
4,107
69,914
85,106
145,735
203,828
206,268
265,870
58,881
418,492
8
50
6
26
3
4
17
31
Key: P – PRODUCTION; D – DISTRIBUTION; E – ESERCIZIO (ACTIVITY); I – INDUSTRY; S – SERVICES
* Data only refer to cinematographic activities.
** The closing date of Sony Pictures Home Entertainment and Sony Pictures Releasing Italia’s balance sheets is set at 31st March every year.
20th Century Fox’s balance sheets on 31st May. Filmauro’s financial year ends on 30th June; Cinestar on 31st July; Giometti on 31st
August; The Walt Disney Company on 30th September. The balance sheets related to financial years started in 2010 and ended in 2011
have been considered.
Source: data provided by Cerved, Telemaco InfoCamere-Business Register and Borsa Italiana’s balance sheets for the companies of the listed groups.
This phenomenon, which involves all the four sections and it is due to the endemic crisis of
the home video channel and the technological development of the sector, and to the
production “deficit” accumulated by the major Hollywood companies after the financial crisis
which broke out in the USA in 2008 (and after the completion of the last blockbusters – first
of all, Avatar [2009; Id.] – which invaded the screens all over the world in the successful
2010). Its size seems exceptional now.
If the problem is structural. They can be undoubtedly considered so, with relation to the
production and commercial structure of Italian cinematography and to the shape taken by
the market up to now, as in both cases it is difficult to hypothesize how much space could
be covered by the national business and, in particular, how this could happen and in which
assets cinema could take shape in the future – or better, in the short or medium term. In fact,
foreign groups are dismantling, quite quickly, the company units in other countries that are
facing great difficulties, without any real possibilities to invert their income trend. Until now,
according to the economic data emerged, a temporary operation for the integration in some
uncovered contexts seems to be taking place, more than a real process of replacement and
strategic consolidation.
The great retreat of the major companies. Sony Pictures Releasing Italia, during the last
financial year (its balance sheets close on 31st March every year), lost activities
corresponding to nearly 20 million Euros (13 of which within the theatrical context) with a 4
million debit.
20th Century Fox, though recording in the last line of its annual reports a modest overall
loss of 430 thousand Euros, recorded lower revenues of 43 million Euros (in this case, even
| 169
27 million Euros less for the box-office receipts) and put Fox Factory, its young business unit
dedicated to the so-called local productions, into liquidation.
Universal is the corporation with the best performance, with only 2 million Euros less than
2009, but Paramount, its competitor, earned 15 million Euros less than 2009 (from a nearly
half a million profit to a 1.496 million loss), thus obliging Viacom, the parent company, to
transfer (from 2011) the home entertainment business branch to Universal, which is now
owned by Comcast, the other communication conglomerate, after the recent acquisition by
General Electric.
Warner Bros. reported a turnover loss of 37 million Euros, basically due to the exit from its
own activity area of the multiplex circuit Warner Village (which, in 2009, generated a 34.97
million revenue), but thanks to this disposal in favour of The Space Cinema, it could get a
balanced budget and make up the 18.6 million deficit accrued in the previous financial year.
Also Walt Disney, whose financial year ends on 30th September every year, increased the
proceeds of cinema and television productions by nearly 50 million (298.49 million in
September 2011 compared to 248.54 million in the previous financial year), but the proceeds
generated in Italy by the cinematographic studios lost more than 25 million Euros, falling
from 90.97 to 64.80 million Euros.
Farewell to Blockbuster. Then there is the case of Blockbuster, which appears in this Report
for the last time, as it closed after drawing up, in 2010, its last balance sheet related to its
Italian experience which, in the four-year period 2007-2010, is marked by an inexorable and
progressive fall in the home-video sale and rental proceeds, from 141.76 million Euros in
2007 to 133.17, then 112.96 and finally, in 2010, to 97.72 million Euros, with a final deficit of
10.4 million Euros.
Today, more than 120 branches scattered throughout the territory show the sign of the
parapharmaceutical chain Essere & Benessere.
The breakdown of technical industries. Even the section of technical and service providing
industries show the difficult situation of its international leaders. Eastman Kodak’s revenues
were lower by 44 million compared to 2009, and the Entertainment Imaging division,
dedicated to the film industry, underwent a 26% decrease.
The Thomson-Technicolor group’s sales, in the period 2007-2010, decreased by about 38
million Euros, and 7.7 million were lost in 2010 only, with a consequent loss in the income
statement of 1.93 million Euros (worse than the 2009 balance by 7 million), mainly due to
the provision of 6.3 million Euros to finance the personnel mobility procedures, thanks to
which the average number of operators in the film production is expected to decrease to 77
from 150.
As for the main competitor, DeLuxe Italia Holding, which recorded the fall (in 12 months
only) from 222.6 to 178.8 in the meters of film developed and printed, it also recorded a
revenue loss of 11 million Euros, and a 1.9 million drop in profit, followed by the opening of
the division dedicated to the digital process following the example of Technicolor, with a
170 |
price policy involving the whole section, starting from the first national competitor CDFCinecittà Digital Factory which, along with Cinecittà Studios, is owned by IEG-Italian
Entertainment Group. Simultaneously, General Disk Manufacturing was put into liquidation.
Its balance sheet showed a negative balance of 5.98 million Euros for the 2010 financial year,
which is higher than the value of the magnetic supports production, equal to 5.53 million
Euros (which in turn decreased by 4 million Euros compared to 2009).
The case of Uci. Even the activity sector is involved in the widespread retreat of foreign
corporations from the national film market. Seemingly, the large expansion of the
international circuit Uci-United Cinemas International, the only great operator that is still
thwarting the rapid development of The Space Cinema – the national group resulting from
the joint venture between 21 investments of Edizione-Benetton Group and MediasetFininvest (which own 51% and 49% of the stock capital, respectively) – contrasts with the
general outlook of the sector, but part of its growth is due to the withdrawal of the other two
foreign operators, Ugc Ciné Cité and Vis Pathé, which transferred their assets to the
company established in 1988 from a partnership between Paramount Pictures and Universal
Studios, whose control passed, in 2004, under the London private equity financial company
Terra Firma Capital Partners.
OPERATING COMPANIES AND LEADERS
In the reconstruction of a representative picture of the economic situation of Italian cinema
there are still some conditions of uncertainty which are mainly related to the unfinished
reclassification of businesses according to new Ateco codes for the assignment to the
activity sectors. While waiting for a complete sharing out (which is now upcoming), as
regards the 2010 balance sheets analysis, also companies dedicated to the production of TV
series and TV movies were included within the list of the companies considered.
Their activity within the film production (also due to the drop in their main scope of
activities) becomes increasingly constant, and film companies intensified their activity in the
opposite field (Table 2). The reference base is the 1 million Euros threshold of production
value, even in front of a quite constant fluctuation of companies around this threshold,
which makes the individuation of the operators that are (or not) in the so-called “hard-core”
of Italian cinema difficult.
The State is the absolute leader. Besides the already mentioned contraction suffered by
American corporations, it is also necessary to record, according to the comparison between
the economic value of the companies – which reconfirms the absolute leadership of Rai
group – another structural factor that is usually disregarded: the persistence of the public
subject as top operator within the national market. In fact, the primacy concretely exercised
mainly through Rai is also confirmed, under the civil and administrative aspect, by the
contents of the balance sheets submitted by all capital companies to the Business Register
(Tables 3 and 4).
| 171
TABLE 2
THE MAIN OPERATING COMPANIES BY REVENUE EXPRESSED IN EUROS
Companies of the sample (head office)
SECTOR
1 Rai Cinema (RM)
2 Medusa Film (RM)
3 The Walt Disney Company*
4 The Space Cinema 1 (RM)
5 Blockbuster Italia (MI)
6 Technicolor (RM)
7 Warner Bros, Entertainment (RM)
8 Kodak*(MI)
9 01 Distribution (RM)
10 Eagle Pictures (MI)
11 Taodue (RM)
12 Cattleya (RM)
13 Fandango (RM)
14 DeLuxe Italia Holding (RM)
15 Publiespaña* (ES)
16 Universal Pictures Int, Italia (RM)
17 Cinemeccanica (MI)
19 Cinecity Art & Cinemas (PD)
20 Lux Vide Finanziaria (RM)
21 Pozzoli (MI)
22 Deltatre (TO)
23 Prima Tv (MI)
24 Iif-Italian International Film (RM)
25 Palomar (RM)
26 Publispei (RM)
27 Opus Proclama (MI)
28 Rainbow (AN)
29 FremantleMedia Italia (RM)
30 20th Century Fox Home Ent,* (RM)
31 Cinecittà Entertainment (RM)
32 Uci Nord (RM)
33 Premiere Multiplex (ES)
34 Cinecittà Luce (RM)
35 Lucky Red (RM)
36 Mondo He (MI)
37 Sipra* (RM)
38 Dap Italy (RM)
39 Uci Italia (RM)
40 Uci Centro (RM)
P
P-D
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P-D
I
E
E
P
I
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E
P-D-S
P-D
P-D
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REVENUE 2010
RESULT
OPERATORS
400,700,283
221,782,204
145,502,723
107,681,000
97,722,893
95,859,070
92,859,952
90,320,852
77,498,385
68,503,952
59,159,250
57,429,278
56,948,568
51,216,720
48,500,000
47,021,157
43,706,937
43,254,000
42,967,891
40,915,199
39,626,081
38,830,105
38,201,441
37,421,362
35,292,350
34,841,036
34,282,261
32,343,088
32,882,301
28,684,873
28,675,743
27,022,470
25,805,500
25,688,965
24,969,492
24,812,056
24,540,500
24,242,965
24,004,339
23,811,797
58,744,800
33,826,761
3,724,134
4,628,000
-10,477,383
-1,938,137
-269,224
1,324,616
1,164,475
1,107,856
14,070,002
663,772
339,016
1,200,285
2,540,000
-1,243,780
1,933,555
3,512,000
2,753,749
504,627
657,670
6,289,977
7,240,064
-558,454
138,545
1,433,037
-500,374
5,413,296
-742,651
-184,259
87,254
1,100,081
256,600
76,735
2,662
1,073,642
99,694
10,496
18,311
1,065,078
60
55
398
897
888
294
119
70
28
35
16
22
75
166
189
28
88
273
268
22
112
213
95
11
109
50
14
102
11
29
29
199
180
128
15
33
10
5
151
161
Segue
THE MAIN PRODUCTION COMPANIES
The double role played by many subjects as production and distribution companies can,
sometimes, make the comparison between the different operators difficult. However, the
situation outlined through the classification of the balance sheets of the companies which,
172 |
segue TABLE 2
SECTOR
41 Cinecittà Studios (RM)
42 Telecinco Cinema (ES)
43 20th Century Fox Italy* (RM)
44 Filmauro* (RM)
45 Casanova Multimedia (RM)
46 Terminal Video (BO)
47 Albatross Entertainment (RM)
48 Mtc-Mikros Image (FR)
49 Magnolia Fiction (BG)
50 Universal Pictures Italia (RM)
51 Itc Movie (BO)
52 Mercurio Cinematografica (MI)
53 Mondo TV (MI)
54 Movierecord (ES)
55 Uci Sud (RM)
56 Movie Magic International (MI)
57 Bim Distribuzione (RM)
58 Magnolia España (ES)
59 Producciones Mandarina (ES)
60 Sony Pictures Releasing* (RM)
61 Ares Film (RM)
62 Cinelandia (CO)
63 Uci Nord Est (RM)
64 Centro Sperimentale Cinem, (RM)
65 Replic (MI)
66 Frame (NA)
67 Antena 3 Films (ES)
68 Sony Pictures Home Ent,* (MI)
69 Indigo Film (RM)
70 Mediolanum Comunicazione (MI)
71 Colorado (MI)
72 Cinecittà Digital Factory (RM)
73 Uci Nord Ovest (RM)
74 Atlantyca Entertainment (MI)
75 Guadiana Producciones (ES)
76 CG Home Video (FI)
77 Mediaport Cinema (RM)
78 Circuito Cinema Roma (RM)
79 Agidi (MO)
80 Mondo TV (RM)
81 Fondazione Cinema per Roma (RM)
82 Sono Tecnología Audiovisual (ES)
83 Fondazione Biennale Venezia (VE)
84 Icet Studios (MI)
85 Hasbro Italy (MI)
86 Ehome Italia Service (MI)
I-S
P-D
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P-D-E
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D
P
I
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P
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I
D
REVENUE 2010
RESULT
OPERATORS
23,678,486
22,791,000
22,457,425
22,290,096
21,837,023
21,503,536
21,056,434
21,050,500
20,934,272
20,888,857
20,885,552
19,480,744
19,298,452
18,651,700
18,567,186
18,501,425
18,098,733
17,737,050
17,454,000
17,718,999
16,994,975
16,544,389
16,514,966
16,297,312
15,880,442
15,679,918
15,417,000
15,132,157
14,678,783
14,146,640
13,965,455
13,324,115
13,282,408
13,103,405
12,620,030
12,618,967
12,524,104
12,493,734
12,455,079
12,287,000
12,249,204
12,098,000
12,000,000
11,923,467
11,838,729
11,736,566
882,277
-4,278
274,682
-4,546,216
123,898
274,537
49,179
897,000
12,000
384,721
458,747
899,097
-1,726,343
506,010
1,070,963
-50,879
284,271
1,064,222
3,627,000
-1,616,996
643,217
1,207,072
1,343,130
4,615
-595,708
-461,623
-501,000
256,847
232,082
-1,966,604
866,453
4,970
840,092
995,003
46,000
622,699
-4,895,754
554,797
2,823,363
-181,000
5,769
-209,000
0
24,584
687,871
240,963
138
98
19
129
12
42
10
172
4
24
0
15
33
110
122
10
9
7
31
32
15
205
113
155
35
25
13
2
12
5
94
82
26
25
11
77
74
15
25
25
18
22
42
40
Segue
| 173
segue TABLE 2
SECTOR
87 Equipe Service Group (MI)
88 DueA Film (RM)
89 Rodeo Drive (RM)
90 Stella Film (NA)
91 Indiana Production Company (MI)
92 Goodtime (RM)
93 Paramount Home Ent, Italy (MI)
94 Rai Trade* (RM)
95 Grass Valley (RM)
96 Tridimensional (AN)
97 Sofind (CT)
98 Dall’Angelo Pictures (RM)
99 Videa Cde (RM)
100 Uci Campi Bisenzio (RM)
101 Fidia Film (RM)
102 Technicolor Milan (MI)
103 Flash Color (MI)
104 Cin Cin (BS)
105 Immagine e Cinema (RM)
106 Andrea Leone Film (RM)
107 Uci Roma Est (RM)
108 Sani 2000 (RA)
109 Eyeworks Italia (RM)
110 Panalight (RM)
111 Duplas Avelca (MI)
112 Sac-Servizi Ausiliari C, (RM)
113 Videe (PN)
114 Victoria (BO)
115 Cineworld Group (TV)
116 Lumière & Co, (MI)
117 Dauphine Film Company (RM)
118 Arcadia (MI)
119 Koch Media (MI)
120 Netaddiction (TR)
121 Apulia Film Commission (BA)
122 Studios (RM)
123 Arvato Services Italia (BG)
124 International Video 80 (RM)
125 Quantum Marketing (MI)
126 La BiBi,it (RM)
127 Rainbow CGI (AN)
128 Dynit (BO)
129 General Disk Manufacturing (MI)
130 Artis Edizioni Digitali (MI)
131 Jean Vigo Italia (RM)
132 Dubbing Brothers Int, Italy (RM)
D
P
P
E
P-S
P
D
D
I
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E
P-D
D
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I
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P
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REVENUE 2010
RESULT
OPERATORS
11,451,803
11,262,238
10,822,817
10,634,633
10,448,827
10,113,073
9,782,112
9,560,500
9,466,879
9,165,000
8,730,984
8,696,505
8,363,246
8,245,690
8,039,218
8,009,458
8,036,656
7,949,853
7,815,089
7,797,621
7,726,296
7,593,724
7,456,395
7,483,550
7,120,364
7,068,189
6,978,713
6,649,600
6,601,001
6,508,969
6,469,287
6,352,255
6,309,100
6,175,368
6,128,208
5,956,753
5,939,549
5,821,180
5,789,519
5,729,028
5,697,000
5,608,962
5,530,499
5,419,367
5,303,372
5,277,603
-782,477
133,164
1,575,300
399,371
13,516
-171,471
-1,496,234
337,500
70,417
1,374,000
366,682
309,708
421,034
605,345
-195,409
-1,095,290
541,525
1,157,574
21,897
571,023
927,949
318,819
-324,394
112,053
106,688
1,150,694
18,159
433,345
117,061
192,987
-9,635
-906
21,809
7,672
493,367
-266,555
71,795
47,500
77,343
9,518
11,000
298,921
-5,096,758
3,971
88,416
466,246
4
3
52
6
21
11
11
15
28
6
12
41
11
30
43
48
9
39
39
2
15
31
50
41
39
2
3
0
62
5
20
7
23
55
3
21
3
18
22
3
2
16
Segue
174 |
segue TABLE 2
SECTOR
133 Mikado (RM)
134 Nexo (MI)
135 Ciao Ragazzi (MI)
136 Conecta 5 Telecinco (ES)
137 Aurora Film (RM)
138 Red Film (RM)
139 Square Post Production (MI)
140 Ariston (IM)
141 Minerva Pictures Group (RM)
142 Microcinema (MI)
143 Outline (BS)
144 Cinehollywood (MI)
145 Pumaisdue (RM)
146 Compagnia Leone Cinem, (RM)
147 Lumiq (TO)
148 Rainbow Toys (AN)
149 VR&MM Park (TO)
150 Emme Cinematografica (RM)
151 Triboo* (MI)
152 Airtech Video (MI)
153 Ambrosini & Associati (MI)
154 Yamato (MI)
155 Mediacontech (MI)
156 Sacher Film (RM)
157 Moviemax Italia (MI)
158 Ecofina (MI)
159 Starplex (BS)
160 Italian Int, Movieplex (RM)
161 Cristaldi Pictures (RM)
162 11 Marzo Cinem, (RM)
163 Cineteam (RM)
164 Laura (FG)
165 Cvd-Cine Video Doppiatori (RM)
166 Gruppo Alcuni (TV)
167 Filmmaster Group (RM)
168 Character (PD)
169 Fratelli Cartocci (RM)
170 Planeta Junior (ES)
171 Conto TV (CZ)
172 Movie Works (RM)
173 Cinemax (PD)
174 Alto Verbano (MI)
175 Arco Program (MI)
176 Bianca Film (RM)
177 Fono Roma Film Recording (RM)
178 Top Ten Group (RM)
P
E
P
P
P
P
I
E
P
E
S
E
S
P
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S
P-S
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D
I
P-S
D
S
P-E
P-D
I
E
E
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S
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E
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I
S
REVENUE 2010
RESULT
OPERATORS
5,252,671
5,201,191
5,168,285
5,144,000
5,111,703
5,111,012
5,097,100
5,050,055
5,013,667
4,932,500
4,704,931
4,577,980
4,564,482
4,444,845
4,428,757
4,411,000
4,322,160
4,318,377
4,293,855
4,272,733
4,254,777
4,195,688
4,186,007
4,156,929
4,133,726
4,130,321
4,061,696
3,946,842
3,961,039
3,953,521
3,913,397
3,825,943
3,740,114
3,620,553
3,521,485
3,511,419
3,487,097
3,451,000
3,363,374
3,306,245
3,272,206
3,206,170
3,148,994
3,111,046
3,107,650
3,056,205
-7,286,518
905,343
-262,000
4,311
998
142,623
498,000
66,559
86,106
81,404
126,139
54,645
5,287
87,033
283
122,000
26,300
95,387
113,063
-593,981
1,729
63,763
77,083
29,988
3,922,768
68,062
16,107
173,095
-375,875
256,168
87,765
186,415
2,547
-20,499
-972,127
12,345
-527,567
-34,272
-18,396
4,144
15,614
-43,981
257,991
236,318
-31,488
14,756
9
17
8
35
3
18
41
8
10
14
7
8
5
10
25
16
24
8
12
10
16
0
18
38
20
2
4
6
25
32
19
15
30
9
10
2
40
31
28
11
Segue
| 175
segue TABLE 2
SECTOR
179 R&C Produzioni (RM)
180 Smile Production (RM)
181 Fratelli Reposi (TO)
182 Cineverbano (NO)
183 Pcm Audio (RM)
184 Eurolab Italia (RM)
185 Post in Europe (RM)
186 C,G,C, (UD)
187 Leader Productions (RM)
188 Platea (MI)
189 Publiodeon (AP)
190 Upc (MI)
191 Gestioni Cinematografiche (MI)
192 Spaziocinema (MI)
193 Mega Cinema (CH)
194 Immobiliare dell’Arte (VA)
195 Banzai (MI)
196 Teodora Film (RM)
197 Studio Asci (CR)
198 Coges (BS)
199 Archibald Enterprise (RM)
200 Backstage (MI)
201 Titania Produzioni (RM)
202 Rainbow Distribution (AN)
203 Anteo (MI)
204 Porta Nova (CR)
205 On My Own (MI)
206 Sedif (RM)
207 Bolero Film (RM)
208 Studio PV (MI)
209 Giometti Holding (RIM)
210 Cinema Europa (RM)
211 Edi-Effetti Digitali Italiani (MI)
212 Lvr (RM)
213 Think | Cattleya (RM)
214 Faro (MO)
215 ArmosiA Italia* (RM)
216 Colby (MI)
217 Cinemars (BR)
218 Surf Film (RM)
219 CG Cinema Spettacolo (RM)
220 One Movie (RM)
221 Studio Azzurro Produzioni (MI)
222 D4 (RM)
223 Circuito Cinema Genova (RM)
224 Sharada Film (RM)
P
P
E
E
I-S
I
D
E
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E
I
E
E
E
E
D-S
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E
P-D
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E
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REVENUE 2010
RESULT
OPERATORS
3,014,291
3,009,212
2,997,962
2,963,017
2,929,240
2,892,763
2,820,100
2,813,343
2,780,767
2,778,519
2,739,636
2,714,588
2,706,552
2,686,613
2,680,287
2,658,387
2,612,054
2,588,097
2,530,826
2,519,308
2,513,182
2,497,871
2,462,619
2,457,002
2,391,970
2,365,821
2,314,058
2,290,263
2,284,191
2,321,852
2,115,426
2,107,479
2,173,077
2,145,345
2,128,000
2,117,574
2,102,216
2,069,305
2,017,723
2,011,211
2,003,409
1,996,963
1,977,544
1,957,613
1,956,034
1,934,019
4,825
405,846
135,221
474,745
11,299
10,892
4,871
18,285
-386,215
246,4237
37,486
167,421
59,930
280,938
266,517
305,114
-2,878,181
2,614
18,441
425,078
10-692
-457,799
508
365,800
99,489
145,294
46,092
40,390
2,746
-20,638
15,602
-148,596
96,979
1,287
-289
115,742
176,964
1,501
26,377
52,570
360,312
39,947
7,665
219,602
94,036
2,923
1
3
13
16
21
11
1
12
10
10
10
22
4
7
8
3
12
5
11
7
1
1
2
4
1
11
25
30
3
11
8
10
12
0
0
15
1
12
0
Segue
176 |
segue TABLE 2
SECTOR
225 Co,mi,ci, (BS)
226 Laserfilm (RM)
227 Atre Film Factory (MI)
228 Cartoon One (RM)
229 Fotocinema (RM)
230 Fox Factory (RM)
231 Olimpia 80 Immobiliare (RM)
232 K-events (RM)
233 Control Cine Service (PD)
234 Veneta Cinema e Teatri (PD)
235 The Animation Band (MI)
236 Dreamlight (AO)
237 Filmmaster Srl (RM)
238 Dolmen Home Video (MI)
239 Torino Spettacoli* (TO)
240 Century (AL)
241 Multimedia San Paolo* (CN)
242 Multiplex Nexus (BS)
243 General Video (PD)
244 Melampo Cinem, (RM)
245 Puettmann Stummer (BZ)
246 Circuito C, Qualità Milano (MI)
247 Camelot (MI)
248 Film Kairòs (RM)
249 Rainbow Entertainment (AN)
250 Digital Video (RM)
251 Globalplex (CT)
252 Mo-Net (FI)
253 Video K7 (PO)
254 InterVideo (LU)
255 Circuito Cinema Torino (TO)
256 Proedi Comunicazione (MI)
257 Unidis Jolly Film (RM)
258 C,S,C, Production (RM)
259 Circuito Cinema Bologna (BO)
260 Euro Immobilfin (RM)
261 Blu Cinematografica (RM)
262 PayPerMoon Italia (MI)
263 Big Bang Media (ES)
264 Circuito Cinema Napoli (NA)
E
I
P
P
I
P
E
S
S
E
P
P
P
D
E
E
P-D
E
D
P
I-S
E
S
P
S
D
E
D
D
D
E
S
E
P
E
D
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D
E
REVENUE 2010
RESULT
OPERATORS
1,883,215
1,865,673
1,852,648
1,813,192
1,766,795
1,731,104
1,725,480
1,677,005
1,676,159
1,669,107
1,654,889
1,623,020
1,623,000
1,618,547
1,596,475
1,588,067
1,582,845
1,563,001
1,524,700
1,500,908
1,456,735
1,402,935
1,389,339
1,386,027
1,374,000
1,372,435
1,305,593
1,255,705
1,243,535
1,223,150
1,209,455
1,185,134
1,175,686
1,135,455
1,131,641
1,115,927
1,095,206
1,090,837
1,085,000
1,077,144
63,042
192,987
2,378
2,624
-27,947
-131,318
281,026
0
-18,175
62,807
6,389
167,103
-25,000
-2,361,849
200,499
199,610
42,957
418,310
29,934
201,895
5,827
196,154
19,000
11,671
-4,003,133
0
8,081
148,296
6,652
16,391
97,172
3,688
-11,029
81,095
8,133
11,133
71,000
42,329
6
15
0
1
14
4
1
11
12
8
20
3
14
10
2
2
16
6
3
1
1
0
6
7
10
10
10
3
5
6
5
5
* I dati riportati si riferiscono alle sole attività cinematografiche.
** I bilanci d’esercizio di Sony Pictures Home Entertainment e Sony Pictures Releasing Italia prevedono la chiusura al 31 marzo di ogni
anno. Tutti quelli di 20th Century Fox la contemplano invece al 31 maggio. Per Filmauro la data di fine esercizio è il 30 giugno; per Cinestar
il 31 luglio; per le società Giometti il 31 agosto; per The Walt Disney Company il 30 settembre. Sono stati considerati i rendiconti relativi
agli esercizi aperti nel 2010 e conclusisi nel 2011.
| 177
TABLE 3
PUBLIC COMPANIES IN THE FILM INDUSTRY
Companies of the sample (registered office) SECTOR
1 Rai Cinema (RM)
4 Sipra* (RM)
8 Rai Trade* (RM)
9 Apulia Film Commission (BA)
10 VR&MM Park (TO)
12 Film Commission Campania (NA)
13 Sicilia Cinema e Turismo (PA)
14 Fondo Investimenti Piemonte (TO)
P
D
P-D-S
S
S
S
S
D
S
P-S
P
S
S
S
REVENUE 2010
RESULT
OPERATORS
400,700,283
77,498,385
25,688,965
24,540,500
16,297,312
12,249,204
12,000,000
9,560,500
6,128,208
8,750,917
1,135,455
116,671
62,062
2
58,744,800
1,164,475
76,735
99,694
4,615
5,769
0
337,500
493,367
26,583
3,688
-356,391
-2
-1,274,567
60
28
128
10
155
25
22
11
7
15
10
6
0
1
TABLE 4
WHEN THE PUBLIC SECTOR IS THE LEADER OF THE NATIONAL MARKET
Operators of the public sector
2010 REVENUES (EXPRESSED IN EUROS) BALANCE SHEET RESULTS
Gruppo Rai Cinema
Totale enti a controllo statale
Altri soggetti di natura pubblica
Rai share over the State
STATE SHARE OVER PUBLIC SECTOR
512,299,668
555,421,400
594,773,464
92.23%
93.38%
60,346,469
60,431,507
59,306,266
99.85%
191.89%
OPERATORS
109
402
478
27.11%
84.10%
According to data provided by Cerved and Telemaco InfoCamere-Business Register.
in 2010, recorded a value production higher than 1 million Euros, represents the production
structure that is the basis of the national film system (Table 5). Even for the inclusion of the
companies whose activity is mainly dedicated to the production of TV series and TV movies
for the television market and that, however, are the protagonists of an increasing integration
with film companies which, in turn, started a similar process in the opposite direction (Table
6). In order to provide an adequate illustration of the company resources used by the major
protagonists of the sector, the Table also includes the other foreign companies controlled by
groups with Italian capital.
THE LARGEST DISTRIBUTION COMPANIES
The thwarted trend of the home-video channel is progressively changing the outline of the
distribution sector: many companies related to the traditional sales network and physical
rental of supports are undergoing a constant recession, while companies that mainly operate
178 |
TABLE 5
THE MAIN PRODUCTION COMPANIES BY REVENUES EXPRESSED IN EUROS
Companies of the sample (registered office)
SECTOR
1 Rai Cinema (RM)
2 Medusa Film (RM)
4 Eagle Pictures (MI)
5 Taodue (RM)
6 Cattleya (RM)
7 Fandango (RM)
8 Universal Pictures Int, Italy (RM)
10 Prima TV (MI)
11 Iif-Italian International Film (RM)
12 Palomar (RM)
13 Publispei (RM)
14 Rainbow (AN)
17 Lucky Red (RM)
18 Mondo He (MI)
19 Dap Italy (RM)
20 Telecinco Cinema (ES)
21 Filmauro* (RM)
23 Albatross Entertainment (RM)
25 Itc Movie (BO)
26 Mercurio Cinematografica (MI)
29 Ares Film (RM)
30 Antena 3 Films (ES)
31 Indigo Film (RM)
32 Colorado (MI)
33 Atlantyca Entertainment (MI)
35 Agidi (MO)
36 Mondo TV (RM)
37 DueA Film (RM)
38 Rodeo Drive (RM)
40 Goodtime (RM)
42 Fidia Film (RM)
44 Andrea Leone Film (RM)
46 Lumière & Co, (MI)
48 La BiBi,it (RM)
49 Rainbow CGI (AN)
50 Dynit (BO)
P
P-D
P-D
P
P
P
P-D
P-D
P
P-S
P
P
P
P
P
P-D-S
P-D
P-D
P
P-D
P-D-E
P
P
P
P
P
P
P
P
P
P
P
P-D
P
P
P-D
P
P
P-S
P
P
P
P
P
P
P
P
P
P
P
P
REVENUE 2010
RESULT
OPERATORS
400,700,283
221,782,204
92,859,952
68,503,952
59,159,250
57,429,278
56,948,568
47,021,157
40,915,199
38,201,441
37,421,362
35,292,350
34,841,036
32,343,088
32,882,301
25,688,965
24,969,492
24,812,056
24,242,965
22,791,000
22,290,096
21,837,023
21,056,434
20,934,272
20,885,552
19,480,744
17,737,050
17,454,000
16,994,975
15,417,000
14,678,783
13,965,455
13,103,405
12,620,030
12,455,079
12,287,000
11,262,238
10,822,817
10,448,827
10,113,073
8,696,505
8,039,218
7,815,089
7,797,621
7,456,395
6,508,969
6,469,287
5,729,028
5,697,000
5,608,962
5,419,367
58,744,800
33,826,761
-269,224
1,107,856
14,070,002
663,772
339,016
-1,243,780
504,627
7,240,064
-558,454
138,545
1,433,037
5,413,296
-742,651
76,735
2,662
1,073,642
10,496
-4,278
-4,546,216
123,898
49,179
12,000
458,747
899,097
1,064,222
3,627,000
643,217
-501,000
232,082
866,453
995,003
46,000
2,823,363
-181,000
133,164
1,575,300
13,516
-171,471
309,708
-195,409
21,897
571,023
-324,394
192,987
-9,635
9,518
11,000
298,921
3,971
60
55
119
35
16
22
75
28
22
95
11
109
50
102
11
128
15
33
5
98
129
12
10
4
0
15
7
31
15
25
2
5
26
25
15
25
4
3
6
6
11
9
2
3
0
3
18
3
Segue
| 179
segue TABLE 5
THE MAIN PRODUCTION COMPANIES BY REVENUES EXPRESSED IN EUROS
SECTOR
52 Jean Vigo Italia (RM)
53 Mikado (RM)
56 Aurora Film (RM)
57 Red Film (RM)
58 Minerva Pictures Group (RM)
60 Lumiq (TO)
61 VR&MM Park (TO)
63 Sacher Film (RM)
66 Cineteam (RM)
67 Laura (FG)
69 Gruppo Alcuni (TV)
70 Alto Verbano (MI)
71 Bianca Film (RM)
72 R&C Produzioni (RM)
75 Teodora Film (RM)
78 On My Own (MI)
79 Bolero Film (RM)
80 Surf Film (RM)
81 One Movie (RM)
82 Studio Azzurro Produzioni (MI)
83 Sharada Film (RM)
85 Cartoon One (RM)
86 Fox Factory (RM)
87 The Animation Band (MI)
88 Dreamlight (AO)
89 Filmmaster Srl (RM)
91 Melampo Cinem, (RM)
92 Film Kairòs (RM)
94 Blu Cinematografica (RM)
P
P
P
P
P
P
P
P-D
P-S
P-S
P-S
P-E
P
P
P
P
P
P-S
P
P
P
P
P
P
P-D
P
P
P-D
P-D
P
P
P
P
P
P
P
P
P
P-D
P
P
P
P
P
REVENUE 2010
RESULT
OPERATORS
5,303,372
5,252,671
5,168,285
5,144,000
5,111,703
5,111,012
5,013,667
4,444,845
4,428,757
4,322,160
4,254,777
4,156,929
3,961,039
3,953,521
3,913,397
3,825,943
3,620,553
3,521,485
3,206,170
3,111,046
3,014,291
3,009,212
2,780,767
2,588,097
2,513,182
2,462,619
2,314,058
2,284,191
2,011,211
1,996,963
1,977,544
1,934,019
1,852,648
1,813,192
1,731,104
1,654,889
1,623,020
1,623,000
1,582,845
1,500,908
1,386,027
1,135,455
1,095,206
1,090,837
88,416
-7,286,518
-262,000
4,311
998
142,623
86,106
87,033
283
26,300
1,729
29,988
-375,875
256,168
87,765
186,415
-20,499
-972,127
-43,981
236,318
4,825
405,846
-386,215
2,614
10-692
508
46,092
2,746
52,570
39,947
7,665
2,923
2,378
2,624
-131,318
6,389
167,103
-25,000
418,310
196,154
3,688
8,133
11,133
2
9
8
35
3
8
8
5
10
8
16
2
4
6
32
19
1
3
1
4
3
5
1
2
12
0
15
0
0
1
4
8
20
2
1
10
5
6
180 |
TABLE 6
THE MAIN OPERATORS IN THE TV SERIES AND TV MOVIES SECTOR
SECTOR
1 Taodue (RM)
3 Palomar (RM)
4 Publispei (RM)
6 Mediavivere (MI)
7 Dap Italy (RM)
10 Itc Movie (BO)
13 Ares Film (RM)
15 Rodeo Drive (RM)
17 Goodtime (RM)
18 Fidia Film (RM)
25 Red Film (RM)
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P-S
P
P
P
P
P
P
P
P
P
P-D
P
P
P
P
P
P
P
REVENUE 2010
RESULT
OPERATORS
59,159,250
40,915,199
35,292,350
34,841,036
32,882,301
32,400,000
24,242,965
21,837,023
20,934,272
20,885,552
17,737,050
17,454,000
16,994,975
12,620,030
10,822,817
10,448,827
10,113,073
8,039,218
7,815,089
7,456,395
6,469,287
5,419,367
5,168,285
5,144,000
5,111,012
4,444,845
3,961,039
3,953,521
3,009,212
2,780,767
2,462,619
1,852,648
1,090,837
14,070,002
504,627
138,545
1,433,037
-742,651
3,400,000
10,496
123,898
12,000
458,747
1,064,222
3,627,000
643,217
46,000
1,575,300
13,516
-171,471
-195,409
21,897
-324,394
-9,635
3,971
-262,000
4,311
142,623
87,033
-375,875
256,168
405,846
-386,215
508
2,378
11,133
16
22
109
50
11
8
5
12
4
0
7
31
15
25
3
6
11
9
2
0
3
8
35
3
8
2
4
3
1
5
0
6
on the web show a small but constant progress. For the last time, the leader was
Blockbuster, which liquidated its Italian activities thus contributing to reach the amount of
500 video-stores that closed in 2011 (Table 7). However, also in the segment of the sales
points, some countertrend cases are reported, fostered by a radical evolution in the
relationships between suppliers and direct sellers, with the shift from the so-called absolute
account to the report of the goods sold only, in order to support the financial resources of the
final operators. Among the companies considered in the Table the presence of an operator
(InterVideo) specialized in the promotion of franchise stores should be also mentioned.
| 181
TABLE 7
THE LARGEST DISTRIBUTION COMPANIES BY REVENUES EXPRESSED IN EUROS
SECTOR
1 Blockbuster Italia (MI)
4 The Walt Disney Co, Studios
5 Universal Pictures Int, Italy (RM)
6 20th Century Fox Home Ent,* (RM)
7 Mondo He (MI)
8 20th Century Fox Italy* (RM)
9 Terminal Video (BO)
10 Universal Pictures Italia (RM)
11 Mondo He (MI)
12 Bim Distribuzione (RM)
13 Sony Pictures Releasing* (RM)
14 Sony Pictures Home Ent,* (MI)
15 CG Home Video (FI)
16 Mondo TV (RM)
17 Ehome Italia Service (MI)
18 Equipe Service Group (MI)
19 Paramount Home Ent, Italy (MI)
20 Rai Trade* (RM)
21 Tridimensional (AN)
23 Videa Cde (RM)
24 Koch Media (MI)
25 Netaddiction (TR)
26 Arvato Services Italia (BG)
27 International Video 80 (RM)
28 Emme Cinematografica (RM)
29 Triboo* (MI)
30 Yamato (MI)
31 Moviemax Italia (MI)
32 Planeta Junior (ES)
33 Post in Europe (RM)
34 Banzai (MI)
36 Backstage (MI)
37 Rainbow Distribution (AN)
38 Bolero Film (RM)
39 Surf Film (RM)
40 D4 (RM)
41 Dolmen Home Video (MI)
43 General Video (PD)
44 Digital Video (RM)
45 Mo-Net (FI)
46 Video K7 (PO)
D
P-D
D
D
P-D
D
P-D
D
D
D
P-D
D
D
D
D
P-D
D
D
D
D
D
P-D
D
D
D
D
D
D
D
D
P-D
D
D
D-S
P-D
D
D
P-D
P-D
D
D
P-D
D
D
D
D
REVENUE 2010
RESULT
OPERATORS
97,722,893
92,859,952
77,498,385
64,805,142
47,021,157
28,684,873
24,812,056
22,457,425
21,503,536
20,888,857
19,298,452
18,098,733
17,718,999
15,132,157
12,618,967
12,287,000
11,736,566
11,451,803
9,782,112
9,560,500
9,165,000
8,696,505
8,363,246
6,309,100
6,175,368
5,939,549
5,821,180
4,318,377
4,293,855
4,195,688
4,133,726
3,451,000
2,820,100
2,612,054
2,513,182
2,497,871
2,457,002
2,284,191
2,011,211
1,957,613
1,618,547
1,582,845
1,524,700
1,372,435
1,255,705
1,243,535
-10,477,383
-269,224
1,164,475
3,724,134
-1,243,780
-184,259
1,073,642
274,682
274,537
384,721
-1,726,343
284,271
-1,616,996
256,847
622,699
-181,000
240,963
-782,477
-1,496,234
337,500
1,374,000
309,708
421,034
21,809
7,672
71,795
47,500
95,387
113,063
63,763
3,922,768
-34,272
4,871
-2,878,181
10-692
-457,799
365,800
2,746
52,570
219,602
-2,361,849
42,957
11,671
0
8,081
888
119
28
28
29
33
19
42
24
33
9
32
13
11
25
21
11
15
6
12
5
20
55
3
25
16
12
0
9
3
12
2
12
1
3
2
Segue
182 |
segue TABLE 7
THE LARGEST DISTRIBUTION COMPANIES BY REVENUES EXPRESSED IN EUROS
SECTOR
47 InterVideo (LU)
48 Euro Immobilfin (RM)
49 Big Bang Media (ES)
50 Adriana Chiesa Enterprises (RM)
D
D
D
D
REVENUE 2010
RESULT
OPERATORS
1,223,150
1,115,927
1,085,000
989,304
148,296
81,095
71,000
9,655
0
3
5
2
THE GREAT CIRCUITS OF THE ACTIVITY SECTOR
The intense mergers & acquisitions activity the marked the development of the activity
during 2010 and the beginning of 2011 was accompanied by an extensive administrative
change within companies.
The progressive concentration carried out by The Space Cinema along with Uci Italia, in fact,
resulted in the disappearance of traditional company names of the film circuit and started,
as for UCI, the establishment of a new series of subholding companies (Uci Torino, Uci
Appennino, Uci Adriatica), thus making the reading of the companies’ balance sheets that
can be ascribed to the previous operators or to the subject which acquired the company
ownership difficult.
This mainly concerns the chain owned by Giovanni Giometti’s family, with the simultaneous
cancellation of the companies owner of the seven movie theatres (Ancona, Fano, Pesaro,
Jesi, Perugia, Senigallia and Porto Sant’Elpidio) sold to The Space Cinema. Giometti has
then opened other complexes, but definite financial data are not available yet. The cases of
the group owned by David Quilleri are similar, after the transfer of a large number of his
complexes, starting from those owned under the name of Cinecity Art & Cinemas (which
have been mentioned as their balance sheets have been deposited in behalf of the original
company name)
THE TOP INDUSTRIAL AND SERVICE PROVIDING COMPANIES
The sector of technical and service providing industries records the greatest collapse of the
film system in the last two-year period. Other than the particular situations pointed out for
the great foreign operators like Technicolor (which removed the brand of the holding
company, Thomson, from its signs in Italy), Kodak and DeLuxe, it has been reported that
Opus Proclama got out of the market. It was the leader in the gathering of screen
advertisement which, after the end of the 2011 financial year, was put into liquidation by
Maestro-Langs group, after a 50 year activity.
The successful season of the 2010 financial year proved fatal: against the large increase in
| 183
TABLE 8
THE MAJOR CIRCUITS OF THE SECTOR BY REVENUES EXPRESSED IN EUROS
SECTOR
3 Cinecity Art & Cinemas (PD)
4 Uci Nord (RM)
5 Premiere Multiplex (ES)
6 Uci Italia (RM)
7 Uci Centro (RM)
8 Uci Sud (RM)
9 Cinelandia (CO)
10 Uci Nord Est (RM)
11 Uci Nord Ovest (RM)
12 Mediaport cinema (RM)
13 Circuito Cinema Roma (RM)
14 Stella Film (NA)
15 Sofind (CT)
16 Uci Campi Bisenzio (RM)
17 Flash Color (MI)
18 Cin Cin (BS)
19 Uci Roma Est (RM)
20 Sani 2000 (RA)
21 Victoria (BO)
22 Cineworld Group (TV)
23 Arcadia (MI)
24 Nexo (MI)
25 Ariston (IM)
26 Microcinema (MI)
27 Cinehollywood (MI)
28 Starplex (BS)
29 Italian Int, Movieplex (RM)
30 Cinemax (PD)
31 Arco Program (MI)
32 Fratelli Reposi (TO)
33 Cineverbano (NO)
34 C,G,C, (UD)
35 Platea (MI)
36 Publiodeon (AP)
37 Gestioni Cinematografiche (MI)
38 Spazio Cinema (MI)
39 Mega Cinema (CH)
40 Immobiliare dell’Arte (VA)
41 Coges (BS)
42 Anteo (MI)
43 Porta Nova (CR)
44 Giometti Holding (RIM)
45 Cinema Europa (RM)
46 Faro (MO)
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
REVENUE 2010
RESULT
OPERATORS
107,681,000
43,254,000
42,967,891
27,022,470
25,805,500
24,004,339
23,811,797
18,567,186
16,544,389
16,514,966
13,282,408
12,524,104
12,493,734
10,634,633
8,730,984
8,245,690
8,036,656
7,949,853
7,726,296
7,593,724
6,649,600
6,601,001
6,352,255
5,201,191
5,050,055
4,932,500
4,577,980
4,061,696
3,946,842
3,272,206
3,148,994
2,997,962
2,963,017
2,813,343
2,778,519
2,739,636
2,706,552
2,686,613
2,680,287
2,658,387
2,519,308
2,391,970
2,365,821
2,115,426
2,107,479
2,117,574
4,628,000
3,512,000
2,753,749
1,100,081
256,600
18,311
1,065,078
1,070,963
1,207,072
1,343,130
840,092
-4,895,754
554,797
399,371
366,682
605,345
541,525
1,157,574
927,949
318,819
433,345
117,061
-906
905,343
66,559
81,404
54,645
16,107
173,095
15,614
257,991
135,221
474,745
18,285
246,4237
37,486
59,930
280,938
266,517
305,114
425,078
99,489
145,294
15,602
-148,596
115,742
897
273
268
199
180
151
161
122
205
113
82
77
74
52
28
41
43
48
39
39
39
2
62
17
41
10
38
20
40
31
13
16
11
12
10
10
10
22
8
11
7
1
11
11
Segue
184 |
segue TABLE 8
THE MAJOR CIRCUITS OF THE SECTOR BY REVENUES EXPRESSED IN EUROS
SECTOR
47 Cinemars (BR)
48 CG Cinema Spettacolo (RM)
49 Circuito Cinema Genova (RM)
50 Co,mi,ci, (BS)
51 Olimpia 80 Immobiliare (RM)
52 Veneta Cinema e Teatri (PD)
53 Torino Spettacoli* (TO)
54 Century (AL)
55 Multiplex Nexus (BS)
56 Circuito Cinema Milano (MI)
57 Globalplex (CT)
58 Circuito Cinema Torino (TO)
59 Unidis Jolly Film (RM)
60 Circuito Cinema Bologna (BO)
61 Circuito Cinema Napoli (NA)
E
E
E
E
E
E
E
E
E
E
E
E
E
E
E
REVENUE 2010
RESULT
OPERATORS
2,017,723
2,003,409
1,956,034
1,883,215
1,725,480
1,669,107
1,596,475
1,588,067
1,563,001
1,402,935
1,305,593
1,209,455
1,175,686
1,131,641
1,077,144
26,377
360,312
94,036
63,042
281,026
62,807
200,499
199,610
201,895
-4,003,133
6,652
97,172
-11,029
42,329
10
0
12
6
1
12
14
10
6
1
6
10
10
5
* Filmauro’s financial year ends on 30th June; Cinestar’s financial year ends on 31st July and for all other companies within the Giometti circuit the
closing date is 31st August.
TABLE 9
THE MAIN TECHNICAL AND SERVICE PROVIDING INDUSTRIES BY REVENUES
SECTOR
1 Technicolor (RM)
2 Kodak *(MI)
3 DeLuxe Italia Holding (RM)
4 Publiespaña* (ES)
5 Cinemeccanica (MI)
6 Pozzoli (MI)
7 Opus Proclama (MI)
8 Cinecittà Entertainment (RM)
9 Sipra* (RM)
10 Cinecittà Studios (RM)
11 Mtc-Mikros Image (FR)
12 Movierecord (ES)
13 Movie Magic International (MI)
15 Replic (MI)
16 Frame (NA)
18 Mediolanum Comunicazione (MI)
19 Cinecittà Digital Factory (RM)
21 Sono Tecnología Audiovisual (ES)
23 Icet Studios (MI)
I
I
I
S
I
I
S
S
S
I-S
I
S
S
S
I
S
P-S
I-S
S
I
S
S
REVENUE 2010
RESULT
OPERATORS
95,859,070
90,320,852
51,216,720
48,500,000
43,706,937
39,626,081
34,282,261
28,675,743
24,540,500
23,678,486
21,050,500
18,651,700
18,501,425
16,297,312
15,880,442
15,679,918
14,146,640
13,324,115
12,249,204
12,098,000
12,000,000
11,923,467
-1,938,137
1,324,616
1,200,285
2,540,000
1,933,555
657,670
-500,374
87,254
99,694
882,277
897,000
506,010
-50,879
4,615
-595,708
-461,623
-1,966,604
4,970
5,769
-209,000
0
24,584
294
70
166
189
88
112
14
29
10
138
172
110
10
155
35
12
94
25
18
22
42
Segue
| 185
segue TAVOLA 9
THE MAIN TECHNICAL AND SERVICE PROVIDING INDUSTRIES BY REVENUES
SECTOR
25 Grass Valley (RM)
26 Technicolor Milan (MI)
27 Panalight (RM)
28 Duplas Avelca (MI)
29 Sac-Servizi Ausiliari Cin, (RM)
30 Videe (PN)
31 Studios (RM)
32 Quantum Marketing (MI)
33 General Disk Manufacturing (MI)
34 Dubbing Brothers Int, Italia (RM)
35 Square Post Production (MI)
36 Outline (BS)
37 Pumaisdue (RM)
38 Lumiq (TO)
39 Rainbow Toys (AN)
40 VR&MM Park (TO)
41 Airtech Video (MI)
43 Mediacontech (MI)
44 Ecofina (MI)
45 Cvd-Cine Video Doppiatori (RM)
47 Character (PD)
48 Fratelli Cartocci (RM)
49 Conto TV (CZ)
50 Movie Works (RM)
51 Fono Roma Film Recording (RM)
52 Top Ten Group (RM)
53 Pcm Audio (RM)
54 Eurolab Italia (RM)
55 Upc (MI)
56 Studio Asci (CR)
57 Sedif (RM)
58 Studio PV (MI)
59 Edi-Effetti Digitali Italiani (MI)
60 Lvr (RM)
61 Think | Cattleya (RM)
62 ArmosiA Italia* (RM)
63 Colby (MI)
64 Laserfilm (RM)
65 Fotocinema (RM)
66 K-events (RM)
67 Control Cine Service (PD)
68 Puettmann Stummer (BZ)
69 Rainbow Entertainment (AN)
70 Camelot (MI)
71 Proedi Comunicazione (MI)
I
I
S
S
S
S
S
S
I
I
I
S
S
P-S
S
P-S
I
P-S
S
I
I
P-S
I-S
S
I
S
I
S
I-S
I
I
S
S
S
S
S
S
S
S
I
I
S
S
I-S
S
S
S
REVENUE 2010
RESULT
OPERATORS
9,466,879
8,009,458
7,483,550
7,120,364
7,068,189
6,978,713
5,956,753
5,789,519
5,530,499
5,277,603
5,097,100
4,704,931
4,564,482
4,428,757
4,411,000
4,322,160
4,272,733
4,254,777
4,186,007
4,130,321
3,740,114
3,521,485
3,511,419
3,487,097
3,363,374
3,306,245
3,107,650
3,056,205
2,929,240
2,892,763
2,714,588
2,530,826
2,290,263
2,321,852
2,173,077
2,145,345
2,128,000
2,102,216
2,069,305
1,865,673
1,766,795
1,677,005
1,676,159
1,456,735
1,374,000
1,389,339
1,185,134
70,417
-1,095,290
112,053
106,688
1,150,694
18,159
-266,555
77,343
-5,096,758
466,246
498,000
126,139
5,287
283
122,000
26,300
-593,981
1,729
77,083
68,062
2,547
-972,127
12,345
-527,567
-18,396
4,144
-31,488
14,756
11,299
10,892
167,421
18,441
40,390
-20,638
96,979
1,287
-289
176,964
1,501
192,987
-27,947
0
-18,175
29,934
19,000
5,827
16,391
11
30
15
31
50
41
23
21
22
16
18
14
7
5
10
24
8
10
18
25
19
15
30
10
2
28
11
21
7
1
4
25
30
3
8
15
14
11
16
3
7
186 |
the audience, a contraction in advertising investments was recorded, and the particular
business relationships between the concessionaires and the projection companies provide
for the commensuration of the fees paid to operators according to the audience attendance
in the cinemas. The 2010 balance sheet actually seemed in line with the previous
managements, recording a 500 thousand Euro loss even in front of a strong increase in
revenues, compared to 2009, of nearly 8.5 million Euros.
Besides the borderline case of Opus (whose role within The Space Cinema was taken over
by the agency Visibilia, owned by Daniela Santanché), among the Italian companies there
are other difficult situations, as the one of the Artech Video group, which incorporated the
controlled companies Aegida and Luna Rossa without solving their market problems. 2010
also proved to be a controversial year for the top Italian group of the sector, Pozzoli group
(which numbers three centres, in London, Frankfurt and Paris), whose turnover decreased
by 8 million Euros in 2010 (Table 9).
| 187
CHAPTER 6
«THE PROBLEM WITH
THE COMPETITIVENESS IS THAT SOMEONE WINS».
George Orwell (1903-1950), writer, in his work 1984, written in 1948
Behind the market shares
T
he numbers that sum up the 2011 balance sheet of the business sector
and the results achieved on the Italian market by the cinematographies
of different countries show (according to the Cinetel sample data) two
opposite competing figures. One is the “great loser” of 2011, and it is
represented by the film made in USA which, in terms of proceeds, underwent a loss of nearly 121.7 million Euros. If we consider that, compared to 2010,
box office receipts decreased by 73.7 million Euros, the debacle of the American cinema – with a negative differential of 48 million Euros – seems, therefore, extraordinary, above all in light of the strength through which it has consolidated its
historical supremacy over time. The remaining foreign production took advantage
of this heavy failure. The decrease in the total amount of revenues of the total foreign works (including, therefore, the American ones) was equal to 94.2 billion
Euros, that is, less than 27.5 million Euros than the “deficit” recorded by American
films only. This means that other foreign filmmakers managed to “absorb” at least
27.5 of those 48 million Euros blown by North-American companies. According to
the balance sheet’s numbers, European producers – extra Italy – could “divert” at
least 20.1 million Euros towards their films, while all other foreign operators benefited for the remaining 7.4 million Euros. Instead, the second opposite role of
“great winner” was undoubtedly taken by the Italian cinema, which could move in
counter-trend and, according to Cinetel data, increased its revenues by 21.2 million
Euros, compared to 2010. This means that, besides not losing a Euro – in spite of
all the millions spent during the last season by the whole sector – national movies
managed, during the same year, to strengthen their capacity to attract both the
TABLE 1
ELEVEN YEARS OF MILLION-GROSSING ITALIAN MOVIES
Years and values expressed in Euros 2001 2002
2003
2004
2005
2006
2007
2008
2009 2010*
2011
From 1 to 5 million
From 5 to 10 million
From 10 to 15 million
More than 15 million
11
4
2
-
13
2
3
3
15
3
3
1
21
3
4
-
18
3
4
-
13
4
1
2
17
7
3
2
19
5
3
1
17
2
4
1
8*
6
3
2
18
6
4
3
TOTAL /MOVIES
17
21
22
28
25
20
29
28
24
19*
31
ANNUAL REVENUES
94.3 100.5 110.5 120.0 125.5
98.5 171.7 142.3 119.0 163.6* 191.7
AVERAGE PER FILM
5.55
4.92
4.78
5.02
4.28
5.02
5.92
5.08
4.95
8.61*
6.18
IData related to 2010 only refer to movies which earned more than 3 million Euros, and not 1 million Euros like in the previous years. This
Table is based on the box-office results achieved by 100% Italian movies from 1st January and 31st December every year.
Source: Italian cinema in numbers (years 2005-2009) by Ufficio Studi/Ced Anica (Rome) carried out on Cinetel’s data.
TABLE 2
WITHIN THE COMPETITION ITALY-USA, OTHER FOREIGN MOVIES LOSE
Films distributed
by origin
YEAR 2006
YEAR 2007
YEAR 2008
YEAR 2009
YEAR 2010
YEAR 2010
Number Quote Number Quote Number Quote Number Quote Number Quote Number Quote
Italy 100%
Co-productions
Italy
Europe
United States
Other Countries
Foreign Countries
209
89
298
242
330
90
662
21.8%
9.3%
31.1%
25.3%
34.3%
9.3%
68.9%
TOTAL
960 100.0%
195
73
268
234
317
68
619
22.0%
8.2%
30.2%
26.4%
35.8%
7.6%
69.8%
887 100.0%
214
69
288
196
300
61
557
25.3%
8.0%
34.0%
23.2%
35.5%
7.3%
66.0%
845 100.0%
225
69
294
189
313
61
563
26.3%
8.0%
34.3%
22.0%
36.6%
7.1%
65.7%
857 100.0%
221
52
273
185
328
47
560
26.5%
6.3%
32.8%
22.2%
39.4%
5.6%
67.2%
186
55
241
226
313
66
605
22.0%
6.5%
28.5%
26.7%
37.0%
7.8%
71.5%
833 100.0%
846
100%
Source: Italian cinema in numbers (years 2010-2011) up to 2010 by Ufficio Studi/Ced Anica (Rome) according to Cinetel’s data and, in
2011, carried out in collaboration with the General Directorate for Cinema of MiBac (Ministry of Cultural Heritage and Activity).
audience and, consequently, the resources (Table 1).
Also considering it – for instance, under its arithmetical aspect only – as the result
of a mere “pouring” phenomenon, the gain of those 20.5 million Euros that, after the
erosion reported by the USA (of 48 million Euros, as already mentioned), have not
been funnelled into other international films (27.5 million Euros), however, the
domestic cinematography managed to increase its box-office receipts autonomously,
by “draining” further proceeds for almost 1 million Euros (Table 2).
1. Value of the investment choices
Beyond the theoretical representation, the measurement of the average values for
the unit profit of each film released offers further indications for the general
reference and the practical verification of the size referring to the Italian film market.
190 |
TABLE 3
WHEN THE PRODUCT IS IMPORTED
Annual data**
about import
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
European Union
Film Share
91.189.701
72.704.371
91.695.243
116.548.464
113.969.562
117.330.820
132.526.515
135.302.659
195.518.878
171.832.040
145.566.650
215.003.252
235.065.326
23,9%
17,5%
19,3%
22,2%
21,8%
20,3%
24,7%
24,8%
31,7%
29,0%
23,4%
29,3%
35,5%
United States
Film Share
203.849.932
289.245.363
284.954.175
315.951.324
337.287.590
375.555.301
288.545.996
338.412.621
342.131.463
357.678.917
395.789.059
442.265.056
320.574.900
53,4%
69,5%
59,9%
60,2%
64,5%
61,9%
53,8%
62,0%
55,4%
60,2%
63,5%
60,2%
48,4%
Other Countries**
Film Share
16.626.212
13.092.250
16.278.030
19.885.224
19.283.137
20.070.754
22.500.963
23.051.704
33.041.649
29.090.241
24.095.343
35.138.100
38.007.600
24,1%
17,5%
19,3%
22,3%
22,0%
20,5%
24,8%
25,0%
31,9%
29,3%
24,4%
32,0%
37,5%
Total Import
Film Share
36.618.225
51.546.791
50.122.935
53.272.275
55.980.432
66.064.219
55.641.000
56.491.668
56.812.191
59.224.299
61.176.001
62.605.504
47.316.548
53,0%
69,1%
59,6%
59,7%
63,9%
67,5%
61,4%
61,3%
54,9%
59,6%
61,8%
62,1%
46,7%
* Imported films are those foreign production films that received the rating within the reference year (the first release of dubbed or subtitled works have been included).
** Data refer to films produced in the extra-EU and extra-USA (Stati Uniti) areas.
Source according to Cinetel data related to the distribution market: Italian cinema in numbers (years 1999-2011) up to 2010 by Ufficio Studi/Ced Anica (Rome) according
to Cinetel’s data and, in 2011, carried out in collaboration with the General Directorate for Cinema of MiBac.
For instance, in order to assess the extent of investments in national films. The
results achieved on average by European works seem indicative. They mainly
originate in the natural qualitative selection that is implied in the export process
itself, because only the best films (that is, the ones with best success chances)
usually cross the domestic borders and get to foreign cinemas – and the same goes
for all European cinematographies (Table 3).
Then, the economic importance (in a film industry based on the re production on
film) of the resources use in the diffusion of copies to be launched on the projection
market and their distribution within the 12 areas that traditionally make up the
commercial and logistic network of the sector. As a widespread and global circulation
of copies through all the complexes is impossible – and given the contextual lack of
economic convenience – it becomes necessary to measure the films’ reproduction
and circulation. The medium values of the theoretical unit profit per film in terms of
revenues and entrances point out the importance of the theoretical profit averages
that can be referred to the whole film production, as well as the high business risk
for operators and filmmakers when planning the first release for their films. It is
important to see how a limited print run and a small distribution of copies can be a
sort of safety valve for the investments carried out to produce the films, in order to
protect the economic and financial balance of the production company itself (above
all if this keeps going only for the funds and public contributions received during the
planning stage).
This context also includes the evaluation of the different economic compatibilities
| 191
related to the production of Italian works compared to the foreign imported ones.
Actually, movies primarily measure their financial sustainability on their own
domestic market: they generate the majority of their revenue within the internal
diffusion and, therefore, the expectation of their ideal economic balance (that is, the
possibility of a suitable financial revenue for the resources used to realize these
films) almost always involves the attendance and the proceeds achieved in the
national movie theatres). Usually, the diffusion of movies on the foreign markets
takes place when they have already obtained an important result within the internal
circuit and the diffusion abroad is not subject to the same financial charges paid
during the production and the first marketing process within the national borders.
The so-called industrial costs only refer to the copies’ printing and any eventual
dubbing, with the discretionary opportunity to allocate further resources to the
marketing and promotion budgets.
2. The box-office competition
We cannot say that Italian cinema lacks in competitiveness. In fact, the national
market is one of the most open European markets and we can constantly and
increasingly find foreign cinematographies within this market. However, Italian
operators have been gaining importance on this frontier during the last five years,
mainly considering the high financial investments required by the promotional and
marketing support to all the new works launched in the screening circuit and in all
other channels. During the comparison it seemed more significant and accurate to
estimate the competitiveness between the Italian and foreign productions (and,
specifically, only the American ones) not only considering the absolute values of
proceeds, but also according to the unit average revenue per theatre and each single
screen, as the projection of foreign movies – and basically the American ones – is
taking place in a greater number of movie theatres compared to those destined to the
screening of national movies (Table 4).
The gap between the movie theatres was considerable in 2005 (16 movie theatres
and 57 screens more for foreign productions). Then, it decreased until it disappeared
in 2008; it then reappeared in 2009 (8 complexes and 68 screens less for Italian
movies), but it tended to reduce again, since in 2011 Italian films had only 4
complexes less, with a total of 20 screens. According to Cinetel’s data, within the
daily monitored sample, no Italian film was scheduled: a single-screen cinema and
three multiplexes (with 18 screens) from 5 to 7 screening-rooms. Also a screen of a
multiplex with more than 7 screening-rooms is missing, for a total of 20 screens that
only projected foreign films during the 12 months. For the first time, in 2011, the
great complexes – that is, those with 5-7 screening rooms and multiplexes with more
than 7 screens – exceeded one-fifth (that is, 20%) of the total (218 out of 1,074) and
192 |
TABLE 4
WHERE ITALIAN AND FOREIGN FILMS ARE SCREENED
Annual data
2005
2006
Italian films
Foreign films
1,238
1,254
1,195
1,210
Italian films
Foreign films
2,926
2,983
3,018
3,062
2007
2008
NUMBER OF MOVIE THEATRES
1,165
1,129
1,166
1,129
TOTAL SCREENS
3,087
3,141
3,092
3,141
2009
2010
2011
1,104
1,112
1,063
1,071
1,070
1,074
3,208
3,276
3,178
3,217
3,207
3,227
* Data refer to all movies under distribution (from 1st January to 31st December), sequels included.
Source according to Cinetel data related to the sector market: Italian cinema in numbers (years 2005-2011) up to 2010 by Ufficio Studi/Ced
Anica (Rome) according to Cinetel’s data and, in 2011, carried out in collaboration with the General Directorate for Cinema of MiBac.
TABLE 5
THE SECTOR AND ITS SEGMENTS
Segmentation
of the section
SCREENING-ROOMS ACTIVE SCREENS
REVENUES BY TYPE
TOTAL ATTENDANCE
Number Share
Number Share Value (in Euros) Share Total attendance Share
SINGLE-SCREEN CINEMA 2011
SINGLE-SCREEN CINEMA 2010
FROM 2 TO 4 SCREENS 2011
MORE THAN 7 SCREENS 2011
MORE THAN 7 SCREENS 2010
548
548
308
308
96
93
122
122
51.02%
51.17%
28.68%
28.76%
8.94%
8.68%
11.36%
11.29%
548
548
841
846
566
551
1,272
1,272
16.98%
17.00%
26.06%
26.30%
17.54%
17.13%
39.42%
39.54%
56,765,282
63,475,419
118,748,216
131,326,152
116,751,511
131,354,307
369,283,815
409,127,965
8.58%
8.63%
17.95%
17.86%
17.65%
17.86%
55.82%
55.64%
9,650,133
10,690,598
19,257,952
21,014,531
17,511,998
19,131,919
54,903,771
59,296,514
9.52%
9.71%
19.01%
19.10%
17.28%
17.39%
54.19%
53.80%
TOTAL 2011
1,074
100%
3,227
100%
661,548,824
100%
101,323,584
100%
TOTAL 2010
1,071
100%
3,217
100%
735,283,842
100%
110,043,562
100%
According to data related to 2010 and 2011 provided by Cinetel (Rome).
made their availability of screens represent more than 57% (1,828 out of 3,227) of
the total number of national screens (Table 5).
The segment of the 5 to 7 screen complexes, which in 2010 was the most profitable,
due to a very favourable cycle considering both revenues and attendance, in 2011 –
after the sensible turnaround suffered from the market during the last 12 months –
suffered a stronger decrease in revenues and attendance, with average variations
per theatre and screen higher than those recorded for other types of cinemas.
During the last eight years, the single-screen cinemas’ performance decreased its
profitability by 30.5% and even more its ability to attract audiences with a 36.8%
decrease in attendance. As for revenues, 2-4 screen movie theatres lost 8.2% per
complex and 12.5% per screen, and moreover, 18.9% and 16.2%, respectively, as
regards the attendance. 5-7 screen theatres lost 17.1% per complex and 17.8% of
revenues.
| 193
TABLE 6
THE SCREENING ROOMS AND THE 2011 TURNAROUND
Percentage variations in the average AVERAGE VARIATIONS PER THEATRE
values compared to the previous year
Attendance
Revenues
AVERAGE VARIATIONS PER SCREEN
Attendance
Revenues
SINGLE-SCREEN CINEMAS 2011
SINGLE-SCREEN CINEMAS 2010
MULTIPLEXES WITH MORE THAN 7 SCREENS 2011
MULTIPLEXES WITH MORE THAN 7 SCREENS 2010
-9.7%
+7.7%
- 8.3%
+11.8%
-11.3%
+11.5%
-7.2%
+9.2%
-10.5%
+13.5%
- 9.5%
+18.6%
-13.9%
+21.2%
-9.7%
+15.1%
-9.7%
+7.7%
-8.3%
+17.0%
-10.9%
+10.9%
-7.2%
+9.6%
-10.5%
+13.5%
-9.0%
+10.2%
-13.4%
+20.7%
-9.7%
+15.5%
TOTAL FOR THE SECTION 2011
-8.2%
-10.3%
-8.2%
-10.3%
TOTAL FOR THE SECTION 2010
+14.5%
+21.5%
+14.5%
+17.5%
According to data related to 2010 and 2011 provided by Cinetel (Rome).
Flows inversion. On the contrary, better results were achieved by multiplexes with
more than 7 screens mainly as regards the audience attendance – but less in terms
of revenues due to the lower impact of 3D films during the season, which usually
imply an increase in the tickets’ price – and 2-4 screen theatres as regards revenues.
Even though a general downturn in the indicators by 10 percentage points
undoubtedly seems quite strong (Table 6).
The trend of the audience attendance at the projection of Italian or foreign films
during the last four years shows three main points.
As for the national production, the segmentation by type of structure shows, for
instance, how the relative shares of attendance have been gradually and constantly
increasing during the last four years within the two greatest ranges (between 5-7
screens and multiplexer with more than 7 screens), until exceeding for the first time,
in 2011, the 65% threshold after achieving a 65.7% amount of tickets issued, thanks
to a progress of 4.2 percentage points in only 12 months.
On the contrary, as regards foreign films, a controversial trend is recorded and, in
2011, the increase in the same two ranges of movie theatres came to a standstill.
Given the continuity in the down turn of domestic and foreign works in the segmento
f the single-screen cinemas, a turnaround took place within the movie theatres with
2-4 screens: the Italian cinema nearly lost three percentage points of its own
diffusion, while the foreign product, for the first time, recorded an increase in the
audience (for nearly one percentage point) compared to the previous year (Table 7).
The details of the audiences’ attendance recorded on average by Italian and foreign
films in each unit of the different structures of the sector show an important datum
that can be seen only partially in the total calculation of the tickets, in absolute values
accrued by national and foreign films, according to the different types of cinemas.
194 |
TABLE 7
REVENUES AND ATTENDANCE OF ITALIAN AND FOREIGN FILMS IN 2011
2011 data for
CINEMAS
the section
Screening rooms
Screens
TOTAL REVENUES
Value (expressed in Euros) Incidence*
TOTAL ATTENDANCE
Attendance
Incidence*
Italian films
Foreign films
547
548
547
548
SINGLE-SCREEN CINEMAS
27,954,039
28,811,243
11.86%
6.76%
4,860,767
4,789,366
12.77%
7.57%
Italian films
Foreign films
308
308
841
841
2-4 SCREEN CINEMAS
48,473,407
70,274,809
20.56%
16.50%
8,193,544
11,064,408
21.52%
17.49%
Italian films
Foreign films
93
96
548
566
5-7 SCREEN CINEMAS
40,527,658
76,223,853
17.19%
17.90%
6,435,590
11,076,408
16.91%
17.51%
Italian films
Foreign films
122
122
MULTIPLEXES WITH MORE THAN 7 SCREENS
1,271
118,795,849
50.39%
1,272
250,487,966
58.82%
18,576,676
36,327,095
48.80%
58.82%
Italian films
Foreign films
1,070
1,074
TOTAL FOR THE CINEMAS
235,750,954
425,797,870
38,066,577
63,257,277
37.56%
62.44%
3,207
3,227
35.64%
64.36%
* The percentage data related to the four types of cinema refer to the incidence of the contribution given by each specific category of cinema
to its total revenue or attendance, for Italian films or foreign films, respectively. The final values related to the total for the cinemas, instead,
record the overall distribution of market shares between national and foreign films.
According to Cinetel data (related to the market of the sector) related to the season 2011.
These total amounts, expressed in Euros, related to the audience attendance (Table
8) show, in fact, that the so-called domestic films generated in 2011 a reassuring
progress within the two main ranges of the cinematographic circuits, that is, cinemas
with 5-7 screens and multiplexes with more than 7 screens: a double increase along
with the double and correspondent decrease in the foreign works.
These are important progresses, which contribute, to a great extent, to the erosion
of more than 5.5 points of market shares of the national production, compared to
foreign production, above all the American one.
However, the comparison with the averages of unit entrances per cinema and per
single screening room highlights how – thanks to a renewed competitiveness – the
Italian cinema achieved, for the first time, a greater attendance in the single-screen
cinemas compared to competitors, and managed to achieve the best average results
in terms of attendance in the other three categories of the sector. The most
significant comparison refers, of course, to seasons 2009 (the least successful,
among the most recent seasons, for the national cinema) and 2010: the screening of
foreign films compared to the national films’ one, for instance, changed from a
multiple of average attendance for each cinema from 2.4 to 1.3 as regards 2-4 screen
cinemas and from 3.4 to 1.7 as for 5-7 screen cinemas. It also saw the reduction of
the multiplier related to multiplexes with more than 7 screens from 3.8 to 1.9.
| 195
TABLE 8
CINEMAS WITH THE HIGHEST REVENUES FOR ITALIAN AND FOREIGN FILMS
Annual
data**
Italian Films: Receipts In Absolute And Average Values
IN EUROS Incidence* Per cinema
Per screen
Foreign Films: Receipts In Absolute And Average Values
IN EUROS
Incidence*
Per cinema
Per screen
SINGLE-SCREEN CINEMAS
39,616.7
39,616.7
58,450,206
38,548.9
38,548.9
50,993,088
51,517.5
51,517.5
44,205,117
40,283.2
40,283.2
38,695,780
35,784.3
35,784.3
38,729,923
51,193.3
51,193.3
35,296,369
51,087.8
51,087.8
28,811,243
14.45%
12.38%
10.47%
9.17%
8.11%
6.78%
6.77%
77,315.0
71,519.0
67,181.0
63,228.3
66,432.1
64,578.1
52,575.2
77,315.0
71,519.0
67,181.0
63,228.3
66,432.1
64,578.1
52,575.2
109,764.3
108,695.8
146,426.4
128,104.1
103,248.2
164,144.3
157,381.2
2-4 SCREEN CINEMAS
43,089.8
85,736,994
40,981.6
81,747,786
54,495.8
78,542,859
47,435.1
75,879,006
38,109.3
80,222,172
59,813.6
80,738,322
57.637.8
70,274,809
21.19%
19.85%
18.59%
17.97%
16.78%
15.53%
16.51%
252,911.4
251,530.7
238,732.0
234,194.4
256,300.8
262,670.5
228,164.9
98,548.2
94,615.4
88,849.3
86,718.8
94,601.6
95,687.1
83,528.9
13.06%
14.35%
14.64%
14.95%
15.76%
16.94%
17.19%
270,513.9
284,213.6
409,095.8
321,334.4
255,201.9
424,606.7
435,781.2
5-7 SCREEN CINEMAS
48,360.0
57,709,709
48,904.5
62,619,159
69,338.2
67,325,556
54,695.2
67,341,749
43,173.2
82,072,131
70,903.6
94,900,641
73,955.5
76,223,853
14.27%
15.21%
15.95%
15.94%
17.17%
18.24%
17.90%
901,714.2
907,524.0
948,247.2
841,771.8
901,891.5
1,012,577.0
793,998.4
155,972.1
154,615.2
161,065.9
143,280.3
152,834.5
171,191.0
134,671.1
48,790,712
53,488,613
84,823,349
79,988,489
69,549,054
99,955,547
118,795,849
36.81%
39.31%
43.39%
46.55%
47.74%
46.46%
50.39%
MULTIPLEXES WITH MORE THAN 7 SCREENS
513,586.4
50,507.9 202,681,522
50.09%
519,306.9
49,989.3 216,461,559
52.56%
785,401.3
74,932.2 232,248,723
54.99%
707,862.7
67,557.8 240,441,913
56.92%
589,398.7
55,862.6 277,014,291
57.94%
818,830.1
78,535.5 309,172,418
59.45%
973,736.4
93,466.4 250,487,966
58.82%
2,133,489.7
2,101,568.5
2,150,451.1
2,127,804.5
2,216,114.3
2,532,422.2
2,053,180.0
209,598.2
200,427.3
205,166.7
203,075.9
211,784.6
242,889.5
196,924.5
132,559,994
135,371,259
195,532,874
171,854,323
145,660,227
24.67%
24.76%
31.64%
29.92%
23.35%
107,075.1
113,281.3
167,839.3
152,218.1
131,938.6
322,630.3
340,348.4
362,197.4
374,139.4
429,923.1
135,628.0
134,494.3
136,585.4
134,480.5
145,932.3
2005
2006
2007
2008
2009
2010
2011
29,355,994
26,945,744
33,898,516
24,653,332
20,862,291
28,161,050
27,954,039
22.15%
19.76%
17.33%
14.35%
14.32%
13.09%
11.86%
2005
2006
2007
2008
2009
2010
2011
37,100,347
35,326,162
48,174,299
41,505,743
32,316,705
50,587,830
48,473,407
27.99%
26.59%
24.64%
24.15%
22.18%
23.51%
20.56%
2005
2006
2007
2008
2009
2010
2011
17,312,891
19,610,740
28,636,710
25,706,759
22,968,177
36,453,666
40,527,658
2005
2006
2007
2008
2009
2010
2011
2005
2006
2007
2008
2009
45,303.8 404,578,431
44,854.6 411,821,591
63.340.7 422,322,255
54,713.2 422,403,448
45,405.3 478,074,516
75.33%
75.24%
68.36%
70.08%
76.65%
Segue
Four main factors can be pointed out.
• The drastic reduction in the American shares, even though the receipts percentage
is still higher than the attendance one.
196 |
segue TABLE 8
CINEMAS WITH THE HIGHEST REVENUES FOR ITALIAN AND FOREIGN FILMS
Annual
data**
2010
2011
Italian Films: Receipts In Absolute And Average Values
IN EUROS Incidence* Per cinema
Per screen
215,158,093
235,750,953
29.26%
35.64%
202,349.2
220,327.9
Foreign Films: Receipts In Absolute And Average Values
IN EUROS
Incidence*
Per cinema
Per screen
67,683.2 520,125,749
73,511.3 425,797,871
70.74%
64.36%
485,413.9
396,459.8
161,603.4
131,948.5
* The percentage values reported for the four types of cinema refer to the incidence of the contribution given by each specific category of cinema
to its total revenue, for Italian films or foreign films, respectively. The final values related to the total of the cinemas, instead, show the overall
distribution of the market shares between national and foreign films.
** Data related to revenues refer to all films under distribution (from 1st January to 31st December), sequels included.
According to Cinetel data related to the market of the sector: Italian cinema in numbers (years 2005-2011) up to 2010 by Ufficio Studi/Ced
Anica (Rome) and, in 2011, carried out in collaboration with the General Directorate for Cinema of MiBac.
TABLE 9
NUMBER OF COMPLEXES BY TYPE OF CINEMA AND PERCENTAGE OF THE TOTAL
2003
2004
2005
2006
2007
2008
2009
2010
2011
Single-screen cinemas 2-4 screen cinemas
Number % of the total Number % of the total
812
65.7%
313
25.3%
789
63.5%
318
25.6%
771
61.5%
326
26.0%
714
59.1%
323
26.7%
659
56.6%
327
28.1%
613
54.2%
324
28.7%
582
52.4%
312
28.1%
549
51.3%
306
28.6%
548
51.0%
308
28.7%
5-7 screen cinemas
Number % of the total
45
3.6%
54
4.3%
63
5.0%
69
5.7%
71
6.1%
80
7.1%
92
8.3%
94
8.8%
96
8.9%
More than 7 screen cinemas
Number % of the total
Total
66
5.3%
1,236
82
6.6%
1,243
94
7.5%
1,254
103
8.5%
1,209
108
9.3%
1,165
113
10.0%
1,130
125
11.3%
1,111
122
11.4%
1,071
122
11.4%
1,074
Source Cinetel.
• The impressive profit of Italian shares (even though the gap between the attendance
percentage and the revenue percentage increases by two points, in favour of the
first one).
• More than half of the American loss in 2011 compared to 2010 (-11.69%) in terms of
revenues corresponds to the growth of Italian cinema (+6.35%); the European cinema
and, to a small extent, the extra-European one, benefit from the other margin.
• During the last three-year period, the Italian works recovery in terms of box-office
receipts – more than 12.49% in terms of competence shares compared to the
grand total – corresponded to a significant profit of a little less than 90 million
Euros, against the 15.04% decrease suffered by American works. Instead, as
regards attendance, an increase of 13.11% was recorded, against the American
decrease of 15.10%.
This means that national movies “stole” nearly 14 million spectators from the
American films: 11 million in 2010 compared to the previous year and about 3 million
in 2011 compared to 2010.
| 197
TABLE 10
PERCENTAGE VARIATIONS BETWEEN CONSECUTIVE YEARS
2004 - 2003
2005 - 2004
2006 - 2005
2007 - 2006
2008 - 2007
2009 - 2008
2010 - 2009
2011 - 2010
Single-screen cinemas
-3.4%
-3.1%
-3.9%
-4.2%
-4.1%
-3.4%
-2.1%
-0.5%
2-4 screen cinemas
1.0%
1.6%
2.8%
5.1%
2.2%
-2.1%
1.7%
0.4%
5-7 screen cinemas
19.3%
15.6%
13.6%
6.8%
16.2%
17.0%
6.0%
1.8%
More than 7 screen cinemas
23.5%
13.6%
13.7%
8.8%
7.9%
12.5%
1.2%
-0.3
Source Cinetel.
TABLE 11
TAKINGS AND ATTENDANCE BY TYPE OF CINEMA (DATA EXPRESSED IN MILLIONS)
2003
2004
2005
2006
2007
2008
2009
2010
2011
Takings Attendance
126.6
22.1
117.5
20.9
89.6
16.2
78.3
14.1
78.4
14.1
63.4
11.5
59.5
10.5
63.6
10.7
56.8
9.7
2-4 screen cinemas
Takings Attendance
141.0
24.3
142.8
25.1
121.6
21.3
116.8
20.6
126.4
22.4
117.4
20.7
112.1
19.0
130.4
20.9
118.8
19.3
5-7 screen cinemas Cinemas with more than 7 screens
Total
Takings Attendance
Takings Attendance
Takings Attendance
57.1
9.6
198.9
31.5
523.6
87.5
72.3
12.2
245.4
39.7
577.9
97.9
74.7
12.6
251.2
40.6
537.1
90.7
82.2
13.8
270.0
43.7
547.2
92.3
95.9
16.0
317.1
51.1
617.8
103.6
93.1
15.5
320.5
51.8
594.4
99.4
105.5
16.7
346.4
52.8
623.5
99.1
132.1
19.3
408.9
59.2
735.0
110.0
116.8
17.5
369.4
54.9
661.7
101.3
Source Cinetel.
TABLE 12
PERCENTAGE ATTENDANCE OF THE TOTAL PER YEAR
2003
2004
2005
2006
2007
2008
2009
2010
2011
Dati Cinetel.
198 |
25.3%
21.4%
17.9%
15.3%
13.6%
11.5%
10.6%
9.7%
9.5%
2-4 screen cinemas
27.8%
25.6%
23.5%
22.3%
21.6%
20.8%
19.2%
19.0%
19.0%
5-7 screen cinemas
10.9%
12.5%
13.9%
15.0%
15.4%
15.5%
16.9%
17.5%
17.3%
Cinemas with more than 7 screens
36.0%
40.5%
44.7%
47.4%
49.3%
52.1%
53.3%
53.8%
54.2%
TABLE 13
TOTAL MARKET DATA FROM 2003 TO 2011
(takings and number of spectators expressed in millions)
2003
2004
2005
2006
2007
2008
2009
2010
2011
Revenue
Attendance
523.2
577.6
536.6
546.5
617.1
593.8
622.8
734.6
660.7
87.5
97.9
90.6
92.1
103.5
99.3
99.0
109.9
101.2
Number
of cinemas
1,236
1,243
1,254
1,209
1,165
1,130
1,111
1,071
1,074
Number
of screens
2,568
2,781
2,983
3,058
3,087
3,142
3,277
3,217
3,227
Average
ticket prices
5.98
5.90
5.92
5.93
5.96
5.98
6.29
6.68
6.53
Average
revenue per screen
0.20
0.21
0.18
0.18
0.20
0.19
0.19
0.23
0.20
Source Cinetel.
| 199
Part IV
The labour market
Specialist film-makers and artists
CHAPTER 7
«ACTORS ARE NOT HONEST PEOPLE:
THEY CAN INVENT FEELINGS THEY DO NOT HAVE»
César/Eduardo Noriega to Sofía/Penélope Cruz
in the film Abre los ojos (1997; Open Your Eyes) by Alejandro Amenábar
The professional community
D
Despite their particular structure, cinematography and entertainment in general cannot represent a “unicum” within the productive activities of the
Country. Given the depth of the economic and financial involution that involved the Italian society and, to a great extent, the European and international
scene in the last years, they are inevitably affected by all the contingent situations and show the signs of the failure of the economic growth under many aspects. This
also involves, obviously, conditions, compatibility and trends of the national productive and
occupational system.
Entertainment is the macro sector that first and more than others has shaped the reference
labour market according to the general adoption (as long as appropriate) of fixed-term,
part-time and intermittent employment. In particular, cinema shows a long and
consolidated recourse to fixed-term employment, or job orders, introduced in the last
decade and consequently spread to the other sectors of industry and services in different
modalities. This created, through project contracts, integration contracts, on-call contracts,
fixed-term contracts, training contracts and also unpaid internships and self-employment
(including the professional services subject to the VAT system) the kind of occasional, or
atypical, jobs that are now ascribed with pervading forms of temporary employment even
in the already weak scene of labour, of youth employment and the re-employment of those
who were affected by reorganization or disposal processes.
At the beginning of 2011, for instance, 78.6% of 22.36 million Italian working relationships
was given by full-time employment, the 9.8% by part-time employment and the 11.6% by
atypical employment1. However, in the general situation of the occupational market, the
flexibility with a broad recourse to the different temporary and occasional job patterns has
followed a widespread downturn. On the one hand, the nature of the new contracts which
were adopted in Italy over the last year – equal to more than 3 million – shows the ongoing
development: only the 19.0% is a permanent employment; the 67.7% is a fixed-term
employment (the 12.8% of which is a one-day contract); the 8.6% is a collaboration work; the
3.0% is an apprenticeship and, finally, the 1.7% is another type of occasional and temporary
employment. On the other hand, the national employment rate went from 67.1% in 2008 to
56.9% at the end of 2010; in the same period, the unemployment rate increased from 8.6% to
8.9%, and the youth unemployment rate increased from 27.8% to 31.0%. In the meanwhile, the
total inactivity rate increased from 26.7% to 37.8% (in 2011 and in the first months of 2012
these indexes decreased further).
1. Offbeat entertainment and cinema
Against this widespread decreasing trend, the entertainment macro sector and even more the
cinematographic sector have shown a anti-cyclical trend. Perhaps unexpected, but probably caused
– even though partially – right by the deeply-rooted tendency of their employment system toward
temporary employment. This is shown by the data of ex ENPALS, the National Welfare and
Assistance Body for Performing Arts and Sport People (which, at the beginning of 2012, joined INPS,
the National Institute for Social Security); all companies and operators must pay the social
contributions2.
EMPLOYMENT
According to the surveys of the Institute at the end of 2011, referring up to 2010, both the number of
the contributors of entertainment – by 3.0% in the last three-year period and 9.7% in the cinema (in
Table 1, annual values are reported) – and companies, which are active as regards the 7.1% in the
macro sector and the 11.9% in the cinematography, besides the annual income of 3.5% and 1.2%,
respectively. Within the macro sector of entertainment, which is the area of competence of ENPALS,
cinema is the sector that most of all contributed, in the year considered – 2010 – to the increase in
1
National data – as well as data of employment and unemployment rates – are taken from the Report on the
Social Cohesion –Year 2011, published by Istat – National Institute of Statistics (Rome, February 2012).
2
From 1st January 2012, ENPALS joined Inps under the Law Decree no. 201 of 6th December 2011, converted
into Law no. 214 of 27th December 2011. The administrative transfer of the instrumental, human and financial
resources was arranged through subsequent decrees of the Ministry of Labour and Social Policy, while the
operating structures of the ex ENPALS – both central and peripheral – continued their activities as in the
past, according to the same institutional duties.
3
ENPALS register identifies companies according to forty different typologies. In ten of these, there are those
companies that are considered and registered as “active” in the movie sector: film production companies
204 |
TABLE 1
THE COUNTERCYCLICAL TREND OF THE MACRO SECTOR AND CINEMA
Percentage variations
compared to previous years
ENTERTAINMENT MACRO SECTOR
2004
2005
2006
ENPALS contributing operators
+5.1%
-0.3%
+3.4%
Active companies
+3.3%
+1.5%
Annual earnings
+13.9%
-3.4%
CINEMATOGRAPHIC SECTOR
2007
2008
2009
+6.5%
+4.3%
+4.9%
+5.5%
+0.2%
+4.9%
+6.7%
+7.2%
+16.5%
-4.4%
+5.6%
Data provided by the Report Workers and companies in the entertainment and professional sport: main occupational and wage data. Year
2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
employment: 3,977 more active contributors compared to 2009, that correspond to 40.6% of the
total increase of 9,787 operators of the macro sector (Table 2), where it represented the 27.91% of
employment, and it is now equal to 29.66%. Practically, in 2010, a new contributor every 20 already
registered operators applied for ENPALS roles, with a high activation rate, equal to 4.91%.
The film industry creates half of the new operators. Compared to 2007, the progress recorded
within the cinematographic activities is equal to 12,232 workers (+16.8%), and it represents more
than half (53.5%) of the additional jobs (22,840) accumulated in the same period by the whole
entertainment sector. While the professional community of cinema keeps on growing, the
productive sector it depends on is also constantly increasing (+21.8% since 2005): companies which
constitute it represent now 13.9% of the whole amount of entertainment companies, and it should
be considered that two more sectors – different structures and types of entertainment – correspond
to 41.9% and are actually and mostly managed by clubs and associations3.
On the other hand, incomes generated by the film industry operators through their work for the
fulfillment of the activity correspond to 28.0% of the total compensation of all sectors, among which
no sector manages to reach half of its wages, with the exception of the TV and Radio sector (that
corresponds to 23.4% of the total), together which it nearly covers 51.5% of the total revenue, which
the whole social security system of the macro sector is based on4.
It also has the highest number of operators per company. This confirms – as already pointed out
– the progressive structural consolidation that cinema has carried out for the last four years, thus
(code 112); different production companies (advertising shorts, photo stories, etc. – code 113); developing and
printing companies (114); dubbing companies (115); distribution and rental companies (121); film production
facility (111); specific cinematographic companies (122); multipurpose cinematographic companies (123);
festival organization companies (532); services providing companies for the different entertainment sectors
(code 713).
4
As regards the greater number of companies that paid the social contributions during the last three-year
period, it should be remarked how this progressive increase also comes from a broader and more incisive
inspection activities promoted by ENPALS in order to curb the evasion and avoidance of payment for the
operators (the so-called “social security deductions”), which gave important results in some regional contexts.
| 205
TABLE 2
THE LABOUR MARKET IN THE MACRO SECTOR OF ENTERTAINMENT
Sectors and years
2004
2005
2006
2007
2008
2009
2010
ALL THE CONTRIBUTORS REGISTERED AT ENPALS
Cinema
68,927
74,658
76,442
72,608
77,343
80,863
84,840
TV and radio
26,375
28,980
30,896
28,787
26,522
25,890
25,768
Music
71,111
69,133
66,068
63,483
61,443
54,362
53,559
Theatre
20,321
21,181
21,262
22,348
24,468
26,637
24,928
53,954
Other types of entertainment* 39,781
35,106
34,711
47,689
50,021
51,390
Structures and sport
20,427
17,456
20,477
23,043
28,303
29,809
30,577
Other activities**
12,112
12,269
14,925
18,613
22,664
22,779
25,855
TOTAL ENTERTAINMENT
259,054
258,783
264,781
276,571
290,764
289,724
299,511
Cinema out of the total
26.60%
28.84%
28.86%
26.25%
26.59%
27.91%
29.66%
3,948
ALL THE ACTIVE COMPANIES REGISTERED AT ENPALS
Cinema
3,288
3,241
3,471
3,520
3,529
3,701
TV and radio
1,421
1,425
1,479
1,430
1,431
1,417
1,438
Music
7,150
6,312
3,018
5,742
4,931
4,339
4,047
Theatre
2,154
2,066
2,333
2,381
2,437
2,375
2,490
Other types of entertainment*
6,640
6,086
6,693
6,606
6,091
6,483
6,605
5,317
3,109
3,044
3,827
4,358
4,630
4,904
Other activities**
1,333
1,386
1,453
1,613
3,446
3,686
4,541
25,095
23,560
25,274
25,650
26,495
26,905
28,386
13.10%
13.75%
13.73%
13.72%
13.31%
13.75%
13.90%
897.8
TOTAL ENTERTAINMENT
ANNUAL EARNINGS OF ALL THE OPERATORS (IN MILLION OF EUROS)
Cinema
670.6
761.7
818.0
761.3
887.3
850.0
Radiotelevisione
658.7
619.1
691.1
679.5
713.4
716.0
752.6
Music
464.7
466.8
453.8
439.7
478.5
459.0
452.3
Theatre
165.8
171.0
167.4
177.0
205.2
198.9
202.5
Other types of entertainment* 264.9
262.9
285.2
363.6
415.1
413.5
450.3
221.0
212.4
235.5
255.4
337.8
289.7
400.8
28.3
33.7
33.3
42.5
59.7
64.5
78.1
TOTAL ENTERTAINMENT
2,474.0
2,527.6
2,684.3
2,719.0
3,097.0
2,991.6
3,206.5
27.10%
30.13%
30.47%
27.99%
28.65%
28.41%
28.00%
Other activities**
* The acronym T.v.s.p. corresponds to the category “Trattenimenti vari e spettacoli polivalenti” (Different types of entertainment
and shows).
** In the sector “Other activities” ENPALS includes those companies which supply services in the different sectors of entertainment, selfemployed persons, dealers, music activities, companies that are not involved in entertainment that contribute to the social security of
contributors registered at ENPALS and companies whose administrative status is considered temporary or awaiting a verification.
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 20002009, by the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and
companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
confirming to be the entertainment sector with the most developed entrepreneurial structures and
industrial management. In fact, it numbers an average 21.49 operators per company, more than
double if compared to the number of the whole entertainment sector (Table 3), and it also
abundantly exceeds other media like the radio and TV, which number 17.91 employees per
company.
206 |
TABLE 3
AVERAGE NUMBER OF OPERATORS IN THE ENTERTAINMENT COMPANIES
Sectors and years
2004
2005
2006
2007
2008
2009
2010
Cinema
20,96
TV and radio
18,56
Music
9,94
Theatre
9,43
Other types of entertainment* 5,99
6,57
Other activities**
9,08
TOTAL ENTERTAINMENT
10,32
Delta cinema out of the total 2,03
23,03
20,33
10,95
10,25
5,76
5,73
8,85
10,98
2,09
22,02
20,88
21,89
9,11
5,18
5,35
10,27
10,47
2,10
20,62
20,13
11,05
9,38
7,21
5,28
11,53
10,78
1,91
21,91
18,53
12,46
10,04
8,21
6,11
6,57
10,97
1,99
21,84
18,27
12,52
10,37
7,92
6,07
6,17
10,76
2,02
21,49
17,91
13,23
10,01
8,16
5,75
5,69
10,55
2,03
* The acronym T.v.s.p. corresponds to the category “Trattenimenti vari e spettacoli polivalenti” (Different types of entertainment
and shows).
** In the sector “Other activities” ENPALS includes those companies which supply services in the different sectors of entertainment, selfemployed persons, dealers, music activities, companies that are not involved in entertainment that contribute to the social security of
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 2000-2009, by
the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies:
main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
TABLE 4
CINEMA, TV AND RADIO: WHO CREATES JOB OPPORTUNITIES OR CUTS THEM
Last
eleven
years
2000*
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
CINEMATOGRAPHIC PRODUCTION SECTOR
Active Basic index
Unit Percentage
employees
2000=100 variations variations
67,948
72,617
69,653
65,449
68,827
74,658
76,442
72,608
77,343
80,863
84,840
100.00
106.87
102.50
96.32
101.29
109.87
112.50
106.85
113.82
119.00
124.86
+4,669
-2,964
-4,204
+3,378
+5,831
+1,784
-3,834
+4,735
+3,520
+3,077
+6.87%
-4.08%
-6.03%
+5.16%
+8.47%
+2.39%
-5.02%
+6.52%
+4.55%
+4.91%
TV AND RADIO PRODUCTION
Active Basic index
Unit Percentage
employees
23,115
24,195
26,513
26,375
28,980
30,896
28,787
26,522
25,890
25,768
23,822 100.00
97.03
101.56
111.29
110.71
121.65
129.69
120.84
111.33
108.68
108.16
-707
+1,080
+2,318
-138
+2,605
+1,916
-2,109
-2,265
-632
-122
-2.96%
+4.67%
+9.58%
-0.52%
+9.87%
+6.61%
-6.82%
-7.86%
-2.38%
-0.47%
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 2000-2009, by the
Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main occupational
and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
In the meantime, the great cuts in the TV systems continue. According to ENPALS data, the radio
and TV sectors lost more than 5 thousand employees (5128 exactly) in the period 2006-2010,
corresponding to 16.6%, even though they created many new digital and satellite channels, free or
pay-per-view (Table 4). This phenomenon is quite anomalous and does not seem to be easily
explainable, considering the constantly growing activities and turnovers of the period, as well as the
advantages gained in terms of economies of scale and management efficiency, as shown by the
achieved production increase: in fact, the payroll (Table 2) rises according to the increase in the
| 207
TABLE 5
EMPLOYMENT SAMPLE IN THE ENTERTAINMENT SECTORS
Sectors and years
2004
2005
2006
2007
2008
2009
AVERAGE EMPLOYMENT VALUES IN THE ANNUAL WORKING DAYS OF THE OPERATORS
TV and radio
236.7
209.3
214.2
215.7
241.5
247.4
Music
52.9
55.9
53.8
53.9
59.6
64.0
Theatre
87.7
84.7
81.1
78.4
82.1
78.8
Different types of entertainment* 71.2
79.9
83.5
91.7
96.8
96.4
179.2
196.5
190.3
176.7
183.8
187.3
Other activities**
43.6
47.1
39.0
37.0
41.6
43.3
TOTAL ENTERTAINMENT
95.8
95.6
96.2
94.3
96.9
101.1
2010
249.0
64.9
80.8
100.1
188.0
43.6
101.7
* The acronym T.v.s.p. corresponds to the category “Trattenimenti vari e spettacoli polivalenti” (Different types of entertainment and shows).
** In the sector “Other activities” ENPALS includes those companies which supply services in the different sectors of entertainment, self
employed persons, dealers, music activities, companies that are not involved in entertainment that contribute to the social security of
Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main occupational
and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
average working days of employees in one year. The deep compression of the TV sector faces the
gradual occupational growth of the whole entertainment macro sector, also thanks to the liveliness
of the following sectors: “different types of entertainment and shows”, “Structures and sport” and
“Other activities” (Table 6). Drama also proved to be an important “incubator” of new employees,
increasing the number of its contributors by 40.9% n the last decade, despite the setback (-6.4%) of
5
The Ministerial Decree under discussion is made up of two provisions: “Adaptation of the categories of workers
who are compulsorily insured at ENPALS” and “Integration and redefinition of the categories of subjects
insured at the social security fund for entertainment workers, issued at ENPALS”. It was issued by the Ministry
of Labour and Social Policy, along with the Ministry of Economy and Finance, on 15th March 2005, and
published in the “Gazzetta Ufficiale” no. 80 of 7th April 2005. However, ENPALS had already started, in 2011,
the research to propose the inclusion of “other types of new generation jobs for”, for instance, “those subjects
who carry out more and more important roles in the realization of entertainment activities which were
unknown in the previous years, but well known nowadays” (from the The regulatory framework as regards the
pension protection of entertainment workers and sports people. Effectiveness and limits, report by the Area
Contributi e Vigilanza (contributions and monitoring area) – ENPALS contributions direction, submitted to the
Unit for the evaluation and strategic control of the Authority, Rome, 2011).
6
According to the globally adopted conventional managerial nomenclature, professional services and jobs are,
as a matter of fact, basically ascribed to five typologies: creative (creative staff), with scriptwriters, set and
costume designers, composers; artistic (artistic labour) with producers, directors of editing and photography,
choreographers; performing (performing labour) with actors and extras, musicians and dancers; technical
(technical line), including stage and dubbing directors, assistant directors, casting directors, cameramen,
sound and lighting technicians, electricians, prop handlers, tailors, make-up artists, hair stylists etc.;
administrative (administrative work) with production agents, accounts officers, purchasing, rental and supply
managers (refer to Fabrizio Perretti - Giacomo Negro, Economy of Cinema. Economic principles and strategic
variables of the film sector, Etas, Milan 2003, pp. 64-90).
208 |
TABLE 6
EMPLOYEES: IN & OUT IN THE ENTERTAINMENT SECTORS
Last
eleven
years
2000*
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
ENTERTAINMENT-STRUCTURES AND SPORT-OTHER ACTIVITIES*
Active Basic index
employees
2000=100
51,595
51,002
64,558
69,362
72,320
64,831
70,113
89,345
100,988
103,978
110,386
100.00
98.85
125.12
134.43
140.16
125.65
135.89
173.16
195.73
201.52
213.94
Unit Percentage
variations variations
-593
+13,556
+4,804
+2,958
-7,489
+5,282
+19,232
+11,643
+2,990
+6,408
-1.14%
+26.57%
+7.44%
+4.26%
-10.35%
+8.14%
+27.43%
+13.03%
+2.96%
+6.16%
ENTERTAINMENT MACRO SECTOR ON THE WHOLE
Active Basic index
employees
2000=100
210,470
218,219
242,850
254,464
257,954
258,783
264,781
276,671
290,764
289,724
299,511
100.00
106.87
102.50
96.32
101.29
109.87
112.50
106.85
113.82
119.00
124.86
Unit Percentage
variations variations
+4,669
-2,964
-4,204
+3,378
+5,831
+1,784
-3,834
+4,735
+3,520
+3,077
+6.87%
-4.08%
-6.03%
+5.16%
+8.47%
+2.39%
-5.02%
+6.52%
+4.55%
+4.91
Statistical-Actuarial Committee of ENPLAS (Rome, 2010) and Professional sport and entertainment workers and companies: main
occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
the last season. The only other sector that showed clear signs of contraction, besides the radio and
TV, is the music sector. This was the first and the most directly involved, in the last eight years, in
the digital devolution that fostered the spread of piracy and the parallel diffusion of “offside” copies
(Table 7).
2. The reference universe
Though having a low number of companies compared to other four activities – “Music”, “Different
types of entertainment and shows”, “Structures and sport” and “Other activities” – cinema is
undoubtedly the most important sector, from the employment point of view, in the whole
entertainment system. This predominance is confirmed by the supremacy in ten out of twenty-five
groups through which ENPALS classifies its contributors, in 147 different professional figures,
according to a Ministerial Decree of 2005 that, six years after being issued, requires an incisive
update, in line with the deep evolution and the progressive specialization introduced by the new
technologies in many professional profiles5.
VOCATIONAL QUALIFICATIONS
In seven professional groups out of ten, in which it stands out for its number of employees,
cinematographic activity even covers the 50% of the components (Table 8). It is about three areas,
creative, artistic and cinematographic areas, and four administrative and technical areas. This
majority presence in these categories, respectively, points out the management structure and
organization of cinematography, compared to the other entertainment sectors6.
The evaluation of the occupational scene is also corroborated by the consideration of the extreme
| 209
TABLE 7
MUSIC AND THEATRE: WHO REDUCES OR ENHANCE OCCUPATION
Last
eleven
years
2000*
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
MUSIC PRODUCTION SECTOR
Active Basic index
Unit Percentage
employees
49,417
53,588
65,037
73,306
71,111
69,139
66,068
63,483
61,443
54,362
53,559
100.00
108.44
131.60
148.34
143.89
139.90
133.69
128.46
124.33
110.00
108.38
+4,171
+11,449
+8,269
-2,195
-1,972
-3,071
-2,585
-2,040
-7,081
-803
+8.44%
+21.36%
+12.71%
-2.99%
-2.77%
-4.44%
-3.91%
-3.21%
-11.52%
-1.47%
THEATRE PRODUCTION SECTOR
Active Basic index
Unit Percentage
employees
17,688
17,897
19,407
19,834
20,321
21,181
21,262
22,348
24,468
26,637
24,928
100.00
101.18
109.71
112.13
114.88
119.74
120.20
126.34
138.33
150.59
140.93
+209
+1,510
+427
+487
+860
+81
+1,086
+2,120
+2,169
-1,709
+1.18%
+8.43%
+2.20%
+2.45%
+4.23%
+0.38%
+5.10%
+9.48%
+8.86%
-6.41%%
Statistical-Actuarial Committee of ENPLAS (Rome, 2010) and Professional sport and entertainment workers and companies: main
uncertainty that cinematographic companies have always to face, with relation to the carrying out
of the support measures for production and distribution, and to the disbursement of the announced
incentives.
The “pure additionality” factor. It is to be remembered that in the constitutional nature of Italian
and European cinema, what economists call “pure additionality” appears. It is that factor –
determined by the basic features of the market and the fundamental structures of the activity
sector – for which many companies (mostly the minor ones) cannot produce and release their
works without an additional external intervention, that almost always consists in the providential,
even though limited, public support in the shape of essential contributions of capital, aid and
financial incentives from the government, regions, local authorities, government institutions or
other central organizations.
THE TERRITORIAL DISTRIBUTION
In the development process of the Italian cinema, particular importance is given to the
increase in the average number of operators per company over the years, that reached the
value of 22.49 units per company at a national level. The territorial distribution of activities
(Table 9) points out its highest value of 29.01 in Lazio (so the average in the central regions
corresponds to 26.5), thus highlighting the importance of the capital of national cinema,
Rome, as in Lazio there is the 45.0% of all the active companies that are registered at ENPALS
and 62.9% of the contributors of the social security institution.
Lombardy is the second region by company “density” (24.49) followed by Veneto that, though
being at the eighth place for the number of active companies (107), has the fourth biggest
group of operators at a National level (2,266), reaching the number of 21.17 employees per
210 |
TABLE 8
ENTERTAINMENT PEOPLE AND JOBS: THE IMPORTANCE OF CINEMA
Artists e technicians by ENPALS
professional categories in 2010
Total employees
in entertainment
Actors and bit part actors
66,160
Employees
33,404
Operators and personnel (A)****
13,132
Organisers. managers and inspectors***
5,905
Directors. assistant directors. scriptwriters
6,044
Operators and personnel (B)****
8,624
Technicians (production and realization)
10,105
Set. interior and costume designers
3,196
Make-up artists and hair stylists
1,460
Choreographers. dancers and models
23,931
Film rental companies employees
475
Opera artists and singers
10,205
Anchormen and animators
21,103
Stage and dubbing directors
511
Concert performers and orchestral players 39,414
Administrators
1,074
Orchestra conductors and maestros
939
Entertainment structures’ employees **
23,815
Structures’ employees
27,240
Self-employed operators of music activities
1,774
GRAND TOTAL
299,511
Cinema operators
number
share
47,236
11,608
7,633
3,897
3,336
3,251
2,845
1,778
763
561
448
413
366
231
276
91
56
38
20
3
84,840
71.39%
34.75%
58.12%
65.99%
55.19%
37.69%
28.15%
55.63%
52.26%
2.34%
94.31%
4.04%
1.73%
45.20%
0.70%
8.47%
5.96%
0.15%
0.07%
0.16%
29.66%
Another most
represented sector
11,081 - Theatre
15,933 - Radio and TV
1,525 - Theatre
2,242 - Theatre
443 - Music
196 - Radio and TV
14,890 - T.v.s.p.*
14 - T.v.s.p.*
7,620 – Music
8,013 - T.v.s.p.*
142 – Theatre
28,119 - Music
750 – Theatre
799 - Music
20,936 - T.v.s.p.*
26,073 - Structures/ sport
1,695 - Other activities
53,954 - T.V.S.P.*
** In this group, ENPALS classification refers to the «employees of companies of travelling shows, racetracks, racing stables, greyhound tracks,
gambling houses, game rooms, betting points and bet operators».
*** This category is officially denominated: “Cinematographic production, audiovisual and entertainment group”.
**** ENPALS provides two groups “Operators and personnel” («those people who perform artistic and technical activities that are directly
connected with the production and the realization of the shows») who are temporary workers: the A group includes those who have
accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
Source: Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the StatisticalActuarial Consultancy of ENPALS (Rome, 2011).
company name. On the opposite side there is Molise, with its minimum share of only one
operator per company; this circumstance is due to the presence of individual firms (only four
are registered at the social security institution).
A high concentration sector. Lombardy, along with its chief city, Milan, is therefore the second
epicentre of the National cinema, in a territorial scenery from which two satellite regions like
Piedmont and Emilia-Romagna emerge, along with other five important “ancillary” regions:
Campania, Tuscany, Sicily, Veneto and Apulia (Table 10). These nine regions –
cinematographically speaking – number 3,615 companies which correspond to 91.4% of the
total and 84,492 operators, corresponding to 99.7% of the whole number of operators and
personnel. If we consider the whole macro sector, the same nine regions cover the 81.8% in
terms of company activities, and the 86.6% as regards labour units, that is ten points less
with respect to what they represent in the cinema in the first case, and almost five in the
| 211
TABLE 9
TERRITORIAL SUBDIVISION OF EMPLOYEES IN THE CINEMATOGRAPHIC SECTOR
Subdivision by
Region
ITALY
Piedmont
Aosta Valley
Lombardy
Trentino-Alto Adige
Veneto
Friuli Venezia Giulia
Liguria
Emilia Romagna
NORTH
Tuscany
Umbria
Marche
Lazio
CENTER
Abruzzo
Molise
Campania
Apulia
Basilicata
Calabria
Sicily
Sardinia
SOUTH AND ISLANDS
Active cinema companies
registered at enpals
2008
2009
2010
3,529
185
3
685
33
110
30
48
232
1,329
141
30
77
1,486
1,734
40
3
139
92
13
22
141
21
471
3,701
202
6
793
39
108
33
49
250
1,480
149
32
74
1,698
1,935
37
5
159
101
13
31
139
30
515
3,948
208
8
795
40
107
27
46
215
1,446
130
31
75
1,777
2,013
33
4
151
108
11
31
124
27
489
Contributors of cinema
sector registered at enpals
2008
2009
2010
77,343
1,457
10
16,217
105
1,251
334
373
1,867
21,614
885
123
382
41,958
43,348
167
8
1,172
560
34
76
1,806
157
3,980
80,863
1,449
7
19,556
176
2,031
343
419
2,091
26,172
933
190
381
49,431
50,935
221
5
1,574
687
33
107
892
227
3,756
84,840
2,166
55
19,315
181
2,266
362
459
2,285
27,089
1,148
197
446
51,566
53,357
239
4
1,582
759
33
122
1,415
240
4,394
Average number of operators
per cinema company
2008
2009
2010
21.91
7.8
3.3
23.7
3.1
11.3
11.1
7.7
8.0
17.7
6.3
5.9
4.9
29.1
24.9
4.1
2.6
8.4
5.3
3.8
3.5
5.1
7.4
8.4
21.84
7.2
1.2
24.8
4.5
18.8
10.4
8.6
8.4
17.7
6.3
5.9
5.1
29.1
26.1
6.0
1.0
9.9
6.9
2.5
3.5
6.4
7.6
7.3
21.49
10.41
6.87
24.29
4.52
21.17
13.40
9.97
10.62
18.73
8.83
6.35
5.94
29.01
26.50
7.24
1.00
10.47
7.02
3.00
3.93
11.41
8.88
8.98
Data provided by the reports Professional sport and entertainment workers and companies: main occupational and wage data. Years 2008
and 2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies: main
occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
second. If we consider, instead, all entertainment sectors, excluding cinema, we can notice
that the macro sector numbers 80.2% of the companies and 81.2% of the labour force in the
nine main regions.
Therefore, the concentration of the cinematographic activities (Table 10) seems even more
marked, with differentials that rise up to more than 11 points for the active companies and
18.5 for the contributors. The increase in the average number of operators per company
seems part of an overall consolidation process underway – often underlined also in the
previous editions – mostly in the light of its perpetuation, even when the entrepreneurship is
subject to some reduction in quantitative terms.
If it is a qualitative selection. In the macro areas of North and South, for instance, variations
of -2.3% and -5.0% have been recorded as regards the number of companies in 2010,
compared to 2009, considering, however, a 3.5% and 16.9% increase, respectively, in the
number of people registered at ENPALS (Table 9). Actually, this is a contingent phenomenon,
212 |
TABLE 10
THE NINE REGIONS WITH MORE CINEMATOGRAPHIC PRODUCTIONS
Regions with more
than 100 companies
and 1000 operators
1. Lazio
2. Lombardy
3. Emilia Romagna
4. Piedmont
5. Campania
6. Tuscany
7. Sicily
8. Veneto
9. Apulia
TOTAL 9 REGIONS
ACTIVE COMPANIES
Share out of italian total
2008
2009
2010
42.0% 43.0%
19.3% 20.0%
6.6%
6.7%
5.2%
5.4%
3.9%
4.3%
4.0%
4.0%
4.0%
3.7%
3.1%
2.9%
2.6%
2.7%
90.7% 93.7%
45.0%
20.1%
5.4%
5.3%
3.8%
3.3%
3.1%
2.7%
2.7%
91.4%
ACTIVE CONTRIBUTORS
2008
2009
2010
60.8%
23.5%
2.2%
1.9%
1.5%
1.1%
2.3%
1.6%
0.7%
95.6%
61.1%
24.3%
2.6%
1.8%
1.9%
1.1%
1.1%
2.5%
0.8%
97.2%
63.1%
22.8%
2.7%
2.6%
1.9%
1.3%
1.7%
2.7%
0.9%
99.7%
PERCENTAGE VARIATIONS
2010 vs 2008
Companies Contributors
+16.8%
+16.0%
-7.3%
+12.4%
+8.6%
-7.8%
-12.0%
-2.7%
+17.4%
+13.2%
+22.2%
+19.1%
+22.4%
+48.7%
+34.9%
+29.7%
-21.6%
+81.1%
+35.5%
+22.8%
Data provided by the reports Professional sport and entertainment workers and companies: main occupational and wage data. Years
2008 and 2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies:
main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
as in a longer period (Table 11) the evolution with a contextual “rooting” of cinematographic
initiatives is not challenged: the selection can correspond to a simple arithmetical reduction
and, at the same time, to the concrete strengthening of the interested structured, even in
qualitative terms.
From every point of view, it is possible to notice how the number of employees increases
much more than the number of companies, thus determining the increase in the average
share of operators per company that has already been noticed. This phenomenon is
particularly marked in the Centre of Italy, thanks to the performance of the Roman centre,
which Lazio cinema depends on. Moreover, it is further corroborated by the observation of the
distribution of companies and operators between the macro areas.
Where the film industry can develop. If in terms of companies Central Regions “cover” 51.0%
of the total of active companies that are registered at ENPALS (compared to the 36.7%
incidence of the North and to the 12.4% of South and Islands), from the point of view of the
employees, their share of competence sets at 62.9% (against 31.9% of the North and 5.2% of
the South). In the analysis of the territorial partition it is possible to stress the gap – in terms
of active companies – in the three traditional national areas, between cinema and the macro
sector of entertainment.
The cinematographic companies’ share of 36.7%, for instance, corresponds to 45.4% share of
the North, referring to most entertainment companies, while as regards the cinematographic
operators, 50.9% of the Centre and 12.4% of the South are contrasted by 26.3% and 28.3%,
respectively, of the whole entertainment industry.
The comparison between the different incidences basically confirms the widespread
perception that cinema should develop right in certain areas of the North and most of all of
the South and Islands, in order to enhance the reference commercial penetration.
| 213
TABLE 11
INCIDENCE OF MACRO AREAS ON NATIONAL CINEMA
Subdivision by
territorial
position
North
Centre
South and Islands
ITALY
ACTIVE COMPANIES
2008
2009
2010
37.6%
49.0%
13.4%
100.0%
ACTIVE CONTRIBUTORS
2008
2009
2010
37.5% 36.7% 31.3% 32.3% 31.9%
49.5% 50.9% 62.9% 63.0% 62.9%
13.0% 12.4%
5.8%
4.7%
5.2%
100.0% 100.0% 100.0% 100.0% 100.0%
PERCENTAGE VARIATIONS
2010 vs 2008
Companies Contributors
+8.8%
+16.1%
+3.8%
+11.8%
+25.3%
+23.1%
+9.4%
+9.7%
3. A great human capital
The opportunity-necessity of the cinematography to develop its own business activities and
the market demand is deeply tied to the potentialities and the power of the supply that have
been already adapted to a higher production proposal and to the availability of a significant
and skilled human capital.
On the other hand, the recurring factor, nearly fundamental in the cinematographic
professional scene, is the extreme compression of the employment rate of its operators,
mostly as regards some of its artistic fields and starting from the actors group, which is the
biggest one and has a share that corresponds to 55.67% of the total and gives it a great
importance in the whole sector.
There is a host of actors. The exorbitant numeric incidence of the group of the actors is
confirmed by an average per capita of 9.4 annual working days (Table 12), the lowest not only
among all the professional groups of actors (as for TV and radio, it is 20.8 per person and
51.3 as regards theatre), but also among all the working units of cinema.
Moreover, if not for orchestra directors and maestros performing in the TV and Radio sector
for 6.8 days per year, the value given by the actors group of the cinema would constitute the
negative record for the whole entertainment macro sector.
EMPLOYMENT LEVELS AND PERIODS
In overall terms, only music suffers the average values of employment lower than the values
of cinema – not including the “Other activities” that, within ENPALS classification, constitute
a heterogeneous group – with 64.9 annual working days against 74.1 (Table 5).
A positive exploit and a negative one. This dichotomy between job demand and supply has not
prevented cinema professional community from nearly touching, in 2010, the daily
performance record, thus obtaining a total amount of 6.28 million working days, just below
the 2008 record of 6.29 millions. But it also produced, in 2010, an average 74.1 working days
214 |
TABLE 12
OCCUPATION AND PAY IN THE CINEMA, BY PROFESSIONAL QUALIFICATION
Active contributors of cinema
sector according to the professional
groups registered at Enpals
Registered operators
by profession
2009
2010
Actors and bit-part actors
45,137
Employees
10,697
Operators and personnel (A)*
7,219
Organisers. inspectors and continuity men*** 3,956
Directors. assistant directors. scriptwriters 3,230
Operators and personnel (B)*
3,128
Technicians (production and realization)
2,665
Set. interior and costume designers
1,623
740
Coreographers. dancers and models
471
Film rental companies employees
513
213
327
Concert performers and orchestral players 199
Stage and dubbing directors
236
Administrators
83
Orchestra directors and maestros
56
Entertainment structures’ employees**
0
Structures’ employees
0
Self-employed operators of music activities 100
GRAND TOTAL/ CINEMA
80,863
47,236
11,608
7,633
3,897
3,336
3,251
2,845
1,778
763
551
448
413
366
276
231
91
56
38
20
3
84.840
Average annual
working days
2009
2010
9.6
239.3
104.4
116.1
95.0
182.3
159.2
103.8
62.3
49.3
260.5
15.8
74.0
31.2
111.5
159.2
65.7
0.0
0.0
22.1
73.6
9.4
243.9
103.8
117.5
94.5
183.8
136.6
96.3
59.8
39.2
269.7
23.8
75.0
33.8
106.4
186.9
51.8
149.0
266.8
29.0
74.1
Average pay
in euros per day
2009
2010
306.49
104.46
105.07
146.14
346.07
56.69
118.94
173.20
197.48
176.80
115.65
501.60
1,925.76
106.91
197.83
185.47
172.60
0.00
0.00
78.20
142.74
334.92
104.97
101.23
146.07
334.14
56.64
118.46
176.21
201.53
195.49
123.02
184.47
1,807.28
107.07
207.71
169.84
190.40
75.51
79.29
145.55
142.82
** ENPALS provides two groups “Operators and personnel” («those people who perform artistic and technical activities that are directly
connected with the production and the realization of the shows») who are temporary workers: the A group includes those who have
accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
** ** In this group, ENPALS classification refers to the «employees of companies of travelling shows, racetracks, racing stables, greyhound
tracks, gambling houses, game rooms, betting points and bet operators».
per operator, only a little above the average 73.5 recorded in 2009, thus going back below the
basic index of 2000 (Table 13).
On the other hand, the integration and stabilization deficit of workers is a historical datum
because of the deep transversal segmentation implied by the intense concentration of skills,
with an extremely varied portfolio of highly specialized experiences. In the same way, the
overall fragmentation of the sector, caused by the high “pulverization”, by legal form, size
and turnover classes, of the companies that are an active part of it, seems paradigmatic.
ENPALS regime also for VAT codes. A feature of ENPALS, compared to the other national
institutes, is also that the insurance obligation of workers depends on the relative professional
qualifications, independently of the subordinate or self-employed nature of the work, that is,
independently of any contracts and their typology, both for subordinate and different types of
| 215
self-employed jobs, or even referable to the performances of VAT code holders (Value Added
Tax)7. Given the specific features of the activities, as regards insurance, all the professional
services are important, even though wages are occasional and limited or fragmented: it is
necessary to work one full day per year. As regards the pension, then, the levels of
contribution days that are necessary to reach the requested yearly income come into play8.
The role of ENPALS is, for instance, foresees the placement of 179 different categories of
workers (147 for entertainment and 32 for sport), divided into three groups according to the
minimum contributions that are considered valid for the fulfillment of the relative yearly
contribution:
A. when payments correspond to 120 days, at least, and do not exceed the threshold of 259;
B. if the payment of the social security taxes falls within a span of 260-311 days;
C. if the number of days credited for the social security is higher than 312. At the base of the
first two types there is the fixed-term employment, while for the third category
indeterminate employment contracts are required (Table 14).
The great rise of a more stable employment. However, cinema – unlike what the general
coordinates of the sector may show – creates more stable employment. This is demonstrated
by the trend of job opportunities in the nine types having the highest work intensity of the
sector: two professional groups that imply the indeterminate employment and seven groups
in which the fixed-term employment is carried out in more than 100 annual working days.
These nine categories of technical and administrative areas in 2008 corresponded to 31.0%
7
As underlined in the aforementioned report (see note 5) sent by ENPALS contributions Section to the
Unit for the evaluation and strategic control of the Authority, «this specificity, that was ahead of the
general trend of the extension of insurance protection to all workers, is gaining ground in the
entertainment sector because of the structural features, execution modalities, professional service,
which often cannot be assigned a specific contract, as they are permeated by a mix of subordination
features and autonomy elements, in which the intuitus personae qualifies the relationship between
employee and the organization of the show ».
8
The minimum limit of daily pay for the contributory obligations, related to the sectors that fall within the
competence of ENPALS, was set at 44.49 Euros for 2011 (corresponding to 9.6% of the minimum
monthly pension depending on the Employees Pension Fund, equal to 468.35 Euros). The contribution
rate – adjusted as foreseen by INPS management and always equalized between self-employed and
subordinates – is equal to 33%, 23.81% of which is paid by the principal and 9.19% is paid by the worker.
The annual ceiling of the contribution and pensionable base (under Law no. 335 of 1995), on the
contrary, is set at 93,622 Euros, and the contextual additional duty of 1% paid by the worker (Law no.
438 of 1992) is applied on the exceeding part of the amount of 43,042 Euros, up to the annual ceiling of
93,662 (in terms of daily pay, it is calculated on the sum exceeding the amount of 137.95 Euros, up to
the ceiling of 300.07 Euros). As for wage exceeding the ceiling of 93,662 Euros, instead, a solidarity
contribution of 5% has been introduced (under Law Decree no. 182 of 1997), 2.50% of which is paid by
the employers, and 2.50% by employees (ENPALS circular no. 4 of 31st January 2011, by the Area
Contributi e Vigilanza).
216 |
TABLE 13
TREND OF EMPLOYMENT IN THE CINEMATOGRAPHY
Last
eleven
years
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
ANNUAL WORKING DAYS (IN THOUSANDS)
Number
Percentage
Basic index
of days
variations
2000=100
5,041.1
5,709.1
5,814.2
5,612.5
5,966.5
6,195.6
6,206.6
5,570.5
6,296.6
5,954.7
6,286.6
+15.44%
+13.25%
+1.84%
- 3.47%
+6.31%
+3.84%
+0.18%
-10.25%
+13.03%
-5.42%
+5.57%
100.00
113.25
115.33
111.33
118.35
122.90
123.11
110.50
124.90
118.12
124.70
AVERAGE ANNUAL WORKING DAYS PER OPERATOR
Number
Percentage
Basic index
of days
variations
2000=100
74.2
78.6
83.5
85.8
86.7
83.0
81.2
76.7
81.4
73.5
74.1
+7.52%
+5.92%
+6.23%
+2.75%
+1.04%
-4.26%
-0.96%
-5.54%
+6.12%
-9.70%
+0.81%
100.00
105.92
112.53
115.63
116.84
111.85
109.43
103.36
109.70
99.05
99.86
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 20002009, by the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
of the total number of operators, while in 2010 they corresponded to 35.1%. in the three-year
period, the overall workforce of cinema increased by 7,497 units (equal to 9.7%); well, 5,307
– that is, the 70.8%, derive from the nine groups with more than 100 annual contribution days
(Table 15). This number, 5,307, almost seems to overlap with the number – of 5,128 – deriving
from the job cuts carried out in the same period in the television and radio sector.
Like Coluche: the best and the worst. If the datum of 5,307 new work units can seem
surprising to those who know the general conditions of the employment market of
entertainment, the intensity of this performance is even more surprising, as the two
consecutive increases recorded in 2009 (+15.2%) and 2010 (+5.5%) resulted in a 21.6%
progress for the three-year period, along with a great average increase in the annual working
days of these operators, almost 30 days: in 2008, the contribution days were 151.8, while in
2010 they were 180.7. If we consider that the overall average for all the operators corresponds
to 74.1 days (the second lowest in 2000s, as said before), it is possible to have a distinct
perception of how the performances of the other professional groups have, instead,
contracted and crushed, like in the artistic, creative and performance sectors.
This phenomenon reminds a successful expression of the popular French comedian, Coluche
(Michel Gérard Joseph Colucci, born in Paris, who died after a motorbike accident in 1986, at
the age of 42) in Pc Cgt Russie Pologne, a sketch from C’est l’histoire d’un Mec, one of his
most successful shows: «As some artists, I am able of best and worst. But in the worst, I am
absolutely the best».
PAY SCALES
From the modest essay about the use of the artistic and technical population comes a pay
| 217
level which is limited for the most part.
The picture is reconstructed through the subdivision, by deciles, of the working periods and
the wage classes, which particularly show lower values compared to the values recorded
twelve months before for the seven lower deciles (Table 16)
Nonetheless, in the whole entertainment sector, cinema holds on to a better position
compared to other sectors in the chart of the wage levels, even though the comparison with
the general average of the macro sector seems satisfying for the daily economic treatment,
and limited for the annual wages.
On the other hand, occupation demand-supply and compensation range are similarly
structured and show similar forms in all the creative, cultural and entertainment categories.
Moreover, the comparison between the trend of wages in the cinema and in the other types
of entertainment has given, in the last seven years, an almost linear performance (Table 17).
4. The coordinates of the sector
Despite the evident lack of job opportunities, and most of all economic opportunities, that
are destined by the market, as explained before, to 70% of their protagonists, cinematographic
activities keep on holding the best average of the annual wages per operator after the TV and
radio sector, which is strongly based on the more gainful indeterminate works (like the sector,
basically extraneous to this context, of the facilities management).
The new contract and the dumping. Right the development of serial productions – mainly due
to TV networks – aiming to more and more limited budgets, seems to be associated with an
only partial adjustment of the cost of goods and services destined to the film and video
industry, while the broad job opportunities led to a “repopulation” of the operators’ sector
(thanks to the new operators, the available personnel has doubled since 1998), that is
consequently exceeding with respect to the effective job opportunities. In this field even the
last collective contract for the film and audiovisual industry issued on 21st December 2011
and signed at the end of January 2012 by the Trade Unions has intervened: Anica and
Unindustria on one side and Slc-Cgil, Fistel-Cisl and Uil-Com on the other side. In fact,
besides acknowledging the orientations introduced by the interconfederal agreement of 28th
June 2011 in terms of industrial relations and development of the second-level agreements
(which assigns the development to territorial and company management) a joint committee
for contracts was issued in order to supervise the activities and try to control any forms of
dumping or unfair competition9.
9
218 |
National collective employment agreement for the employees of the film and audiovisual industry
(Rome, January 2011).
TABLE 14
NOMENCLATURE OF CINEMA PROFESSIONS
GROUP A* – FIXED-TERM EMPLOYMENT (120-259 ANNUAL WORKING DAYS)
Group A (4)
011 Opera artists
012 Singers
013 Choralists and vocalists
014 Choirmasters, assistants
Actors group (9)
022 Film and audiovisual actors
023 Dubbing actors
028 Prompters
029 Bit-part actors and special extras
Anchormen group (3)
031 Presenters
032 DJs
033 Animators
Directors and scriptwriters group (5)
041 Directors
042 Assistant directors
043 Scriptwriters
044 Dialogists and adaptors
045 Directors of photography
Stage and dubbing directors’ group (3)
061 Stage managers
062 Dubbing directors
063 Stage and dubbing assistants
Orchestra directors and maestros group (3)
071 Orchestra directors
072 Orchestra substitute directors
073 Prompters
Concert performers, orchestra players group (3)
081 Concert performers and soloists
082 Orchestra professors
083 Orchestra and pop music singers
Dance group (2)
091 Choreographers and assistant choreographers
092 Dancers and e terpsichoreans
Technical group (1)
111 Editors and sound engineers
Technicians and operators group (3)
121 Camera operators
122 Assistant operators
127 Prop handlers
Set designers group (1)
133 Set designers
GROUP B* – FIXED-TERM EMPLOYMENT (260-311 ANNUAL WORKING DAYS)
Production group (6)
051 Production managers
052 Production supervisors
053 Production secretaries
054 Script supervisors
055 Production accountants
056 General organizers
Administrators group (1)
101 Administrators
Set and costume designers group (2)
131 Interior designers/architects
132 Costumes designers, fashion designers
Make-up artists and hair stylists group (2)
141 Make-up artists
142 Hair stylists
Technicians group (5)
115 Developing and printing, lights, stage
technicians
Technicians and operators group (7)
123 Cinematographic personnel
126 Stage photographers
155 Projection rooms operators
156 Attendants, keepers, cloakroom attendants, cleaners and porters
Employees group (6)
202 Administrative employees and
technicians of public authorities and companies/cashiers and hall managers
203 Administrative employees and
film production, dubbing, developing
and printing technicians
204 Drivers
Film rental companies group (2)
231 Employees of film rental
and distribution companies
232 Operai imprese noleggio
e distribuzione
GROUP C – INDETERMINATE EMPLOYMENT (MORE THAN 312 ANNUAL WORKING DAYS)
This group includes all other cinema and entertainment operators with an indeterminate employment contract,
while those included in groups “A” and “B” have a fixed-term employment contract.
*The Table only refers to the 19 groups and 53 professional qualifications (with the specific placement code) related to the sector of cinema. Therefore, other
six groups that depends on ENPALS are not included: “Figuration and Fashion” of group A and the five “Bandsmen”, “Employees of racetracks, racing stables, greyhound tracks and bet operators”, “Employees of travelling shows companies”, “Sport facilities employees” and “Gambling houses employees” of group
B, which number 94 more qualifications in total.
Numbers in parentheses next to the denomination of the different groups, instead, indicates the total number of the categories – referring to the whole entertainment macro sector – that are part of it, according the nomenclature of the Authority.
Source: The world of Entertainment. Analysis and ENPALS (Omnia Zucchetti, Rome 2011), by Rossella Quintavalle, labour consultant.
EARNED INCOME
The substantial “resistance” of the wages of cinematographic operators has been confirmed
by the trend, in 2000s, of the average daily wage indexes per operator.
The average daily wage, in fact, proves to be constantly increasing, even though gradually,
| 219
TABLE 15
INCREASE IN MORE STABLE EMPLOYMENT
Professional groups with more
than 100 annual working days
2008
2009
2009
Number
Number
vs 2008
INDETERMINATE EMPLOYMENT
Film rental employees
451
513
+13.7%
Facilities workers
0
0
0.0%
FIXED-TERM EMPLOYMENT
Employees
7,690
10,697
+39.1%
Administrators
82
83
+1.2%
3,019
3,128
+3.6%
Entertainment facilities employees
0
0
0.0%
Technicians (production and realization) 2,463
2,665
+8.2%
Organizers. managers and supervisors 3,743
3,956
+5.7%
7,076
7,219
+2.0%
GRAND TOTAL
24,524
28,261
+15.2%
2010
Number
2010 Average working
vs 2009
days - 2010
448
20
-12.6%
-
269.7
266.8
11,608
91
3,251
38
2,845
3,897
7,633
29,831
+8.5%
+9.6%
+3.9%
+6,7%
-1.5%
+5.7%
+5.5%
243.9
186.9
183.8
149.0
136.6
117.5
103.8
180.7
* * ENPALS provides two groups of fixed-term “Operators and personnel”: group A, that includes those who have 120-259 annual contribution days; group B, that includes operators with 260-311 days.
2008 and 2009, and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by
the Statistical-Actuarial Consultancy of ENPALS (Rome).
TABLE 16
DISTRIBUTION OF WORKING PERIODS AND WAGES
Values of the deciles
for all cinema
operators
Up to 10% of workers
Up to 20%
Up to 30%
Up to 40%
First 50% of the units
Up to 60%
Up to 70%
Up to 80%
Up to 90% of the operators
Last 10% included
MAXIMUM WORKING DAYS
IN ONE YEAR
2008
2009
2010
1
1
2
3
8
23
78
156
266
312
1
1
2
3
6
21
78
170
302
312
1
1
2
3
6
19
74
172
311
312
DISTRIBUTION OF MAXIMUM WAGES
IN EUROS RECEIVED IN ONE YEAR
2008
2009
2010
69.44
121.66
200.00
396.00
918.00
2,878.45
7,843,77
15,816.98
26,152.88
27,309.90
67.50
96.74
159.00
300.00
660.00
2,335.30
7,539.87
17,247.25
30,842.93
-
73.37
100.00
160.75
300.00
512.74
2,097.17
7,453.70
17,095.39
30,846.02
-
and 2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
and in 2010 it reached the sum of 142.82 Euros (+26.62% compared to 2000), which represents
the highest sum of the last eleven years. Similarly (+26.46%) the average annual wage per
operator increases, even if it is not the highest ever received, it being exceeded by the level
of 2006 and even more by the record of 2008, which was more than 10 percentage points
higher (Table 18).
Level of the economic treatments. The adequacy of the economic treatment is based on Trade
Unions’ standards, and the last collective agreement formalized in January 2012 also resulted
220 |
in a new increase in the minimum wage – spread over the three years 2012-2013-2014 – which
goes from 76.27 Euros of the first-level agreement to 189.92 Euros for the seventh, and
assigns the fourth (the most widespread and the traditional reference) 122.80 Euros.
Moreover, in the renewal of the agreement, the one-off bonus has been set at 280 Euro gross
as for 2011, while the guarantee element for companies which do not sign the second-level
agreement has been set at 200 Euros, starting in 2013.
A certain shady area. Given the features of the labour market in the entertainment, which is
based on fixed-term employment and marked by an excessive number of employees (mainly
young and at the beginning of their work experience) and considering the low level of the
most pay scales, the presence of tax avoidance and evasion practices is not to be excluded in
advance. This is an evasive aspect that eludes any possible census or investigation. But
ENPALS itself and other public institutions – as already noticed – have been underlining the
existence of this aspect for many years, with the consequent necessity to gradually update the
social security regulations in order to control their spread10. The great number of employees
which lies at the basis of the pyramid of employees actually seems to justify the fact that a part
of the personnel – very young, considering the average age they start working at – and
occasional jobs, particularly in the so-called minor production (promotional documentaries,
supplementary videos for training and teaching, or illustrating the social and industrial
realities), managed through intermediary agencies (like for the special ability extras) comes
to feed that sector of undeclared activities that, according to the estimates of surveys carried
out in this field, subtract more than 20% of the workforce and produced income from the
official accounts in any sector and at a national level. Some trade union organizations, for
instance, assert that besides the undeclared work and the contribution evasion “tout court”,
there are other illegal or unlawful practices, mainly in the shape of unpaid trial work or (even
worse) of the payment of contributions without the actual payment of any wage to those who
have worked.
THE PROFESSIONAL PAY
If we consider that the average values for the total number of cinema employees correspond
10
In this connection, it is important to point out The Italian film market and industry – Report 2009
(Fondazione Ente dello Spettacolo, Rome 2010), pp. 65-67 and 74. Moreover, during the last four years,
two parliamentary committees have been working in order to reorganize the sector, also for what
concerns the development support and financing policies through public resources. The Labour
Committee aims to introduce – in compliance with its institutional purposes – the unified text of a law
about the social security in the show, sport and entertainment sectors. The Culture Committee,
instead, has developed a framework law (defined “bipartisan”). Compared to the Labour Committee bill
under discussion, the trend of three articles on the pension and assistance system contained in the
preliminary drafts of the text under discussion of the second parliamentary body seems contrasting.
| 221
TABLE 17
EVOLUTION OF WAGES IN THE ENTERTAINMENT
Sectors and years
2004
2005
2006
2007
2008
2009
2010
131.80
104.41
127.60
97.08
98.45
60.45
57.18
105.34
136.67
109.45
128.39
101.03
83.13
62.72
61.77
104.22
141.02
111.41
130.64
102.15
85.72
64.94
63.32
105.51
142.74
111.81
131.86
102.39
83.47
65.40
65.44
104.56
142.82
113.10
130.12
100.54
83.39
69.73
69.25
105.27
AVERAGE ANNUAL WAGES IN EUROS PER OPERATORS
Cinema
9,743.27 10,202.52 10,700.92
TV and radio
24,974.41 21,363.01 22,368.59
Music
6,534.85
6,752.26
6,868.68
Theatre
8,159.05
8,073.27
7,873.20
Other types of entertainment* 6,830.66
7,488.75
8,216.42
10,819.01 12,167.74 11,500.71
Other activities**
2,336.53
2,746.76
2,231.16
AVERAGE/ENTERTAINMENT 9,590.86
9,767.26 10,137.81
10,485.07
23,604.40
6,926.26
7,920.17
7,624.40
11,083.63
2,283.35
9,831.11
11,481.93
26,899.77
7,787.48
8,348.61
8,298.37
11,933.58
2,634.29
11,086.35
10,111.27
27,661.25
8,443.72
8,073.10
8,046.12
12,246.74
2,833.74
10,325.68
10,582.96
28,161.90
8,444.78
8,123.63
8,347.33
13,109.24
3,019.30
10,705.95
AVERAGE DAILY WAGE IN EUROS PER OPERATOR
Cinema
112.39
122.94
TV and radio
105.50
102.07
Music
123.58
120.70
Theatre
93.04
95.36
Other types of entertainment * 95.88
93.74
60.36
61.91
Other activities**
53.54
58.35
AVERAGE/ENTERTAINMENT 100.14
102.19
** In the sector “Other activities” ENPALS includes those companies which supply services in the different sectors of entertainment, self-employed workers, dealers, music activities, companies that are not involved in entertainment that contribute to the social security of contributors registered at ENPALS and companies whose administrative status is considered temporary or awaiting a verification.
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 2000-2009,
by the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main
to 74.1 as regards the annual working days, to 142.82 as for the average daily fee and to 10.58
thousand Euros as regards the annual compensation, we can notice how the comparison
proposed by the distribution of compensations, by deciles (Table 16), shows the ability of the
last 30% workers – 16,172 out of more than 84,840 – to strongly balance the compensation
standards of the other 70% colleagues, as well as the low annual compensation standard.
When the last 10% overturns the values. The distance that separates the high range of the
most famous and appreciated performers (the star system protagonists) from the rest of an
extremely large number of persons, is actually huge. It is probably because of the very high
pays of the most famous actors that the average daily pay is relatively considerable (Table 17)
compared to an occupational sample – the fourth – that is quite contained (Table 5) and below
the average of the whole entertainment macro sector. In this connection, it is possible to
notice how ENPALS system, in view of the compensations for fixed-term works, that are
sometimes above average, foresees their “spreading” over more creditable contribution days
for social security purposes (Table 19).
Moreover, in this connection, the reports of ENPALS analysis and statistics also showed, up
to 2008, the maximum level reached by the contributors belonging to the tenth decile in the
222 |
TABLE 18
TREND OF WAGES IN THE FILM SECTOR
Last
eleven
years
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Values
in Euros
112.79
118.67
116.30
112.73
112.39
122.94
131.80
136.67
141.02
142.74
142.82
AVERAGE DAILY WAGE
Percentage
Basic index
variations
2000=100
+7.12%
+5.21%
-2.00%
-3.07%
-0.30%
+9.38%
+7.20%
+3.69%
+3.18%
+1.20%
+0.05%
100.00
105.21
103.11
99.94
99.64
100.13
116.85
121.17
125.02
126.55
126.62
AVERAGE ANNUAL WAGE PER OPERATOR
Values
Percentage
Basic index
in Euros
variations
2000=100
8,368.23
9,329.77
9,708.12
9,667.07
9,743.27
10,202.62
10,700.92
10,485.07
11,480.93
10,111.27
10,582.96
+15.19%
+11.49%
+4.05%
-0.42%
+0.78%
+4.71%
+4.89%
-2.92%
+29.85%
-11.92%
+4.66%
100.00
111.49
116.01
115.52
116.43
121.92
127.87
125.29
137.19
120.82
126.46
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people – Series 2000-2009,
by the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main
distribution of the salaries of the sector.
Those “selective” data, that is, only accessible to red carpet artists, could be associated by
name to the possible recipients, thus allowing their identification; for this reason, since then,
they are not published anymore, according to the regulations that provide for the privacy
respect, also from the administrative point of view. That year, the income limit reached by
the highest paid artists among all the protagonists of the last and richest 10% of the Italian
entertainment population corresponded to 9,253,050 Euros for the cinema, 4,315,782 for the
television, 3,161,572 for the theatre and 1,600,924.20 Euros for the music (it should be noticed
that the sum of the last three annual fees remained below the single record reached in the
cinematographic sector).
The fattest pay envelopes. An objective datum that can be obtained from the statistical
balance sheets of ENPALS regards the salaries of the different professional categories of
the film industry. For instance, the groups of the creative, artistic and performing sectors
– which belong to the production activity – today “absorb” a little less than 40% of the total
wages of the entire sector. From the 29.7% of 2007 (when ENPALS classification foresaw a
different placement of working positions) 37.9% has been reached in 2008 and 2009, and
38.4% in 2010. Technical and administrative sectors instead – where the operators from all
the sectors converge to – decreased from 70.2% of 2007 to 62.1% in the following two-year
period and to 61.6% a year later (Table 20).
Moreover, it is possible to notice the definite reversal, starting in 2008, of the percentage
dimensions between the total wages of actors and authors (the number of the first ones is
fourteen times higher than directors and scriptwriters), also considering the other heading
“Anchormen and animators”, in which there are other professionals usually playing
| 223
TABLE 19
ENPALS REGIME FOR THE HIGHEST INCOME RANGES
DAILY SALARY RANGES 2011
FROM EUROS
TO EUROS
682.51
1,365.01
3,412.01
5,460.01
7,507.51
9,555.01
12,285.01
15,015.01
1,365.00
3,412.50
5,460.00
7,507.50
9,555.00
12,285.00
15,015.00
Ad libitum
MAXIMUM TAXABLE DAILY
SALARY
682.50
1,365.00
2,047.50
2,730.00
3,412.50
4,095.00
4,777.50
5,460.00
ACTUAL CREDITED CONTRIBUTION
DAYS
1
2
3
4
5
6
7
8
Source: Year 2011 – Minimum daily pay; maximum taxable annual and daily pay; solidarity contribution; additional 1% rate; contribution rates, Circular no. 4 of 31st January 2011, by the Contribution and Monitoring Area-Regulation and Circulars Office of ENPALS (Rome, 2011).
interpretative roles. Salaries, obviously, other than the compensation level of the different
professional categories, also depend on the relative numerical consistency of these groups.
Therefore, under the occupational aspect, it can be noticed how the incidence of creative,
artistic and performing areas has basically remained fixed at 63.5% in the last three years
(while it was equal to 60.0% in 2007) compared to the as static incidence of 36.5 percentage
points between 2008 and 2010 as regards technical and administrative sectors (Table 21).
THE REPUTATIONAL SCORE
Another indication of the difference in wages according to the categories derives from the
comparison between different types of high income that cinema gives to its professionals
over the years. The grid of the annual salaries shows the adequacy of wages paid to the
working categories of the technical and administrative sectors, while it highlights a marked
discontinuity between the groups of creative, artistic and performing areas, where the
number of operators penalizes the level of the salary per capita (Table 22). This is proved
by the average unit earnings of actors. Only the authors group (directors and scriptwriters)
seems to be given a relatively adequate salary, while the extreme standard of anchormen
and animators – compared to the general scenery – seems to be referable to the particular
situation of some very popular protagonists of the so-called show biz ( mainly TV and, to a
lesser degree, music and theatre artists) who entered the cinematographic world.
What makes the difference is the so-called “reputational score”. In the entertainment and
art world, wages are directly connected with the individual awards and they increase as the
career evolves, according to the gained experience, to the number of performances, to the
ability to interact with other protagonists of a specific production, to the result of the
previous works, according to the audience appreciation and the economic results obtained.
Overbooking consequences. For this reason, the reputational value can be only referred to
the typologies of creative, artistic, performing and also technical qualifications; barely to the
224 |
TABLE 20
PAYS OF THE DIFFERENT WORK CATEGORIES
Professional groups of EVOLUTION OF THE ANNUAL WAGE BILL IN MILLIONS OF EUROS (IN THE CINEMATOGRAPHY)
operators of the sector
2007
Share
2008
Share
2009
Share
2010
Share
CREATIVE, ARTISTIC AND PERFORMING AREAS
80.10
10.5%
166.34
19.2%
132.80
Directors and scriptwriters 122.70
16.0%
159.31
18.3%
106.10
Stage and costume designers 23.39
3.0%
34.78
4.0%
29.18
77.15
9.0%
46.59
Coreographers. dancers and models 1.34
0.2%
5.00
0.6%
4.10
0.04
0.0%
1.30
0.2%
1.68
Concert performers
and orchestral players
0.65
0.0%
0.76
0.1%
0.66
Orchestra directors and maestros 0.06
0.0%
0.73
0.1%
0.63
Employees
281.28
Operators and personnel (A)**
Organizers-supervisors*** 57.71
Operators and personnel (B)**
Production technicians
34.98
Make-up artists and hair stylists 11.18
Film rental companies employees 17.92
Stage-dubbing directors
3.88
Administrators
0.75
Other categories *
135.85
TECHNICAL AND ADMINISTRATIVE AREAS
36.4%
137.18
15.8%
267.39
74.28
8.7%
79.18
7.5%
66.75
7.7%
67.12
30.85
3.5%
32.32
4.5%
39.65
4.6%
50.46
1.4%
10.57
1.2%
9.10
2.3%
10.80
1.2%
15.45
0.5%
5.46
0.6%
5.20
0.0%
2.10
0.2%
2.45
17.6%
0.02
0.0%
0.05
15.6%
12.6%
3.4%
5.4%
0.5%
0.2%
148.71
105.33
30.17
49.60
4.22
1.81
16.7%
11.8%
3.4%
5.6%
0.5%
0.2%
0.1%
0.1%
0.99
0.55
0.1%
0.1%
31.4%
9.3%
7.9%
3.9%
5.9%
1.1%
1.7%
0.6%
0.3%
0.0%
297.19
80.20
66.88
33.84
46.03
9.19
4.86
5.10
2.88
0.85
33.1%
8.9%
7.5%
3.8%
5.1%
1.1%
0.7%
0.8%
0.5%
0.1%
* In 2008 ENPALS classification of the professional groups changed; that is why under the heading “Other categories” related to 2007 there are different
typologies that, starting in 2008, have been placed in the above indicated classifications.
** ENPALS provides two groups for “Operators and personnel” («those people who perform artistic and technical activities that are directly connected with
the production and the realization of the shows») who are temporary workers: the A group includes those who have accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
*** This category is officially denominated: “Cinematographic production, audiovisual and entertainment group.
Data provided by the reports Professional sport and entertainment workers and companies: main occupational and wage data. Years 2007, 2008 and
2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies: main occupational and
wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
administrative ones. Right in these sectors, the overbooking in the operators’ lists is likely
to freeze the chances to emerge, mostly for the young, and to improve a CV by gaining work
experience, as well as the opportunity to collect those professional “credits” which are at
the basis of the salary “quotation” in the market. With the risk of creating one of the most
famous quotes about young artists: «He cannot move, he cannot sing, he cannot dance: he
is multi-skilled »11.
11
The joke is spoken by Donald O’Connor, playing the role of Cosmo Brown, about Jean Hagen
(interpreter of the young colleague Lina Lamont) in the film Singin’ in the Rain (1952) directed by Gene
Kelly and Stanley Donen, which became one of the top Hollywood classic movies.
| 225
TABLE 21
INCIDENCE OF THE PROFESSIONAL GROUPS ON THE OPERATORS
Operators of the film sector ANNUAL EVOLUTION OF THE NUMBER OF OPERATORS PER PROFESSIONAL CATEGORY
according to professional groups 2007
Share
2008
Share
2009
Share
2010
Share
CREATIVE ARTISTIC AND STAGE ACTIVITIES
Actors and bit-part actors 41,561
54.4%
37,680
54.7%
45,137
Directors and scriptwriters 3,102
4.1%
3,118
4.5%
3,230
Stage and costume designers 1,116
1.5%
1,576
2.3%
1,623
286
0.4%
327
Coreographers. dancers and models 304
0.0%
442
0.6%
471
8
0.0%
192
0.3%
213
Concert performers
113
0.0%
177
0.3%
199
5
0.0%
38
0.0%
56
Employees
14,392
Operators and personnel (A)** 4,618
Organizers-supervisors*** 3,447
Operators and personnel (B)** 1,641
3,931
Make-up artists and hair stylists 740
Film rental companies’ employes 635
158
Administrators
33
Other categories *
628
18.8%
7,690
11.2%
10,967
6.0%
7,076
8.7%
7,219
4.5%
3,743
5.4%
3,743
2.2%
3,019
4.4%
3,128
5.1%
2,463
3.6%
2,665
1.0%
678
0.9%
740
0.8%
451
0.7%
513
0.2%
228
0.3%
236
0.0%
82
0.1%
83
0.8%
3
0.0%
100
55.8%
4.0%
2.0%
0.4%
0.5%
0.2%
47,236
3,336
1,778
366
551
413
55.7%
3.9%
2.1%
0.4%
0.6%
0.5%
0.1%
0.0%
276
56
0.3%
0.0%
13.6%
8.9%
4.6%
3.9%
3.3%
0.9%
0.6%
0.2%
0.1%
0.1%
11,608
7,633
3,897
3,251
2,845
763
448
231
91
61
13.7%
8.9%
4.6%
3.8%
3.6%
0.9%
0.5%
0.3%
0.1%
0.0%
* In 2008 ENPALS classification of the professional groups changed; that is why under the heading “Other categories” related to 2007 there
are different typologies that, starting in 2008, have been placed in the above indicated classifications.
** ENPALS provides two groups for “Operators and personnel” («those people who perform artistic and technical activities that are directly connected with the production and the realization of the shows») who are temporary workers: the A group includes those who have accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
2007, 2008 and 2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
There are no unemployment benefits. Moreover, it should be noticed that there is not a
specific employment list for unemployed artists, and they have to refer to the general lists
managed by the regional employment offices. Despite a long “struggle” led by trade unions
and professional representatives, they are still excluded from the possible unemployment
benefit foreseen for all the other categories12.
INCOME RANGES
The economic – and professional representatives – influence exerted by the top ranges of
operators and artists on the rest of the large amount of operators can be also seen in the
balance sheet. According to the reports of the Internal Revenue Service as regards the liberal
professions and the different categories of self-employed persons, the community of actors
and directors is among the greatest contributors to the tax system (Table 23). But it cannot
226 |
TABLE 22
AVERAGE PAY OF EACH PROFESSIONAL FIGURE
Operators categories
Of the cinematographic sector
AVERAGE ANNUAL INCOME IN EUROS PER PROFESSIONAL GROUPS
2007
2008
2009
2010
1,997.4
4,414.5
2,942.3
Directors and scriptwriters
39,556.8
51,093.9
32,876.6
Set and costume designers
20,961.9
22,071.8
17,978.2
271,033.8142,506.2135,546.0
Coreographers. dancers and models
6,014.7
11,332.8
8,716.2
4,860.7
6,770.4
7,925.3
Concert performers and orchestral players
5,778.4
4,331.7
3,335.6
11,857.6
13,374.9
11,339.8
3,148.2
31,576.2
16,969.0
7,663.2
4,390.4
3,618.9
9,862.7
Employees
20,415.5
17,838.7
Operators and personnel (A)**
10,498.5
Organizers-supervisors***
16,742.8
17,835.2
Operators and personnel (B)**
10,221.1
18,422.5
16,099.1
15,113.3
15,601.9
Film rental companies’ employees
29,194.6
23,948.3
24,573.5
23,947.7
Administrators
22,880.1
25,655.6
Self-employed operators/musical activities
6,080.4
Entertainment employees*
Workers of the stuctures
Other categories ****
12,933.0
-
24,997.3
10,969.4
16,966.8
10,334.6
18,935.2
12,303.0
30,126.8
22,058.0
29,526.8
1,728.2
-
25,602.1
10,507.7
17,163.2
10,410.4
16,181.6
12,051.5
33,178.5
22,180.3
31,743.1
1,310.0
11,251.0
21,154.5
-
GENERAL AVERAGE/CINEMA
10,111.2
10,582.9
10,485.0
11,480.9
* In this group, ENPALS classification refers to the «employees of companies of travelling shows, racetracks, racing stables, greyhound tracks,
gambling houses, game rooms, betting points and bet operators».
** ENPALS provides two groups for “Operators and personnel” («those people who perform artistic and technical activities that are directly connected with the production and the realization of the shows») who are temporary workers: the A group includes those who have accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
**** In 2008 ENPALS classification of the professional groups changed; that is why under the heading “Other categories” related to 2007
there are different typologies that, starting in 2008, have been placed in the above indicated classifications.
and 2009, by the Statistical-Actuarial Committee of ENPALS and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome).
12
On the circular no. 105 (5th August 2011), INPS-National Institute of Social Security confirmed the
inaccuracy of the payment of unemployment benefits to the artists, considering their activity similar to
the one defined in the judgment of the Supreme Court, no. 12355 of 20th May 2010, that provides the
exclusion of those who operate “in the full autonomy of their works, as expression of the subject, and work
without the contribution of the entrepreneur…”. This issue originates in the evaluation of the artist’s activity
from the administrative and legal point of view, as well as in the fact that, in order to define this ratio, the
only point of reference is the Royal Decree no. 1827 of 1935 (art. 40, paragraph 1, point 5). Despite it is in
contrast with the current situation of the production and artists’ work status in the entertainment, this
regulations do not set up the case considered by INPS in order not to pay the unemployment benefits.
| 227
be said that the tax values represent a golden world, similar to the image that took root thanks
to a strong representation of the star system and Hollywood stars behavior13.
These are the overall averages and are, therefore, important just for a general comparison.
A more analytical representation of the incomes of both cinematographic and theatrical actors
and directors comes from the historic series of the surveys carried out by the Department of
Finance of MEF – Ministry of Economy and Finance, and it can be noticed in the database of
the sector studies in a five-year period, from 2005 to 2009 (data related to 2010 are not
available yet). This category, previously defined as “creation and interpreting in the direction
and entertainment” (code: SK28U), after the reform of the Ateco statistical classification, has
been defined as “activity in the sector of acting and direction” since 2008, with the new code
TK28U14. This is one of the 206 activities that are under the tax system of the sector studies,
and it therefore falls within a really large contribution basin, constituted by more than 3.5
billion tax positions that are mainly individual (nearly 64%), namely, natural persons. Even
though the sector studies are applicable to self-employed jobs and liberal professions, there
are also some companies: 20% partnerships and 16% corporations or institutions (that is,
having other legal forms). However, among actors and directors, companies seem less
common: they are only 347, equal to 7.71%, out of a total of a little more than 4.5 thousand
persons. Actually, the fiscal identities were more than 5,300 until 2007, but in 2008 the new
facilitated tax system – only for operators of companies, arts or professions” that have
salaries or revenue that are lower than 30 thousand Euros – was introduced, and in a two-year
period more than 800 actors or directors got out of the sector studies’ area, choosing to
adhere to the substitute tax for the facilitated tax system instead of Irpef, with the exemption
from VAT obligations and from Irap. This is an exodus that demonstrates the low income levels
of a large number of artists (Table 24).
Actual earnings according to the Internal Revenue Service. However, those who operate as
natural persons, even though declaring an annual average income or wages that are sharply
lower than the company average, declare (this is a common factor to all the categories that
13
An ironic and provoking definition of the American jet-set by the great director, scriptwriter and
producer Billy Wilder (1906-2002) can be considered a well-chosen synthesis of this representation:
«Just as the whole world hates America, the whole America hates Hollywood. It is the essence of
superficiality, with people that earn ten thousand dollar a week and do not pay taxes, bang beautiful
girls, own inside or outside swimming pools, private teachers who teach their children how to climb a
tree and sixteen servants, and drive a Maserati….Yeah, it’s all true! ».
14
However, the structure of the tax system of the sector studies that all the professionals who work
autonomously are subject to, allows the production of deeper and more detailed statistic analysis
through its automatic verification processes (the Internal Revenue Service sets revenue standards and
relative taxable income to evaluate the contributors’ tax returns). These analysis are based on the use
of a benchmark for each category as regards the annual global income obtained by persons or
companies, and the taxable income they have actually declared.
228 |
TABLE 23
GREAT CONTRIBUTORS FOR THE INTERNAL REVENUE IN THE CINEMA
CONTRIBUTORS BELOW 15,000 EUROS
CONTRIBUTORS/ MORE THAN 15,000 EUROS
CONTRIBUTORS/MORE THAN 43,000 EUROS
Activity
2010 Income Activity
2010 Income Activity
2010 Income
Car rental
Fitness centres
Discos-ballrooms
Clothing trade
Shoes trade
Travel agencies
Hotelkeepers
Car dealers
Goldsmiths
Seaside resorts
-6,100
-5,300
-4,700
7,700
7,700
11,300
11,900
12,000
12,300
13,600
Furnishers
Barmen
Movers
Groceries
Restaurateurs
Pastry chefs
Vets
Electricians
Financial consultants
Industrial technicians
15,600
15,800
16,500
17,100
17,700
19,000
19,200
19,500
38,000
41,500
Engineering offices
Clinical analysis
Engineers
Odontologists
Funeral Services
Actors and directors
Labour consultant
Medical offices
Farmacie
Notary’s offices
44,600
46,500
47,100
7,600
48,700
58,200
60,300
68,300
109,700
310,800
Source: Sector studies database of the Department of Finance of the Ministry of Economy and Finance (Rome, 2012).
TABLE 24
INCOME TAX RETURN OF ACTORS AND DIRECTORS
VALUES EXPRESSED IN THOUSANDS OF EUROS
2005
2006
2007
2008
2009
Number of contributors
Average revenue or wages **
Average declared income*
4,627
85.5
50.7
TOTAL CONTRIBUTORS
4,967
86.0
53.2
5,331
85.2
52.9
4,688
94.6
58.3
4,502
93.3
58.2
Average revenue or wages**
4,284
68.6
53.8
NATURAL PERSONS
4,610
69.9
55.3
4,963
70.0
55.0
4,335
78.2
61.3
4,155
77.4
61.3
CORPORATIONS AND INSTITUTIONS
266
275
281
342.5
339.2
338.5
5.2
21.8
22.4
262
350.3330.3
16.2
268
20.7
77
135.2
34.2
91
141.0
37.0
79
127.6
25.3
PARTNERSHIPS
82
144.0
37.3
87
137.0
32.3
* This is an average company or self-employment income.
** These are average declared revenue or wages.
Source: Sector studies’ database of the Department of Finance of the Ministry of Economy and Finance (Rome, 2012).
fall within the sector studies) an average taxable income that is three times higher: 61.3
thousand Euros in 2009 compared to 20.7 thousand Euros of the 268 corporations or
institutions and 25.3 thousand Euros of the 79 partnerships. This imbalance remains nearly
unchanged over the years, independently of any wage variations, as in 2009 when, according
to the surveys of the same Internal Revenue Service, the first consequences of a clearly
troubled economic situation became evident.
The large gap between the income – the so-called taxable income – and the earned and
| 229
TABLE 25
THE GAP BETWEEN COMPANIES’ REVENUES AND INCOME
VALUES
NUMBER
Thousands Considered
of Euros
subjects
2005
2006
2007
2008
2009
77
82
87
91
79
2005
2006
2007
2008
2009
266
275
281
262
268
RICAVI COMPENSI O REDDITI CONGRUI
Average declared
Company income or
revenues or wages self-employment income
145.8
184.4
143.3
142.1
133.0
RICAVI COMPENSI O REDDITI NON CONGRUI
Average declared
Company income or
revenues or wages self-employment income
PARTNERSHIPS
37.0
46.4
38.6
40.9
29.8
CORPORATIONS AND INSTITUTIONS
307.3
7.8
488.5
54.5
305.6
37.2
292.6
32.1
238.1
31.3
30.0
48.2
115.8
135.7
110.7
6.3
15.2
11.3
18.9
11.4
437.3
247.5
378.4
418.6
456.8
-2.0
12.6
4.3
-2.9
6.2
declared income (the really taxable income), from companies, is also confirmed by the
comparison given by the statistics of the Department of Finance itself among those tax
returns that meet the parameters of the category sector studies (for “adequacy” or
“adaptation” of contributors themselves, adhering to the directions of the Internal Revenue
Service) and those which do not fall within the “economic normality”, according to the
appropriate definition (Table 25).
As regards corporations, income considered “adequate”, for instance, represent on average
13.14% of revenue compared to 1.35% of revenue considered inadequate, while as regards
partnerships, the respective values correspond to 22.40% and 10.29%.
As for natural persons, instead, the imbalance is more limited: earnings correspond to 67.93%
of revenue in the tax returns that fall within the “economic normality”, compared to 56.19%
of revenue that is considered inadequate for the contributors range with annual income lower
than 30 thousand Euros, and 81.41% and 58.35%, respectively, for those with an income higher
than 30 thousand Euros (Table 26).
Anyway, another general result that is obtained by cross-cheking data from the Department
of Finance with data from ENPALS is quite eloquent. The group of 4.155 contributors recorded
as natural persons by the sector studies in 2009 – corresponding to 8.59% of the 48,367 actors
and directors registered at ENPALS in the same year – is made up of two income ranges
whose discriminant factor is the sum of 30 thousand Euros, that coincides with the sum
(30,842.23 Euros) considered as the average of that ninth decile of ENPALS’ wage bill that
contemplates 90% of the subjects (Table 16).
Therefore, in the most part the number of contributors the sectors studies are applied to is
not part of the large group of ENPALS’ artists (made up of the first eight deciles) with a lower
income, as it seems to centre around the ninth decile of ENPALS. The 1,850 natural persons
230 |
TABLE 26
SONO PIÙ VIRTUOSE LE DENUNCE DELLE PERSONE FISICHE
VALUES
NUMBER
Thousands Considered
of Euros
subjects
RICAVI COMPENSI O REDDITI CONGRUI RICAVI COMPENSI O REDDITI NON CONGRUI
Average declared
Company income or
Average declared
Company income or
revenues or wages self-employment income revenues or wages self-employment income
NATURAL PERSONS UP TO 30,000 EUROS INCOME OR WAGES
14.2
10.3
11.0
13.9
10.4
10.6
13.4
9.9
11.8
13.7
9.5
12.3
13.1
8.9
12.1
2005
2006
2007
2008
2009
2,162
2,278
2,489
1,893
1,850
2005
2006
2007
2008
2009
NATURAL PERSONS WITH MORE THAN 30.000 EUROS INCOME OR WAGES
2,122
124.4
100.5
125.0
2,332
125.7
103.0
116.7
2,474
131.5
106.7
92.6
2,442
131.3
105.8
94.1
2,305
132.9
108.2
85.0
2005
2006
2007
2008
2009
4.4
4.8
6.0
6.7
6.8
72.3
63.3
55.9
54.8
49.6
AGGREGATE DATA OF COMPANIES AND NATURAL PERSONS WITH MORE THAN 30.000 EUROS INCOME
2,466
140.8
90.6
227.5
44.9
2,689
143.6
99.4
172.5
31.6
2,842
142.8
100.4
181.4
38.1
2,795
140.9
99.6
216.2
32.0
2,652
139.9
101.0
220.4
31.5
who declare up to 30 thousand Euros converge into it from below (44.5% of the total, with an
average of 13.1 thousand Euros), and the 2,305 natural persons with more than 30 thousand
Euros (55.5%, with an income average of 132.9 thousand Euros) converge into it from the top.
THE PROFESSIONAL TURNOVER
When we talk about professional overbooking we have to refer mainly to the professional
groups of the artistic, creative and stage areas, which contribute to the overall composition
of cinema labour market for more than 65%.
But also the technical areas, more than the administrative ones, gave a respectable
contribution to the growth of the operators’ group (Table 27). Numerically, the entrance flows
mainly involved the actors’ groups (7,234 more from 2007 to 2010), production technicians
(+946), set and costume designers (+662), operators and personnel of Group A (+557),
organizers, supervisors and secretaries (+450), opera artists and singers (+405),
choreographers and dancers (+327) and directors and scriptwriters (+234). In percentage
terms, the deepest dynamics were recorded for choreographers and dancers (+145.98%),
stage and dubbing directors (+46.20%), actors (+17.78%), operators and personnel of Group
A (+7.87%) and directors (+7.54%), not considering, obviously, the particular cases of
orchestra directors and maestros and administrators, where the fluctuation on relatively
small quantities sometimes give exceptional results.
| 231
TABLE 27
TURNOVER NELLE CATEGORIE PROFESSIONALI DEL CINEMA
Groups and professional
qualifications of
the film sector
NUMBER OF OPERATORS
OF THE ARTISTIC PROFESSIONS
2007
2008
2009
2010
PERCENTAGE VARIATIONS OF INCOME AND
EXPENDITURE COMPARED TO THE PREVIOUS YEAR
2008
2009
2010
Bit-part actors
40,102
37,680 45,137 47,236
-6.03%
3,102
3,118
3,230
3,336
+0.51%
1,116
1,576
1,623
1,778
+41.21%
286
327
366
Coreographers. dancers and models 224
442
471
551
+97.32%
Concert performers
113
177
199
276
+56.63%
8
192
213
413
+2,300.00%
Orchestra maestros
5
38
56
56
+660.00%
TECHNICAL AND E ADMINISTRATIVE AREAS
Employees
13,778
7,690 10,967 11,608
-44.18%
7,076
7,219
7,633
Organizers & supervisors*** 3,447
3,743
3,743
3,897
+8.58%
3,019
3,128
3,251
1,899
2,463
2,665
2,845
+29.69%
Make-up artists and hair stylists 740
678
740
763
-8.37%
Film rental companies’ employees 674
451
513
448
-33.08%
158
228
236
231
+44.30%
Administrators
33
82
83
91
+148.48%
Employees of the structures**
0
0
38
0.00%
Workers of the structures
0
0
20
0.00%
Music activities operators
3
100
3
Other categories ****
7,367
8,401
0
0
+14.03%
TOTAL/CINEMA
72,608 77,343 80,863 84,840
- 5.05%
+19.79%
+3.59%
+2.98%
+14.33%
+6.56%
+4.65%
+3.28%
+9.55%
+11.92%
+16.98%
+12.42%
+10.93%
+47.36%
+38.69%
+93.89%
0.00%
+42.61%
+2.02%
0.00%
+3.61%
+8.20%
+9.14%
+13.74%
+3.50%
+1.21%
0.00%
0.00%
+3,233.33%
+4.55%
+5.84%
+5.73%
+4.11%
+3.93%
+6.75%
+3.10%
-14.61%
-2.11%
+9.63%
-97.00%
+4.91%
* ENPALS provides two groups “Operators and personnel” («those people who perform artistic and technical activities that are directly connected with the
production and the realization of the shows») who are temporary workers: the A group includes those who have accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
** ** In this group, ENPALS classification refers to the «employees of companies of travelling shows, racetracks, racing stables, greyhound tracks, gambling
houses, game rooms, betting points and bet operators».
***This category is officially denominated: “Cinematographic production, audiovisual and entertainment group”.
**** In 2008 ENPALS classification of the professional groups changed; that is why under the heading “Other categories” related to 2007 there are different typologies that, starting in 2008, have been placed in the above indicated classifications.
Data provided by the reports Statistics on the employment and wages of entertainment workers and sport people: main occupational and wage data.
Years 2008 and 2009, by the Statistical-Actuarial Committee of ENPALS (Rome, 2010) and Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
How many people reach the world of TV. Again, it seems quite symptomatic that the inflow
turnover – besides being mainly synchronous and with similar numbers – nearly coincide also
with the typology of the professional groups involved in the outflow from the TV system: actors,
directors and scriptwriters; choreographers and dancers; stage and dubbing director; operators
and personnel of Group A. Many “employees” in this sector do not imply that they do not perform
any other activities in other sectors of entertainment. On the contrary, the fact that actors,
directors and other operators of the creative, artistic and performing areas leave the set for a
certain period for different professional experiences – the TV movies sector is a privileged sector
232 |
– is much more frequent than it is, conversely, for their colleagues of TV and radio, theatre and
music. During the last two theatrical seasons, for instance, many successful actors (among
others, Elio Germano, Massimo Ghini, Vittoria Puccini, Alessandro Gassman, Alessandro Preziosi,
Alessio Boni, Riccardo Scamarcio, Daniele Pecci and Michele Riondino) decided to tread the
boards, thus leading to the rediscovery of a deeper artistic vocation15.
YOUTH EMPLOYMENT AND EQUAL OPPORTUNITIES
Anyway, if the persistence of more active subjects can foster the competitive dynamics and, as a
consequence, a certain qualitative selection, it also produce – as described – understandable
phenomena of compression of employment and wage levels, starting from the work units of the
youth ranges.
Two thousand Euros per year. When the distribution of the periods of employment and the wages
is related to the age, it is clear how difficult for the movie people is to build up a career: 60% of all
operators is less than 38 years old, but they work less than 20 days per year and, during the twelveyear period, they manage to get a 2,097.17 Euros salary at the most. Only at the limit of the higher
decile (namely, the decile joined by all the other people that contribute to form the total 70% ) the
conditions assume a less penalizing aspect (Table 24). The number of annual worked days can rise
up to 74, thus even leading to a 7,453.70 Euros salary. However, it is a group of employees – as said
before, equal to 70% - that already corresponds to an average age of 43 years; this means that the
salary improvements are only achieved by an over forty group of operators (Table 28).Obviously,
the deciles per period of employment and maximum annual wages do not exactly include the
same persons, and it is the same for the distribution in terms of age (that is why there can be
twenty-year-old employees for more than 100 days and fifty-year-old employees with annual
wages of less than 7 thousand Euros). However, it seems that the high consistency of the first
seven deciles of the three different features indicates that those who belong to the 70% operators
coincide and are, for the most part, the same subjects.
Women get the 30% less. In this picture there is also the distribution by genre of human resources.
In the surveys carried out by ENPALS, a subdivision by sector of workforces between men and
women is not available, therefore, we have to refer to the general division related to the whole
macro sector of entertainment. By extrapolating the professional groups in which the active
15
The explanation given by Alessandro Preziosi can be interpreted as follows: «This is not a makeshift
solution, but a continuous ambition. For me, it is a choice: only in this way I could have the opportunity
to work with great directors that I haven’t found anywhere else» (Emilia Costantini, The Il teatro dei
belli e famosi, in «Sette», the weekly magazine of «Corriere della Sera», February 2012). In this
connection, we can also mention a declaration, that has now become axiomatic, of the French actor
Pierre Arditi: «Being a movie actor is like making love by mail. Being a theatre actor is like making
love on your own bed ».
| 233
TABLE 28
MOVIE PEOPLE ARE YOUNG
Age deciles in the entertainment
Up to 10% of employees
Up to 20%
Up to 30%
Up to 40%
First 50% of the units
Up to 60%
Up to 70%
Up to 80%
Up to 90% of the operators
Last 10% **
CINEMA
MUSIC
THEATRE
TV-RADIO
T.V.S.P.*
MACRO
SECTOR
20
24
27
30
34
38
43
48
56
-
23
27
27
34
38
41
45
48
54
-
23
26
29
32
36
38
43
47
54
-
28
32
35
38
41
44
47
50
55
-
21
23
25
27
30
33
36
40
47
-
21
25
28
31
34
38
42
47
53
-
** The last decile cannot be given a maximum age limit: however, some ninety-year-old contributors are also included, while active tundreyear-old contributors are not known.
Source: Professional sport and entertainment workers and companies: main occupational and wage data. Year 2010, by the Statistical-Actuarial Consultancy of ENPALS (Rome, 2011).
TABLE 29
IF ENTERTAINMENT DOES NOT OBSERVE THE EQUAL OPPORTUNITIES
Eleven professional groups
CONTRIBUTORS REGISTERED ACCORDING
mainly represented by operators
TO THE PROFESSIONAL CATEGORIES
of the movie sector
Men
Share Women
Share
AVERAGE DAILY WAGE
EXPRESSED IN EUROS
Men
Women
37,123 55.3% 30,037 44.3%
216.14
3,759 62.2%
2,465 37.8%
266.18
1,033 32.3%
2,163 67.7%
156.65
Employees
17,896 53.6% 15,508 46.4%
120.08
Operators and personnel (A)** 10,416 79.3%
2,716 20.7%
111.76
Organizers-supervisors***
2,973 50.3%
2,932 49.7%
150.10
Operators and personnel (B)** 4,931 57.2%
3,693 42.8%
59.71
8,751 86.6%
1,354 13.4%
103.58
Make-up artists and hair stylists 377 25.8%
1,083 74.2%
165.63
Film rental companies employees 188 39.6%
287 60.4%
130.79
309 60.5%
202 39.5%
165.24
ENTERTAINMENT MACRO SECTOR 172,480
57.6% 127,031
42.4%
117.62
WAGE
DIFFERENTIAL*
Incidence
166.33
154.64
138.57
25.50%
52.52%
12.50%
93.82
72.19
105.36
44.36
103.17
124.06
112.23
167.71
87.98
24.24%
37.93%
35.40%
27.99%
0.39%
30.83%
15.50%
1.18%
28.15%
* The incidence of the wage differential between two genres is calculated as a percentage of the average wage of the different professional groups
that is, in its turn, obtained from the total wages of men and women. Example: the absolute average daily wage, that is, for the whole macro
sector of entertainment, amounts to 105.27 Euros, while the difference between men’s wages (117.62 Euros) and women’s wages (87.98
Euros) is equal to 29.64 Euros and this value corresponds to a differential of 28.15% (against women as in all the professional qualifications with the exception of the category of the stage and dubbing directors).
** ENPALS provides two groups “Operators and personnel” («those people who perform artistic and technical activities that are directly connected with the production and the realization of the shows») who are temporary workers: the A group includes those who have accumulated 120-259 annual contributory days; the B group includes, instead, those who have accumulated 260-311 days.
234 |
TABLE 30
UP TO 24 YEARS, WOMEN IN THE ENTERTAINMENT ARE MORE THAN MEN
Active contributors’
age ranges in 2010
MEN
WOMEN
Number
Share*
TOTAL/ENTERTAINMENT
Number
Share*
Number
Share*
UP TO 20 YEARS
7,079
Less than 14 years
2,568
From 15 to 19 years
4,511
TWENTY-YEAR OLDS
46,581
From 20 to 24
21,916
From 25 to 29
24,665
THIRTY-YEAR OLDS
49,123
From 30 to 34
24,748
From 35 to 39
24,375
FORTY-YEAR OLDS
39,624
From 40 to 44
20,982
From 45 to 49
18,642
FIFTY-YEAR OLDS
21,607
From 50 to 54
13,116
From 55 to 59
8,491
SIXTY-YEAR OLDS
7,358
From 60 to 64
5,264
From 65 to 69
2,094
SEVENTY-YEAR OLDS AND UPWARD 2,018
From 70 to 74
1,265
75 years and upward
753
2.36%
0.86%
1.50%
15.55%
7.32%
8.23%
16.40%
8.26%
8.14%
13.23%
7.00%
6.23%
7.21%
4.38%
2.83%
2.45%
1.75%
0.70%
0.67%
0.42%
0.25%
7,525
2,566
4,959
46,464
22,740
23,774
36,126
19,598
16,528
23,198
13,156
10,042
9,869
6,249
3,620
2,928
1,991
937
871
503
368
2.51%
0.85%
1.66%
15.51%
7.58%
7.93%
12.06%
6.54%
5.52%
7.74%
4.39%
3.35%
3.29%
2,08%
1.21%
0.98%
0.67%
0.31%
0.29%
0.17%
0.12%
14,594
5,124
9,470
93,045
44,656
48,439
85,249
44,346
40,903
62,822
34,138
28,684
31,476
19,365
12,111
10,286
7,255
3,031
2,889
1,768
1,121
4.87%
1.71%
3.16%
31.06%
14.90%
16.16%
28.46%
14.80%
13.66%
20.97%
11.39%
9.58%
10.50%
6.46%
4.04%
3.43%
2.42%
1.01%
0.96%
0.59%
0.37%
TOTAL/ALL AGES
57.59%
127,031
42.41%
299,511
100.00%
172,480
* The share corresponds to the percentage incidence that every single age range has on the total number of active contributors (both men and
women) of the entertainment macro sector.
contributors of the movie sector represent the majority, it is possible to notice the difference in
wages between men and women, with a differential in the average daily pay – reflected by the
employment rates and at the origin of the respective annual income – that nearly touches the
30% against women (Table 29).
Actually, female subjects are only the 15% less than male ones. The disparities are also shown by
the analysis of the respective age ranges of the genres. Up to 24 years – namely, when the
overbooking phenomena are more common in the availability of operators and jobs are more
parceled out – the number of women is higher: 30,265 (10.09%) against 28,995 (9.68%) of men. On
the other hand, as age increases, also the presence of active male subjects rises: more than 4%
among thirty-year olds and about 6% among forty-year olds (Table 30). However, the most
important thing is that, over 50 years, female subjects have less than half of the opportunities
given to men, and when over 60 years old, even less than about one-third. It is only after 75 years
that we go back to a 1:2 ratio: and this is also due to the fact that women’s vitality (along with the
innate activity) remains, even in the entertainment sector, decidedly higher than men’s vitality.
| 235
Focus on cinema digitalization
in Italy and Europe
by Media Salles
Elisabetta Brunella
Coordination: Francesca Mesiano - with the collaboration of Marta Lecca
Data collection: Silvia Mancini - Statistical analyses: Paola Bensi
«TODAY THERE ARE ENORMOUS OPPORTUNITIES FOR CREATION. MY DREAM
IS THAT IN THIS CENTURY COMMUNICATION TOOLS WILL INCREASINGLY BE
IN THE HANDS OF THE PEOPLE RATHER THAN IN THOSE OF THE OLD POWERS»
Wim Wenders, intervista di Hans Ulrich Obrist, Biennale Architettura 2010)
2011: the turning point
in the digitization process
T
he surveys carried out by Media Salles on the trend of digitization in Europe
(35 countries, from Iceland to Russia1) showed that, in 2011, European
cinemas crossed the watershed. Statistics, as at 1st January 2012, in fact,
showed that 18,527 European screens were already equipped with digital
projectors2, with a 79.3% increase compared to the previous year. As there
are about 35,900 active screens in the countries analyzed by Media Salles, this means
that about 52% of the screens has now adopted the new projection technologies.
Exceeding the 50% threshold of digitized screens is particularly important for its
broader implications, both economic and managerial, but also psychological. As we go
on towards the complete digitization of screens, the moment in which distribution
companies will make their products available exclusively in the digital format gets
closer. When this happens, movie theatres that have not completed the conversion will
face enormous difficulties in finding the products, with the consequent risk of closure.
If we consider that, on 1st January 2011, the digital screens installed in Europe were
10,335, we note that 2011 was a decisive year for the digitization process. A more indepth analysis of the different European markets, starting from the top six ones –
among which there is Italy too – allows us to grasp the similarities and the differences
which mark the adoption of the new technology, which is taking place according to the
respective modalities and pace of each country. This confirms what was formerly
1
Media Salles considered the following countries: Andorra, Austria, Belgium, Bulgaria, Croatia,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, The Netherlands, Norway, Poland, Portugal,
Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, The United
Kingdom.
2
Digital screens are those equipped with DLP CinemaTM or SXRDTM technology projectors.
TABLE 1
DIGITAL SCREENS IN EUROPE BY COUNTRY (AS AT 1ST JANUARY OF EACH YEAR)
Country
2005
2006
2007
2008
2009
2010
2011
2012
Country
2005
Andorra
Austria
1
Belgium
14
Bulgaria
Croatia
Cyprus
Czech Republic
1
Denmark
4
Estonia
Finland
France
6
Germany
2
Greece
Hungary
1
Iceland
Ireland
Italy
4
Latvia
Lithuania
Luxemburg
3
Malta
The Netherlands
3
Norway
2
Poland
Portugal
1
Romania
Russian Federation 1
Serbia
Slovakia
Slovenia
Spain
1
Sweden
1
Switzerland
Turkey
United Kingdom
10
Total Europe
55
2006
16
20
1
5
21
31
1
1
25
3
18
3
1
1
7
6
12
33
205
2007
18
35
4
1
5
1
34
96
1
3
23
31
13
30
23
5
3
2
21
5
14
159
527
2008
35
76
4
1
6
1
66
151
2
2
3
36
38
13
34
35
8
14
31
2
33
5
16
1
284
897
2009
84
98
17
7
2
10
2
12
253
162
8
7
7
38
80
2
21
2
56
48
53
44
14
90
9
50
8
28
20
303
1,535
2010
239
144
23
8
6
50
25
5
48
904
566
31
31
7
112
434
3
5
22
2
105
61
177
181
40
351
6
10
9
252
38
60
62
667
4,684
2011
2
306
331
57
9
15
133
137
13
86
1,885
1,238
59
56
14
142
912
11
13
24
6
252
268
324
317
61
941
7
36
16
770
153
139
205
1,397
10,335
2012
3
393
434
77
90
18
299
286
18
180
3,656
2,303*
75
159
29
192
1,485
15
18
33
6
540
425
592
387
111
1,473
13
76
18
1,545
273
315
266
2,724
18,527
* This figure includes digital projectors with a resolution lower than 2K.
Source: Media Salles
observed for film supply and cinema-going in the different European countries. In order
of importance, as for the number of digital screens installed up to 1st January 2012, the
top five European markets, besides Italy, which has 1,485 digital screens (equal to 8.0%
of the European total), are: France (which, with 3,656 screens, represents 19.7% of the
Continent’s digital equipment), United Kingdom (2,724 – 14.7%), Germany (2,303 –
12.4%), Spain (1,545 – 8.3%) and Russia (1,473 – 8.0%). Along with Italy, they represent
| 239
TABLE 2
FOCUS ON THE TOP 6 EUROPEAN MARKETS BY NUMBER OF DIGITAL SCREENS
Digital screens in the top 6 European markets (as at 1st January of each year)
Paese
2003*
2004
2005
2006
2007
2008
2009
2010
2011
2012
Country
2003*
2004
2005
2006
2007
2008
2009
2010
2011
2012
Germany
2
2
2
31
96
151
162
566
1,238
2,303
Spain
2
2
1
7
21
33
50
252
770
1,545
France
3
3
6
21
34
66
253
904
1,885
3,656
Italy
1
1
4
25
31
38
80
434
912
1,485
Russia
1
1
1
3
31
90
351
941
1,473
United Kingdom
3
7
10
33
159
284
303
667
1,397
2,724
Total 6 territories
11
16
24
118
344
603
938
3,174
7,143 13,186
Total Europe
16
30
55
205
527
897
1,535
4,684 10,335 18,527
% of the 6 territories 68.75% 53.33% 43.64% 57.56% 65.28% 67.22% 61.11% 67.76% 69.11% 71.17%
out of the total of Europe
* February 2003
GRAPHIC 1
DIGITAL SCREENS IN THE TOP 6 EUROPEAN MARKETS COMPARED TO THE EUROPEAN TOTAL
(AS AT 1ST JANUARY OF EACH YEAR)
100% –
90% –
60% –
40% –
0.5%
3.3%
3.3%
6.7%
18.2%
16.8%
12.2%
3.4%
1.8%
7.3%
1.8%
3.6%
6.7%
30% –
20% –
3.5%
4.2%
3.7%
23.3%
2004
16.1%
10.9%
10.2%
France
8.8%
5.4%
7.5%
12.1%
12.0%
19.7%
14.2%
13.5%
14.7%
16.5%
19.3%
18.2%
19.7%
10.6%
30.2%
31.7%
6.5%
7.4%
2006
United Kingdom
2007
Germany
–
–
–
–
2005
9.3%
8.0%
8.0%
15.1%
18.2%
–
–
0% –
9.1%
5.9%
5.2%
3.3%
10% –
10.0%
7.5%
2008
2009
Spain
Italy
–
50% –
0.5%
5.9%
4.0%
30.9%
2010
Russia
8.3%
12.4%
2011
–
42.4%
56.4%
46.7%
28.8%
32.2%
38.9%
–
70% –
32.8%
34.7%
–
80% –
2012
Other European
Countries
over 71% of European digital installations.
More than the absolute numbers, the ratios between the number of digitized screens
and the total screens per country look interesting. In some areas, the penetration rate
of digital screens on the total number of screens is higher than the European average
recorded at the beginning of 2012, some other areas are at the same level of the
European average, and others are below this threshold. Among the top countries are
240 |
GRAPHIC 2
PERCENTAGE OF THE DIGITAL SCREENS IN INDIVIDUAL COUNTRIES COMPARED TO THE EUROPEAN TOTAL
As at January 1st, 2011
UK
13.5%
F
18.2%
Others
13.5%
NL
2.4%
N
2.6%
A
3.0%
As at January 1st, 2012
D
12.4%
RU
8.0%
Others
13.9%
RU
9.1%
NL
2.9%
N
2.3%
I
E
8.8%
B
3.2% 7.5%
P
3.1%
UK
14.7%
F
19.7%
D
12.0%
A
2.1%
PL
3.1%
I
E 8.0%
B
2.3% 8.3%
P
2.1%
PL
3.2%
GRAPHIC 3
DIGITAL GROWTH IN THE MAIN WESTERN EUROPEAN MARKETS
150% –
CH (57.7%: 315 out off 546)
FIN (64.3%: 180 out off 280)
% increase 2012-2011
N (76.4%: 540 out off 707
DK (72%: 286 out off 397)
100% –
UK (72.6%: 2.724 out off 3.750)
E (38.4%: 1.545 out off 4.024)
F (66.9%: 3.656 out off 5.464)
S (32,9%: 273 out off 829
D (49.6%: 2.303 out off 4.640)
I (32.9%: 1.485 out off 3.600
N (100%: 425 out off 425)
L (100%: 33 out off 33)
50% –
B (85.1%: 434 out off 510)
IRL (43.2%: 192 out off 444)
A (68.1%: 393 out off 577)
100%
150%
–
50%
–
–
–
0% –
0%
–
P (69.4%: 387 out off 558)
200%
Compound average growth rate (2006-2012)
% of digital screens out of total screens as at 01/01/2012
| 241
United Kingdom (72.6%) and France (66.9%), among those in second place, we find Russia
(54.0%) and Germany (49.6%), while Italy (about 39%) and Spain (38.4%) remain below the
European average.The following graphs show the situation.
The European way to digital: the 2009 turning point after
ten difficult years
Conventionally, the birth of digital cinema dates back to 1999, when the movie by George
Lucas, Star Wars: Episode I - The Phantom Menace, was screened in four commercial
movie theatres in the USA, with Texas Instruments and Hughes-Jvc electronic projectors.
Since then, ten years passed before digital technology fully developed in Europe, and this
process started in 2009.
In the early stages of digital cinema, the only available technology was DLP Cinema™ by
Texas Instruments, which granted the license to Barco, Christie and Nec/Digital
Projection for the production of the first digital projectors.
The first alternative to this technology arrived in 2004, when Sony introduced the 4K
projector prototype with SXRD technology.
If digital cinema was born in the USA – the first technology, the first film and the first
digital screens come from the USA – the success achieved in Asia, and China in
particular, during these first stages is worth mentioning. If we consider the first data
gathered by Media Salles on digital cinema worldwide, we notice that, at the beginning
of 2005, out of a total of 291 digitized screens, 138 were in Asia, 86 in North America and
55 in Europe. Also the data relating to 1st January 2006 show that the spread of new
technologies was rather uncertain, mainly in North America (173 screens), which was
TABLE 3
DIGITAL SCREENS WORLDWIDE (AS AT 1ST JANUARY OF EACH YEAR)
Continent
2004
2005
2006
2007
2008
2009
2010
2011
Var %
2009
/2008
Var %
2010
/2009
Var %
2011
/2010
Africa and Middle East
Asia and Pacific
61
Europe
30
Latin America
10
North America
80
Total
181
1
138
55
11
86
291
1
207
204
16
173
601
3
354
527
21
1,957
2,862
3
786
897
26
4,576
6,288
27
75
289 800.0% 177.8% 285%
1,458 3,469 8,237 85.5% 137.9% 137%
1,535 4,684 10,335 71.1% 205.1% 120,6%
48
485 1,670 84.6% 910.4% 244%
5,660 7,934 15,654 23.7% 40.2%
97%
8,728 16,647 36,185 38.8% 90.7% 117%
overtaken not only by the Far East (207) but also by Europe (204).
The lack of technological standards – related to a variety of crucial aspects, such as the
image quality, file security and format – represented, during the first years in the digital
cinema’s history, the main obstacle to its adoption on a large scale.
The first turning point took place at the beginning of 2002, when seven American studios
created the DCI (Digital Cinema Initiatives) joint venture, which aimed to identify the
242 |
GRAPHIC 4
DIGITAL SCREENS WORLDWIDE (AS AT 1ST JANUARY OF EACH YEAR)
North America
18,000 –
14,000 –
12,000 –
Europe
10,000 –
Asia and Pacific
AVATAR
8,000 –
6,000 –
4,000 –
2005
2006
2007
2008
2009
2010
–
–
–
–
–
–
Africa and Middle East
–
–
0–
2004
Latin America
DCI
specifications
–
2,000 –
–
Number of digital screens
16,000 –
2011
specific techniques for the production, distribution and reproduction of digital contents.
These specifications (Digital Cinema System Specifications 1.0) were then published
more than three years later, in 2005: their crucial role in the digitization process is
demonstrated by the speed-up in the installation of digital projectors. Despite the initial
discontent of the film companies operating in Europe where, in mid-2001, an umbrella
organization (EDCF - European Digital Cinema Forum) to protect the interests of
European digital cinema was established, the standardization process was clearly guided
by the U.S. majors, which managed to make DCI specifications a universal model, defined
as “de facto” standard. DCI specifications were then changed into standard by the Society
of Motion Picture & Television Engineers (SMPTE), the American monitoring organization
for the audiovisual industry whose members come from 64 countries, and were then
published as standard SMPTE DCP (Digital Cinema Package) in March 2009.
The need for new economic models: birth of VPF in the
United States
Once the technological standards were developed, new economic models for
digitization were soon needed. This process soon proved to be expensive and
characterized by a lack of balance between the expected economic benefits, basically
benefiting distribution, and the need for substantial investments, (which are) basically
sustained by exhibitors.
| 243
As happened for technology, the individuation of an economic model capable of finding
a way out of the dilemma also took place within American industry.
In the United States, the first installations were funded by technology producers like
Boeing Digital Cinema, with a model that entailed payment of part of the GBO coming
from digital projections (charged to exhibitors), and the payment of a share per digital
copy (charged to distributors).
However, the studios did not like this kind of model, as they were reluctant to accept the
intervention of third parties, which might interrupt their direct relationship with the
exhibitors. As a result, the spread of digital technology was restrained by the studios’
hostility during these first years. Not even the establishment of the DCI joint venture, in
2002, could solve the problem: it was not possible to match the specific techniques with
an economic model for the commercial development of digital cinema, due to the
antitrust laws.
From the economic point of view, the turning point took place in May 2005, when
Technicolor Digital Cinema, Warner Bros., Disney and Sony signed an agreement that
marked the birth of the VPF (Virtual Print Fee) model, a support mechanism to fund
the initial purchase of equipment for digital projection based on the payment, by
distributors and content suppliers, of a fixed amount every time a digital copy of their
products was rented.
The projector’s initial cost was therefore paid in advance by a third party, called the
“integrator”, while studios made their content available in the digital format and
committed themselves to paying contributions – the so-called “virtual print fees” – for
each digital copy.
Thus, as a solution for the two main obstacles was found – availability of contents and
costs – the VPF model, along with the intervention of integrators, started off the
development of digital cinema on a large scale in North America.
European market features do not allow American models
to be transposed as they stand
Unlike the United States, the European film industry offers very different outlooks,
according to the different areas considered, in each of which there were (and are) specific
challenges for the shift. In fact, according to the different markets, factors that sharply
influence the access to digitization, such as the business concentration, that is, the
importance of the main companies in terms of number of screens owned and tickets
sold, as well as the number of screens in multiplexes compared to single-screen
cinemas, can vary significantly.
What generally proves to be common to the various European countries is, instead, the
fragmentation of the distribution market, in which a relatively large number of small
distribution companies that concentrate their activity on few films, sometimes with a low
distribution and production budget and addressing a niche audience, operate alongside
244 |
the American studios (or the local companies that represent them).
The first digital installations in Europe – 527 screens as at 1st January 2007 – were mainly
funded by the UK Film Council through the Digital Screen Network: the aim was to use
digital technology to widen the circulation of films made for a limited audience according
to the traditional distribution dynamics (art-films, films in other languages, repertory
films, etc.). The English initiative remained unique for a long time and, right from the
start, due to the high costs of the transition, it was clear that public funds could contribute
to the process only partially: the industry had to find an economic model. After the
pioneer experiences of some groups, such as Kinepolis (in Belgium), which converted
some screens at its own expense, XDC made its entrance. XDC was a private integrator
which, by offering exhibitors a leasing scheme, digitized about 200 screens all around
Europe by the end of 2006. Another attempt was made in Ireland by Avica, a server
production company, which aimed at digitizing all the Country’s screens. However,
without the support of the American studios, the project never took off.
Finally, a VPF model similar to the American one was also introduced in Europe by Arts
Alliance Media (AAM), in its role as integrator. The first agreement was signed in mid2007. As in the USA, the first VPF schemes in Europe were usually managed by
integrators, while only some of the major circuits negotiated direct VPF agreements.
However, the original VPF had been planned to meet the requirements of the USA market
which – as already mentioned – is very different from the European one.
Moreover, the majors themselves were not as willing to contribute to the same extent
either to the conversion of the North American market, where their market share is even
higher than 90%, or to the conversion of the European market, where their majority
market share still remains approximately 70%.
As a consequence, VPF alone did not give the European digitization process the same
impulse given to the USA. Both in Europe and the United States, the economic crisis
(mainly by reducing the access to credit) slowed down the transition in the second half
of 2008 and at the beginning of 2009, thus causing a crisis in digitization as it had been
conceived when VPF was introduced: the simultaneous conversion of all the screens in
each complex which adopted the scheme, aiming to reduce the period of simultaneous
management of 35mm and digital versions by distributors and exhibitors. The deadlock
was broken by the launch of the great 3D blockbusters on the market, and this also gave
transition a different connotation. Exhibitors and American studios were thus given an
unprecedented opportunity to produce significant revenue, thus becoming the first
effective economic model for the digital cinema.
The introduction of 3D is the main factor influencing the
installation of digital projectors in 2009 and 2010.
Digital cinema would not have established itself without the advent of 3D, which proved
the main driving element for digitization in Europe. 3D succeeded where other factors
| 245
GRAPHIC 5
HALF-YEAR TRENDS IN THE NUMBER OF DIGITAL SCREENS
Western Europe
France
4,000 –
3,500 –
United Kingdom
3,000 –
Germany
2,500 –
2,000 –
Spain
Italy
1,500 –
1,000 –
Belgium
500 –
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0–
–
Austria
Jun05 Jan06 Jun06 Jan07 Jun07 Jan08 Jun08 Jan09 Jun09 Jan10 Jun10 Jan11 Jun11 Jan12
failed: it turned digital into a profitable investment choice for a large part of the sector.
The wave of 3D films that started in 2009 attracted an increasing number of spectators.
Moreover, the possibility to sell more expensive tickets for 3D screenings significantly
increased revenues per screen. On the basis of the success achieved by the first
screenings, American studios enhanced their 3D release schedule. The number of 3D
releases increased from 6 in 2008 to 12 in 2009 and 28 in 2010.
While the number of digital and 3D screens was still limited at the end of 2008, 3D and
digital cinema really took off in 2009. The number of new European installations
increased from 638 in 2008 to 3,149 in 2009.
Almost all the new digital screens (93%) were equipped with 3D technology and were
installed in order to screen blockbusters like Ice Age: Dawn of the Dinosaurs (2009), Up
(2009) and, of course, Avatar (2009), which constituted the greatest boost to digitization
on a large scale in Europe.
A strong line-up of 3D films in 2010 continued leading the digital transition with a further
5,651 new digital screens all around Europe, 87.5% of which were 3D screens. Not until
2011 were digital installations mainly led by 2D screens.
2011: new factors of digital growth show up in Europe
1. THE TRANSITION OF THE BIG CIRCUITS TO 2D
Out of 8,192 new digital projectors installed in Europe during 2011, a new and important
aspect emerges: 5,300 of them – about 65% - are 2D screens. A radically different
246 |
GRAPHIC 6
TENDENZE A METÀ ANNO NEL NUMERO DI SCHERMI DIGITALI
Central and Eastern Europe and the Mediterranean Rim
Russia
1,600 –
1,200 –
1,000 –
800 –
Poland
600 –
–
–
–
–
–
–
–
–
–
–
0–
–
Hungary
Romania
–
200 –
–
Croatia
Turkey
–
400 –
–
1,400 –
Jun05 Jan06 Jun06 Jan07 Jun07 Jan08 Jun08 Jan09 Jun09 Jan10 Jun10 Jan11 Jun11 Jan12
situation compared to 2010, when the new 2D projectors were 710 out of 5,651 – that is,
about 13%.
It is therefore evident that, while the initial stage of the intensive transition to digital,
which took place in 2009 and 2010, was almost completely due to 3D screens, the 2011
stage depended, for the first time, on 2D screens. The transition is now in its second
stage, and it is developing thanks mainly to the total transition of the major chains which,
as they have achieved a sufficient 3D projection capacity (usually 50% of screens per
site), now concentrate on the conversion of the remaining screens to 2D digital.
Among the key players in the 100% digitization process in Italy are Uci and The Space
Cinema. A similar process took place in Spain where Yelmo, the main company in the
sector, which had 209 digital screens at the beginning of 2011, has now completed the
process of installing of digital projectors for all its 403 screens. The same goes for
Cinesa, Kinepolis and Cinesur, again in Spain, and for Utopia, which manages cinemas
in the Benelux and France, for Zon Lusomundo in Portugal and for Vue, Apollo (recently
taken over by Vue) and Showcase in the United Kingdom, who have chosen the 4K
technology by Sony.
2. THE AVAILABILITY OF SEVERAL FUNDING SCHEMES
The other key element in this second stage of digitization in Europe, which started in
2011, is the availability of a variety of financial instruments issued in many countries at
the end of 2010 and during 2011.
The funding for the transition to the new projection technologies is, in fact, a considerable
| 247
challenge mainly for small and medium sized exhibitors, who are numerically
predominant within the European film industry.
Single-screen cinemas, in particular, make up over 60% of the total number of European
cinemas. As a consequence, even though this typology does not affect the total box office
results proportionally, it is a distinctive component of the film industry in many countries,
and it also plays a very important social or cultural role within the communities it occurs
in. Looking at the type of cinemas that have been converted to digital up to now in Europe,
the results are alarming for the smaller ones: at the end of 2010, in fact, only 11% of the
single-screen cinemas had digitized their screens. On the contrary, 89% of multiplexes
had installed at least one digital projector.
The large circuits, therefore, are completing their process towards total digitization,
thanks mainly to the availability of VPF screens with the intervention of integrators, while
the small companies are facing the greatest difficulties in the access to new technologies.
From this point of view, Italy is not an exception. On 1st January 2011, the digitized
cinemas (that is, with at least one screen equipped with digital projection technology)
were 474. 120 of these were multiplexes, that is, complexes with at least 8 screens, and
125 were single-screen cinemas. However, even though we can say that the new
technology reached all Italian multiplexes (numbering 120), for the 1,172 single-screen
cinemas the penetration rate of digital was equal to 11%. As for the screens, it emerges
that the 120 multiplexes totalled 456 digital screens, that is, 50% of total digital
installations, which, as at 1st January 2011, numbered 912 units.
Public intervention
The approach of the crucial turning point, that is, the 50% threshold of digitized
screens, which is also considered the turning point for distribution towards the
progressive abandonment of the 35mm format, highlighted the need to identify
processes which also allow the transition to digital for those cinemas that, because
of their individual characteristics, cannot take part in the classical VPF systems.
In this connection, various forms of funding (both private and public) have been
developed by European institutions and national and regional authorities.
The first typology is represented by private buying groups made up of a group of small
and medium sized cinemas which, by going into partnership and operating as a single
large circuit, manage to afford the VPF. In the UK, an example is given by the Digital
Funding Partnership which, after being established in mid-2009 upon the initiative of
British film exhibitors, soon became the major buying group operating in Europe.
In 2011, through an agreement with XDC, it developed a model for the conversion of
400 screens in 130 cinemas. The cases of Norway and the Netherlands combine the
buying group structure with public support, both being based on a partnership
between the State and private entities. The total investment costs, besides being
shared between exhibitors and distributors, are also supported by the contribution
248 |
of a public body that acts as a co-sponsor.
The aim is to include all the territory’s screens and ensure them a quick transition
which reduces the risks for certain types of exhibitors and distributors.
Norway was the first European country to digitize all its screens in 2011 thanks to a
public initiative that was possible due to the typical features of the Norwegian market.
With the majority of cinemas owned by municipalities, a fund for cinema financed by
a 2.5% tax on cinema tickets, sales and rentals of DVDs and a strongly representative
umbrella organization Film & Kino, the Norwegian way to digitization attracted much
attention.
In 2006 Film & Kino had already tested digital and started dialoguing with the
American studios about technical standards and business models, VPF particularly.
In order not to exclude any cinema, the initiative of Film & Kino became part of the
public policies on the principle of equal access to culture, thus allowing the
mobilisation of the Fund for Cinema, on condition that other stakeholders contributed
proportionally to the savings obtained through the shift to digital. Initially (mid-2009),
Film & Kino signed an agreement with five American distributors and, in 2010, with
Sony too, followed by other distributors operating in the Norwegian market.
The transition was funded by using 100 million NOK (11.1 million Euros) of the Fund
for Cinema which, therefore, had a significant impact on the total investment of 400
million NOK (45 million Euros).
The choice of equipment suppliers and integrators was carried out through a tender.
Cinemas were offered a basic technical package, which met the DCI specifications,
with a series of extra options, like 3D.
Pay-back of the investment takes place through the VPF mechanism, according to
which distributors cover 40% of the transition costs, and the single cinemas, thanks
to the resources of the Fund for Cinema, cover 60% of the total. This system will be
in force until costs have been fully paid, or for a maximum of 8 years, even though the
full pay-back will probably take place within 6 years. As per the VPF model, payments
are fixed – standard fees for each contract – with a ceiling to the total VPF per film
and cinema, and they are provided by all the distributors involved in the agreement.
They are calculated at a lower level compared to other territories. A support to
projection, which was initially automatic, and today selective, is offered for certain
types of film (mainly movies for children and young people).
The Dutch collective scheme takes the shape of a partnership between public and
private, which, for its members, acts like a public buying group.
From the collaboration between exhibitors’ and distributors’ associations (NVB and
NVF), coordinated by the Eye Film Institute, Cinema Digitaal was born, a non-profit
organization whose aim is the conversion to (the) digital format of 500 screens
belonging to 170 exhibitors. The total cost of the project – 39 million Euros – is paid
by exhibitors’ contributions, by distributors’ payment of the VPF (a total of 25 million
Euros), by public funds, through the ICT project, and by a contribution from the Dutch
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Film Fund for a total of 5.4 million Euros, plus the revenue that should come from
alternative content. All Dutch exhibitors can join the project, even though three
foreign-owned circuits – Pathé, Euroscoop and Utopolis – took their own ways
towards digital, by signing direct agreements with the studios (Pathé) or by relying
on the Ymagis as intermediary (Euroscoop and Utopolis).
Cinema Digitaal, instead, signed an agreement with Arts Alliance Media, which
handled the practical realization of the project. In turn, AAM reached an agreement on
the VPF with 14 distributors of the Dutch distributors’ association (NVF).
In 2011, after a period of uncertainty, 175 screens (including some larger circuits like
Jogchems Theatre and Wolff Cinema Group) joined the project during the summer
and the first share of the VPF was paid in July.
The goal of the second stage, which started in November 2011, was the art-sector
and about 30 cinemas were involved.
Direct public funding
Another type of support is direct public funding. This typology – according to the
survey published by Media Salles and by the European Audiovisual Observatory in
the study The European Digital Cinema Report – involves sixty different projects
supporting conversion to the digital format, recorded in 13 European nations and at
pan-European level in 2011. The majority of these projects (42) are managed at
regional level, while another 15 at national level. Three other schemes belong to the
supranational level and are promoted by the European Commission and by the
Council of Europe.
The supranational level
The plan launched by the European Commission through the Media Programme belongs
to the supranational level. In fact, in 2011, a call3 for support to the digitization of about 100
screens in Europe was launched.
Among the access requirements, special attention is paid to programming, which should
include at least 50% European films (with a minimum 30% of non-national European films).
The fund, which grants up to 20,000 Euros per screen, is destined to the co-funding of the
indirect costs of the digitization, which, as a consequence, do not include the cost of
purchasing projectors and servers.
From the results of the selection published by the European Commission, it emerges that
the total funds allocated corresponded to 2.5 million Euros, that is, 500,000 Euros more
than initial estimates. Among the 57 selected cinemas, six are located in Italy and were
3
250 |
Call for proposals 19/2011.
given a total amount of 220,000 Euros (8.8% of the total budget).The call for the digitization
of European cinemas was launched again in May 20124, expiring 31st July 2012, with an
available budget of 2 million Euros.
The national level
According to the survey published by Media Salles and the European Audiovisual
Observatory within the study The European Digital Cinema Report, there were 15 active
support programs in 2011 at national level outside Italy in 12 European countries, from
Switzerland to Slovakia, from Spain to Portugal.
Two German initiatives stand out because of the large sums of money allocated: they
provided 35 million Euros. In particular, FFA (the federal organization for cinema) granted
funds to 566 screens in 2011, mainly to those located in areas with a population of less
than 20,000 people, recognizing their socio-cultural value.
The Finnish measure stands out, as it was established before all other schemes, and is
part of a larger process of technological innovation addressing many sectors that are
considered strategic for the future of the country, among which culture and audiovisual.
Instead, the approach of Denmark is different: it considers the technological adaptation
of cinemas located outside the main urban areas as an instrument for fostering the
circulation of Danish and European films. This instrument gives cinemas funds of up to
27,000 Euros per screen, or a lump sum relating to the projection of Danish movies (335
Euros per film).
The French case is unique. It includes a legislative instrument that obliges distributors
to contribute to the digitization costs incurred by exhibitors5, and it also provides for a
direct support programme for those cinemas that would be unable to pay at least 75%
of transition costs with the contribution from distributors.
New national projects are being set up for 2012. Among these, a plan for digitization
developed by Icaa and the Autonomous Communities in Spain, which was presented in
the Basque Country in 2011 and will also have to include other Spanish autonomous
communities in 2012.
The case of Italy
In Italy the first digital screen was installed in 2001, in the “Fuoco” auditorium of the
Arcadia cinema in Melzo: it was a Kinoton projector fitted with Barco digital technology.
It was in the Arcadia cinema that the first digital screening took place in March 2001: the
4
5
Call for proposals 14/2012.
It is the “Loi n. 2010-1149 du 30 septembre 2010 relative à l’équipement numérique des établissements de spectacles cinématographiques”, published in the «Journal Officiel» on 1st
| 251
cinema’s announcement stated “electronic screening of alternative content”, with Stanley
Kubrick: A Life in Picture (2001). Instead, in December 2001, the first digital feature film
was screened: Atlantis: The Lost Empire (2001) by Disney (3D projections, instead, were
launched in 2007 with Meet The Robinsons, 2006, again by Disney).
After this pioneer experience, the first Christie digital projectors were purchased.
Besides the Arcadia, they also equipped the cinemas belonging to the Gruppo Furlan and
Giometti Cinema.
However, the spread of the new technology remained limited to the “eager beavers” of
Italian digitization.
These were private entrepreneurs who autonomously funded the transition in order to
give continuity to a reputation for technical excellence, and to acquire knowledge and
experience in order to better face the mature stage of digitization. Up to 1st January 2009,
there were no more than 80 digital screens in Italy, with a 5.2% incidence on the European
total. A first turning point took place in Italy during 2009, mainly thanks to the
aforementioned “3D effect”. Within 12 months, this increased the number of digital
screens up to 434, so that Italy accounted for a 9.3% share of the Continent’s digital
equipment. The increase then slowed down slightly compared to other European
territories, if we consider that the 912 Italian screens at 1st January 2011 represented
8.8% of European digital equipment and the 1,485 screens at 1st January 2012 as much
as 8.0%. Behind the increase in 2009 and in the following years, there was not only the
release of 3D blockbusters, but also the introduction of economic models that were more
compatible with the requirements and feelings of Italian exhibitors, mainly small and
medium sized ones, compared to the classical VPF models based on the mediation of an
integrator. Instead, the latter were used by the biggest chains in Italy, such as Uci or The
Space Cinema, which has recently relied on Arts Alliance Media. From the point of view
of economic models, Italy is a unique case in Europe, both as regards private collective
initiatives and public intervention.
Italian VPF: no intermediaries thanks to the agreement
between distributors and exhibitors
In December 2009, an agreement between distributors’ and exhibitors’ associations was
signed, in order to negotiate a VPF model for the whole Italian market, avoiding the
involvement of integrators. Each exhibitor could choose the best equipment for his or
her own cinema, with the opportunity of receiving a VPF contribution of up to 60,000
Euros per screen – funding costs excluded. The equipment for digital projection had to
meet DCI specifications, respecting a minimum 2K standard. The total amount of VPF
was set at 450 Euros for exhibitors running up to 9 screens and at 550 Euros for exhibitors
with more than 9 screens. From March 2011, the contribution was renegotiated and set
at 480 Euros.
By July 2011, more than 900 screens had joined the initiative.
252 |
Public intervention at national level
A package of fiscal measures related to the film industry was introduced in 2009. One of
these was tax credit for exhibitors installing equipment for digital screening. When the
package was examined by the Directorate General for Competition at the European
Commission in 2009, the measure relating to tax credit was not approved and the
Commission launched an inquiry.
While awaiting the inquiry result, tax credit was made available, within the limits of the
Commission’s de minimis Regulation.
The system offers exhibitors a tax credit equal to 30% of the expenses incurred for the
purchase of digital projection equipment and satellite signal reception devices, for
personnel training and for the renovation and adaptation of the projection rooms. The
credit is available to all cinemas with fewer than 5 screens, as well as to complexes with
5-10 screens located in cities with fewer than 50,000 inhabitants, independently of the
type of programming. Instead, if the expenditure regarded the shift to digital format of
complexes with 5-10 screens located in cities with more than 50,000 inhabitants, or
multiplexes with more than 10 screens, Italian and European films had to represent 50%
of all screenings during the three following years, in order to access these benefits.
The package of fiscal measures, which was expected to last until 2010, was extended
until the end of 2013.
Between the launch of the digital tax credit in 2009 and the end of 2011, applications for
funding the digital shift submitted by 431 exhibitors for a total of 1,028 screens in 642
cinemas were approved. 393 of these screens are located in single-screen cinemas or
miniplexes (2-4 screens), 439 are located in 5-10 screen complexes and 196 in larger
complexes. Up until 31st December 2010, when the applications concerned 760 screens,
a total tax credit of 20.5 million Euros had been granted, corresponding to an expenditure
of 66.6 million Euros.
The Italian Regions and digital technology
In addition to public and private initiatives at National level, the Italian Regions continue
to play a fundamental role within the process of the conversion of screens to digital
technology, mainly through support to small and independent cinemas that find it hard
to access VPF schemes in order to finance the transition process. There follows a list of
the main initiatives, divided by Region.
LOMBARDY
Lombardy has supported the digitization of screens since 2008. 22 applications for
funding were submitted during that year. 13 of them were financed, whereas 5 were
accepted but not financed due to the unavailability of funds.
The following year, there were 27 applications, 18 of which obtained funding, whereas 7,
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even though they were accepted, were not funded.
In 2011, a total amount of 2 million Euros was made available for the technological
adaptation of movie theatres and the purchase of equipment for digital projection,
including all necessary accessories and the costs for project design and management
(up to a maximum of 7% of the total cost).The funding varies between 35,000 Euros and
250,000 Euros and cannot exceed 70% of the total costs.
An additional intervention was promoted, in 2011, by the Lombardy Region in
collaboration with the provinces of Novara and Verbano-Cusio-Ossola, with a total
investment of 2 million Euros available to non-profit private organizations, ecclesiastical
and religious bodies and public administrations which manage multi-purpose premises.
The goal is to strengthen the relationship between multi-purpose cultural centres and
the territory, through funding technological innovation.
MARCHE
Starting from 2009, the Marche Region has supported the digital transition of movie
theatres through three calls for applications addressed to small and medium sized
companies with investments in the innovation sector. In 2009, 9 cinemas submitted the
application: 8 of the projects were approved, for a total amount of 406,351.15 Euros.
The following year, 5 cinemas submitted the application for funding: all applications were
accepted, but funds were not allocated as they were not available.
As for the third call, relating to 2011, results are still awaited.
LAZIO
The Lazio Region issued a call for applications for the technological innovation of the
audiovisual sector in 2009. A total amount of 16 million Euros was allocated to fund the
purchase and the installation of digital projectors (max. one per movie theatre). 28
applications out of 35 were accepted.
EMILIA ROMAGNA
The support to the digitization of cinemas in Emilia-Romagna is included in a measure
which supports the technological innovation of small and medium sized companies and
that was issued in 2011 with a total allocation of 10 million Euros.
Moreover, on the initiative of some Regional Advisers, a resolution allocating funds for
the digitalization of small cinemas was introduced.
As the text reports, from 2014 the shift to the digital format will be “almost mandatory”
for all Italian cinemas, but small cinemas, parish and studio cinemas “cannot afford the
transition”. Therefore, the intervention of the Region with an appropriate call for funding
applications is required.
Moreover, Advisers point out the “crisis that has involved Italian film theatres for several
years, Emilia-Romagna included”, and ask to maintain the “role of cinemas as cultural
businesses on the territory”.
254 |
UMBRIA
In 2011, the Umbria Region made a sum of 100,000 Euros available within a call for
funding applications which, in addition to the digitization of small cinemas, provides for
support to the local television system for the transition to digital cable technology.
Investments covered by the support include the purchase of equipment for film projection
and for the satellite or cable reception of the digital signal, but also specialized technical
advice where strictly necessary, in order to carry out the conversion (max. 10% of the
allowable costs).
PIEDMONT
In Piedmont, too, the measures taken date back to 2011. They have aimed at supporting
the digitization process of small and medium sized businesses in the film sector,
including parish cinemas. The total funding was of 1,500,000 Euros and was fully used
by May 2012.
APULIA
In 2011, Apulia provided for a measure in favour of the digitization of cinemas based on
the allocation of 1.3 million Euros through the European Regional Development Fund.
TUSCANY
On 27th April 2012 Tuscany, which had long been active in offering support to digitization,
renewed the call for applications (expiring 31st May 2012) for the innovation and
digitization of cinemas with an allocation of 1 million Euros mainly for the territory’s
smaller cinemas.
This funding, granted in compliance with the “de minimis” regime, consists in a
contribution for the installation of equipment which covers up to 50% of eligible costs,
that is, those relating to the purchase and installation of equipment for digital projection
and satellite signal reception, as well as to the adaptation of projection booths and project
costs. In 2010, all 72 applications submitted for the digitization were accepted.
VENETO
In their 2012 Budget the Veneto Region allocated 300,000 Euros for the digitization of
cinemas. The same amount is expected to be confirmed for 2013 and 2014. In this
case, too, mainly small cinemas will be the beneficiaries of these funds, including
parish cinemas, so that they can survive commercially whilst maintaining high-quality
programming.
SICILY
A scheme envisaging total funding of 5,560,000 Euros by the Region of Sicily for the
digitization of cinemas on the territory still has to be drawn up . According to the plan, 3
million Euros of the total amount will be granted by the Ministry of Economy and
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Finance’s fund APQ Sensi Contemporanei (that is, the framework agreements
“Promotion and spread of contemporary art and valorisation of architectural and urban
contexts in the regions of Southern Italy”).
Future prospects for European cinema
DIGITAL FORMAT: IS THIS TECHNOLOGY LIKELY TO EXCLUDE?
While the big complexes are quickly upgrading to digital technology and the end of
35mm distribution is near, the risk of closure for single-screen cinemas becomes
increasingly real.
An important aspect to be considered, in this transition phase, is that the majority of
distributors, and consequently some exhibitors, too, are now obliged to use both the 35mm
format and the digital; this could be extremely expensive and difficult to support, mainly in
the case of smaller exhibitors. Therefore, in order to make this process as short as possible,
much work is needed, even though the conflicting interests of the subjects involved
continue to be an obstacle to quick and complete transition.
IMPORTANCE OF PUBLIC SUPPORT
The different public support initiatives of which we have attempted to provide an overview
thus remain fundamental.
They were launched – mainly starting from 2009/2010 – with the precise aim of supporting
the least competitive subjects from a commercial point of view. Given the high cost of the
shift to digital format, it is highly improbable that the public sector will support the
conversion of all these technical installations or the majority of them. Collective projects
based on some sort of joint agreement seem to represent the most promising approach if
we want to preserve the variety of cinemas present in Europe.
THE END OF 35MM FILMS DISTRIBUTION IS COMING CLOSER
Norway, Luxemburg and the Netherlands are the first territories which, between 2011 and
the first half of 2012, reached 100% digitization. In general, the shift will take place in every
nation and in every region. However, once the major markets like the United Kingdom and
France are completely digitized, the demand for 35mm will fall and the 35mm distribution
market will quickly experience a crisis, along with the exhibitors and distributors who still
depend on it.
The current economic models adopted for film distribution are based on the economy of
35mm distribution and were developed within a market context which has not seen great
changes for more than 100 years.
Digital cinema is about to change everything.
THE SHIFT TO DIGITAL FORMAT: NOT ONLY A TECHNOLOGICAL CHANGE?
For the moment, most players are still trying to maintain the economic models based on
256 |
the 35mm format, for instance, through VPF schemes, in the digital world. But, in the
medium-short term, digital economic models will bring fundamental changes in the
relationship between exhibitors and distributors, who are destined to earn more than
others through digital distribution, once the transition period has ended and VPF has
been paid off.
WHAT ARE THE EFFECTS OF THE NEW TECHNOLOGY ON THE OFFER TO AUDIENCES?
It is too early to predict the impact of digital cinema on programming. However, it is possible
that more commercially oriented exhibitors will start adapting their programming towards
alternative content at higher prices, for example 3D movies, American blockbusters or
alternative content able to balance the higher expenses. This would further sharpen the
competition for access to the screen, mainly for medium-budget films, small European
and independent productions, which could find it even harder to recover part of their
production budgets through theatrical distribution. However, maybe a more optimistic
possibility for the art-cinema cultural sector does exist, as the digital format can bring new
flexibility to programming and new opportunities for increasing audiences.
This hypothesis seems to be confirmed by the first results to emerge in the Norwegian
experience, even though – as data at the moment only refer to 2011, i.e. the year in which
the digitization process was completed – we must be cautious.
JØRGEN STENSLAND’S ACCOUNT (FILM & KINO) IS REPORTED BELOW.
If quality and art-cinemas purchased equipment through public contributions or
opportunely adapted VPF models, they should be able to resist the temptations offered by
the mainstream and continue offering varied contents, thus improving the flexibility allowed
by digital projection in order to give a new extent and a greater visibility to high-quality
works. It would be a pity if a great number of public and private investments like those
required by the transition to the digital format did not result in a greater possibility of choice
for the European spectator.
CAN DIGITALIZATION MAKE AN IMPACT ON ADMISSIONS?
The case of Norway: since 2011the first fully digital country in the world
In 2011, the spectators in Norwegian cinemas amounted to 11,650,000, with a 5.7% increase compared to the
previous year. Domestic productions reached a 24.5% market share, with 2,855,000 tickets sold. This is a record
amount, if we think that we have to go back to the 3.8 million tickets of 1975 to find a better result. In 2011,
Norwegian cinemas also completed their shift to digital.
In order to know if digital projection is one of the elements that most contributed to the increase in the number of
spectators, MEDIA Salles interviewed Jørgen Stensland of Film & Kino, the organization that has been the driving
force of the shift thanks to the introduction of a particular version of the VPF model that combines public funds
with private investments1.
Segue
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CAN DIGITALIZATION MAKE AN IMPACT ON ADMISSIONS?
One of the risks of digitization is the decrease in the number of cinemas, given that some of them may not be
able to afford the expenses. What happened in Norway?
J.S.: The number of cinemas has basically remained unchanged. Some of them closed while some new cinemas,
and mainly new screens, have been planned. We are talking of around 30 new screens.
What have been the effects of the introduction of new projection technologies on the number of spectators?
J.S.: In 2011 a great increase in the number of spectators in small cinemas was reported. The smallest cinemas
recorded a 50% increase between 2010 and 2011. The category right after this (medium-sized cinemas) increased
by 30%. The biggest cinemas, instead, have not recorded any increase. In fact, even before the shift to digital, they
could offer the audience all the contents available on the market.
As for supply, have there been any changes?
J.S.: The number of spectators on the first day and in the first week of release, in the smaller cinemas, rose by 6%
in 2010, increasing to 39% in 2011. The percentage increase for the major groups, instead, was from 22% in 2010
to 66% in 2011.
Has this had any effect on the length of runs?
J.S.: One result is a more rapid turnover in programming. Films are screened for a shorter period of time.
Has there been any variation in the total number of films distributed?
J.S.: The number of new releases is relatively stable, a little higher in 2011 compared to 2010. This is mainly due
to a high percentage of “local interest products”, that is, Norwegian films. The total number of films distributed
has decreased, as the older films that are not digital have been excluded from circulation. These films represent
less than 1% of the total repertoire. As for new films, the number has basically remained unchanged.
And as far as their countries of origin are concerned?
J.S.: The percentage of American films is slightly decreasing, while it is somehow increasing for Norwegian and
European films.
More intense cinematographic activity is recorded: more cinemas screen films. If we compare 2011 with 2010, film
screenings increased by 10%. There are more screenings per film, but shorter runs. We noted more screenings in
the smaller cinemas (an increase of up to 25%), while little has changed for the major complexes.
Have any differences in the market shares by film nationality been reported?
J.S.: As for total admissions, American films suffered a slight decrease, but Hollywood blockbusters maintain their
leading position. Minor American films, instead, attracted fewer spectators.
One of the expectations from the digitization process was that low-budget films could have greater opportunities.
Have there already been any results in this respect?
J.S.: Art films were screened in a larger number of cinemas in 2011, compared to 2010: they recorded more
screenings and a higher number of spectators. Most admissions have been recorded in the medium and largesized complexes, but the general picture has not undergone important changes since the introduction of the
digital system.
1
258 |
See the chapter Public intervention
SOURCES
VV.AA. Il sostegno della tecnologia digitale nelle regioni, Records from Fice conference,
Meetings on Art-cinema – 11th edition, Mantova, 10th-13th October 2011.
Brunella, Elisabetta, Cinema Digitaal: la via olandese verso la digitalizzazione totale,
DGT online informer no. 77 of 23rd December 2011, www.mediasalles.it
Brunella, Elisabetta, Focus on Norway, DGT online informer no. 81 of 16th May 2012,
www.mediasalles.it
Grispello, Luigi, Focus on Italy: le sfide del digitale per l’industria cinematografica
italiana. 1.000 schermi passati alle nuove tecnologie, 2.500 ancora da digitalizzare,
DGT online informer no. 75 of 16th November 2011, www.mediasalles.it.
Grispello, Luigi, La digitalizzazione del sistema sale italiano. Una missione impossibile?,
DGT online informer no. 65 of 15th December 2010, www.mediasalles.it
Media Salles, The European Cinema Journal, no. 1, year 2012, www.mediasalles.it.
Media Salles, DiGiTalk. Ideas, Experiences and Figures on Digital Cinema from
DigiTraining Plus 2011, www.mediasalles.it.
Media Salles, European Cinema Yearbook, www.mediasalles.it
Media Salles - European Audiovisual Observatory, The European Digital Cinema Report.
Understanding digital cinema roll-out, December 2011.
Osservatorio dello Spettacolo – Ministry of Cultural Heritage and Activity, La via italiana
al Tax Credit e al Tax Shelter per il cinema, www.beniculturali.it.
Websites
Ministry of Cultural Heritage and Activity – Italy
www.beniculturali.it
Media Programme
http://ec.europa.eu/culture/media/index_en.htm
Media Salles
www.mediasalles.it
| 259
Testimonials
by Schermi di Qualità
Cristina Loglio
Schermi di Qualità
Films and Cinema Halls:
Still together but with better quality
chermi di Qualità (Quality Screens) is a Special Project carried out with the
support of the Ministry for Cultural Heritage and Activities – DG Cinema and
promoted by Agis (Associazione generale Italiana dello Spettacolo) together with
Anec (Associazione Nazionale Esercenti Cinema), Anem (Associazione Nazionale
Esercenti Multiplex), Fice (Federazione Italiana Cinema d’Essai) and Acec
(Associazione Cattolica Esercenti Cinema). The aim of the project is to improve the
promotion and distribution of high quality and artistic Italian and European cinema, for an
overall growth of the national market and greater visibility of our cinema. The special MiBac
(Ministry for Cultural Heritage and Activities) project, which was entrusted to Cinecittà
Holding, was launched in the 2004-2005 season with the name CentoCittà (One hundred
Cities), the initiative has changed name and structure but not its original objective: to allow
films acknowledged as art films according to the terms of decree 28/2004 and the enacting
legislation of 3 October 2005, provided they come from the European community, to obtain
a fast track for showing in all types of cinemas, in order to improve their visibility, make
them available to the greatest number of citizens and to improve their economic results,
with positive effects on the whole industry and its future. After two years under the control
of Cinecittà Holding, which were marked by limited access and specialized involvement in
medium and small cities, areas mostly abandoned by less profitable programming, the
Project changed sponsor and name. Agis, with its broad base where all elements of the
cinema business find space, from community cinemas to large multiplexes, from city centre
cinema halls to more traditional cinemas, suggested that the initiative be extended to all
cinemas wishing to sign up to the rules set up by the regulation, obtaining an award only if
they were able to meet the requirements. From the 1st January 2012 onwards with the start
of the 7th year of Schermi di Qualità, Italian cities were subdivided into four categories: from
the smallest, with a population of less than 10.000 people, to metropolitan centres with a
population of more than 200.000 people. Apart from afternoon screenings for
schoolchildren, the number of days of programming dedicated exclusively to Italian and
European quality films is extremely high, way above the standards required in order to
obtain the Art film Award and Europa Cinemas funds. The results are extraordinary and are
S
TABLE 1
SCHERMI DI QUALITÀ
2006/2007
1st Year
2007/2008
2 nd Year
2008/2009
3 rd Year
2009/2010
4 th Year
2010/2011
5 th Year
2011
6 th Year
2012
7th Year
Registered screens
820
Screens Which
requested Financial Contribution 510
Screens which obtained
financial contribution
255
Standard Contribution
10,588
Value of a day
Exceeding minimum
% Days of programming
of It ed eu quality films
to the total programming
n.d
686
699
875
736
724
790
459
527
574
540
592
370
7,662
457
6,203
508
5,369
439
3,421
439
1,140
-
-
13
29
6
61.4%
59%
60.9%
64.6%
74.7%
shown in table 1: More than a quarter of the active cinemas in Italy are registered with the
programme, and their quality programming has reached 74,7% of the total programming,
with a contribution which amounts to around 5.000 euro per year for each successful cinema.
The geographical distribution of the participating and winning cinemas should also be
highlighted, they are situated in all the Italian regions, subdivided proportionally by small,
medium and large cities and by screen type (mono-hall, small cinemas of two to four screens,
multi screen cinemas with five to seven screens and multiplexes), although the smaller
complexes are generally situated in historical centres and are already suited to quality
programming.
Italian and European quality films benefit from this initiative, both c cross over art house
films, niche films and more strictly authorial productions that attract the majority of their
audience at the specialist cinemas. In the last two years (5th year of Schermi di qualità: 1st
September 2010 - 31st August 2011 and 6th year: 1st September 2011 - 31st December 2011) we
have witnessed some important events concerning the top twenty and other sample films:
TABLE 2
5TH YEAR – TOP TWENTY
Pos
ID
Titles
1
2
3
4
5
6
7
8
9
10
11
4426
4379
4481
4434
4456
4377
4418
4393
4374
4435
4403
Il discorso del Re
Benvenuti al Sud
Habemus Papam
La banda dei Babbi Natale
Qualunquemente
La Passione
Incontrerai l'uomo dei tuoi sogni
La bellezza del somaro
La solitudine dei numeri primi
Immaturi
Noi credevamo
Cinemas
Days
Spectatori
Showings
316
278
327
193
234
276
212
220
272
216
215
4.127
3.988
4.557
1.897
1.866
2.255
1.717
1.973
2.396
1.735
1.587
525.118
466.760
437.689
247.938
230.616
214.110
204.390
198.235
182.649
163.381
159.651
10.786
9.821
12.702
5.064
4.830
6.183
4.834
5.459
5.876
4.219
3.150
Segue
| 263
segue TABLE 2
Pos
ID
Titles
12
13
14
15
16
17
18
19
20
4406
4438
4514
4439
4479
4407
4425
4440
4464
Uomini di Dio
La versione di Barney
Le donne del sesto piano
Maschi contro Femmine
Nessuno mi può giudicare
Una vita tranquilla
We Want Sex
Another Year
Il gioiellino
Cinemas
Days
Spectatori
Showings
180
175
152
171
206
197
161
152
195
1.466
1.236
1.780
1.595
1.896
1.297
1.133
1.078
1.340
157.814
157.367
137.361
129.082
117.981
112.130
106.310
106.282
106.233
3.761
3.198
4.805
3.775
4.744
3.387
3.150
2.798
3.555
Days
Spectatori
Showings
2.696
2.060
2.557
1.818
2.449
1.267
1.701
1.486
1.533
1.508
829
868
1.077
694
609
842
677
394
622
815
332.037
327.404
271.254
182.387
171.097
149.314
119.629
113.062
97.949
91.144
76.852
75.100
70.943
70.676
62.481
62.111
60.633
51.849
46.389
46.018
7.217
6.372
7.930
5.068
6.470
3.829
4.566
3.903
3.973
3.761
2.116
2.532
2.628
2.131
1.566
2.042
1.943
1.313
1.532
1.947
TABLE 3
Pos
ID
Titles
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
4429
4575
4522
4524
4430
4561
4554
4548
4523
4527
4559
4551
4121
4560
4555
4535
4537
4563
4587
4530
This Must Be the Place
Midnight in Paris
Carnage
A Dangerous Method
Terraferma
Miracolo a Le Havre
Scialla!
Il cuore grande delle ragazze
Cose dell’altro mondo
La pelle che abito
Pina
La kryptonite nella borsa
Bar Sport
The Artist
Faust
Melancholia
Tomboy
ALMANYA - La mia famiglia va in Germania
La peggior settimana della mia vita
Il villaggio di cartone
Cinemas
257
192
263
206
259
132
198
197
209
195
92
114
156
80
73
120
108
51
97
137
Among the films which don’t feature in the 20 most seen, it should be noted that Le gamin au
vélo (2011; The Kid with a Bike) obtained 71% of its admissions within the project’s cinemas,
Sorelle mai (2011) 73%, Il primo incarico (2011) 81%, Notizie dagli scavi (2011) 73%.
Also worth remembering is the fact that Il villaggio di cartone (2011) brought in 59% of its
admissions from the project’s screens, Pina (2011) 64%, Ruggine (2011) 64% and Il mio
domani (2011) 84%. The flexibility of the regulations has allowed the inclusion in the 6th year
of the project a regulation which particularly awards the programming of debut and second
works with a knock-on positive effect on the ministerial provisions.
The research entrusted to “La Sapienza” University and Prof. Celata’s team highlighted a
constant growth in parameters and a progressive maturation in implementation.
Further innovations are being prepared for the current year, which is showing vitality, having
concrete benefits for the entire Italian cinema industry, which is in strong agreement with
ministerial aims.
264 |
by Film Commission Torino Piemonte
Steve Della Casa
Film Commission
The History
Film Commissions began to emerge in the United States in the 1940s. As with other AngloSaxon institutions, they were private and profit making. On the contrary to what would later
happen on the European front, their work consisted essentially in supporting the cinema
industry, making available, for a cost, locations for film production. The promotion of their
own area was rarely their scope. In the United States the AFCI was founded, which requests
the Film Commissions’ members to pay a membership fee and each year organizes the
Location Trade Show, a sort of exhibition of the locations which are shown to the location
managers of production companies, briefly illustrating technical features, prices and
availability of the locations on offer.
The amount of Film Commissions began to be a noticeable phenomenon in Europe only in
the second half of the 1980s. Although different legal structures exist, they are essentially
no profit, public organizations and their role is to increase the productive activity of the area
and to promote tourism. In some countries (for example Germany) the work of Film
Commissions is integrated and inserted in the investment funds which complement their
activity offering also financial leverage to the production companies that choose their area.
These funds participate through equity, contributing financially to the film’s budget and
receiving in return guarantees for a return of the investment. Such activities carried out
through these funds usually complement those of the film commissions, the latter dealing
mainly with promoting locations available in the area and the supplying of consultation
services which are useful to cinema production companies. The cinematographic activities
in Hamburg, Munich and Berlin have this type of structure: in each of these areas the total
budget for them about 25 million euros per year. The existing Film Commissions in Europe
today have roles which may be local, provincial, regional (the largest number) or national.
The usefulness of a national body, which represents this category and coordinates its activity
over the whole area, is in fact acknowledged abroad. The most important examples are Film
France, Location Austria, Scandinavian Locations, Spain Film Commission. The presence of
these structures on a national level is important as it gives official recognition of the role of
Film Commissions to the audiovisual industry and creates the possibility of lobbying on a
national basis. The European Film Commissions are not focused on training, apart from
that of its own workers (once again there is a big difference with the equivalent American
structures, where training is one of the commercial activities of the AFCI). In 2007 the
European Film Commissions Network (Eufcn) was founded, an association which
represents many Film Commissions in various European States. Created from the desire of
certain Film Commissions who considered the presence of such a network, with the objective
of clarifying the role of Film Commissions to a country’s Government and to the audiovisual
industry, fundamental.
The association of European Film Commission in just a few years has grown to such an extent that
today it can boast about 80 members representing twenty-seven European countries. In Italy the
Film Commissions began to emerge from the beginning of the second half of the 1990s, again in this
case the types of structures were very different (some were foundations, others associations, and
others local administration offices) and often they had very different goals. Their duties, straggling
marketing and supplying services to the producers working in the area, were exclusively aimed at
employment development, promotion of the area, or creating a mix between the two objectives. In
2004 the Italian Film Commissions was founded, an association which brings together numerous
italian Film Commissions. The aim of this association is to promote the country abroad (it is in fact
always present at the main festivals) and it carries out training activities for its members, placing
itself on a par with the main players in the market and in the italian cinematographic institution.
Today 19 Film Commissions are members of the association:
• Abruzzo Film Commission
• Apulia Film Commission
• Bls Südtirol Alto Adige
• Bologna Film Commission
• Emilia-Romagna Film Commission
• Film Commission Regione Campania
• Film Commission Roma & Lazio
• Film Commission Torino Piemonte
• Fondazione Calabria Film Commission
• Friuli Venezia Giulia Film Commission
• Genova Liguria Film Commission
• Italian Riviera Alpi del Mare Film Commission
• Lombardia Film Commission
• Marche Film Commission
• Toscana Film Commission
• Trentino Film Commission
• Sardegna Film Commission
• Venice Film Commission
• Vicenza Film Commission
It is evident that there are Film Commissions with regional (Lombardia, Piemonte, Campania...),
provincial (BLS in Bolzano) or local (Vicenza, Venice) roles. The coexistence of more than one
Film Commission is possible within one region. Obviously there are also many Film
Commissions which are not members of this association: for example almost every city in the
Lombardia region has its own Film Commission, and in Sicily the Film Commission is an internal
body of the Sicilian Regional Body.
266 |
The Impact on the Local Area
At present the estimates of the effects on the local area are extremely are difficult to measure
and are the least scientifically based among all of the data produced by the Film Commission
in their general reports and in their promotional material.
The effects on local area is in fact the main measure used in order to verify the actual validity
of the work carried out by each Film Commission. If the impact on its image can be verified
using traditional methods (the presence of the Film Commission in newspaper cuttings,
television services, the visibility of the territory in films or television programs…), the
economic effect is more problematic to quantify, as it is often difficult to obtain data that only
the production companies are able to produce: such as employment, expenses, type of
expenses. For the Film Commissions that give substantial economic help to productions, it is
without a doubt easier to obtain such data as it is a necessary component of the contract that
the Film Commissions agree upon with the producers. If however the Film Commission does
not contribute economically it is extremely rare to find a producer who communicates the
main data correctly, that is to say: the total budget of the film or TV program, the budget spent
on location, the number of workers hired, its cost, the length of filming, preparatory budget.
In addition it is possible that the Film Commission is not aware of all the production
companies that have worked in their area and therefore the data collected is not complete and
does not represent the real situation.
This issue, which concerns production companies that do not consider the collaboration with
a Film Commission of any use when carrying out their project, is particularly predominant
especially in some European countries marked by the presence of large cinema studios. In
Germany, the Czech Republic and Belgium for example, studios attract production companies
offering their structures and entering into coproduction by supplying studio and technical
support, and so the local Film Commission is not directly involved in the making of the project
and thus has neither information nor access to the data which concerns it.
The Work of the Film Commission
Now that the historical and methodological aspects have been dealt with, we can look at the
actual work and aims of the numerous Italian Film Commissions.
As previously mentioned, they began as a form of support for production companies and as
a means of promoting the local area. Over time they have become an essential tool for the
production, promotion and financing of films and audiovisual products. This evolution has
turned them into a complementary tool, and possibly also a substitute for the FUS il Fondo
Unico per lo Spettacolo, traditionally the major public financing tool for films which in recent
years has experienced consistent cuts causing them to become progressively less important.
In fact it was no coincidence that together with the Film Commissions other forms of
investment funds also emerged. At present Friuli Venezia Giulia, Piemonte, Puglia, Bolzano,
| 267
Toscany and Lazio have these. The aims and the structure of these funds are all very different
concerning their methodology and endowment. For example the fund recently established by
the Regione Lazio, with 45 million euros in three years (thus the most consistent) works in a
completely different way from that of the local Film Commission, which is aimed at cinema
and television programs and provides automatic financing mechanisms which go to the
producer. In Piemonte however it is a rotating fund with a much lower endowment, which
participates through equity and is connected exclusively to cinema products as it works
through buying rights (pay TV, foreign locations…) and in this way securing their funds,
something which is not possible for products destined for television and where the company
is fully controlled by the Film Commission.
Other funds also have very different working objectives and legal structures, and are tied,
just as in the previous examples, to the various missions that have been entrusted by local
bodies which finance their activity.
The presence of these funds (and of others which are beginning to emerge) is a further
element which highlights the natural evolution of the Italian Film Commissions previously
mentioned. It is obvious that a Film Commission which is part of a local authority where the
main aim is to obtain employment permission on public ground as requested by production
companies, will obtain completely different results, and have a different role and importance
from those which are part of a private foundation which also has an investments fund.
As previously mentioned, this evolution of Film Commissions qualifies them as an extremely
important financial source for projects and they are therefore an active reality in the industrial
sector of cinema production.
Possibilites for the Immediate Future
Italian Film Commissions, whatever their objective and type of structure, are organizations,
which in an indirect way, are linked to culture whereas their field of action is more easily
related to productive activities. Despite this consideration, Film Commissions have witnessed
a great reduction in their activity because of the large cuts made to the cultural activities
during the present economic crisis. The Film Commissions which are part of Regional bodies
or self-governing Provinces or those who have access to European funds have been less
affected by these investment cuts.
To the reduction of economic availability in the various Regions, there has however to be
added the total numeric and economic contraction in the cinema field and above all in
television fiction, not to mention the new trend in making fictions abroad despite the fact that
most of the capital for their making comes from the Rai, a public company. This problem of
outsourcing of fictions has already been indicated as one of the objectives, for example, of the
Lazio fund for audiovisuals. In the near future, especially with the ongoing crisis, outsourcing
risks to be the final blow to the employment levels in the Italian audiovisual sector.
The cuts made have however pushed some Film Commissions to look for other forms of
268 |
activity in order to make their area more attractive for production companies. We have already
spoken about the financial companies and investment funds which guarantee financial
benefits as a further element of attraction. There are some examples of best practice abroad
which show how incentives are not the only solution for a Film Commission which desires to
make their area more desirable for production companies. In London, for example, in 2009 a
Code of Practice was drawn up which transformed the British capital into a “film friendly” city,
resolving many of the problems connected to administrative fragmentation or public security
bodies which in the past had been a huge obstacle for productions.
Also in Paris a local Film Commission established important partnerships with local private
and public institutions (from the locations in public ownership, to electricity companies, to
the police) making agreements which can favor productions in a decisive way.
The Film Commission Torino Piemonte is moving in this direction, and over the last ten years
has launched a model of activity which has been a reference point for other Italian Film
Commissions and today, like almost all the sectors in the chain, risks feeling the effects of
the cuts because of the economic crisis. The Film Commission Torino Piemonte, as already
mentioned, works side by side with a financial company, Film Investimenti Piemonte, which
participates by way of equity and in 2011 invested 1.200.000 euro in four first works and four
films of commercial nature. The first works were: The First of the List by Roan Johnson, Seven
Acts of Mercy by Gianluca and Massimiliano De Serio, Pulce non c’è by Giuseppe Bonito, Baby
Blues by Alina Marazzi. The commercial films were: Il giorno in più by Massimo Venier, Tutta
colpa della musica by Ricky Tognazzi, Anche se è amore non si vede by Ficarra & Picone,
Twice Born by Sergio Castellitto.
The Film Commission Torino Piemonte also runs the Piemonte Doc Film Fund, which in 2011
supported 13 documentaries and in four years of activity has supported a total of 230. The
Piemonte Doc Film Fund was founded in order to support a particular part of the audiovisual
from the Piedmont region, given that most of the production companies based in the area
consider documentaries to be their main activity. The Film Commission Torino Piemonte, for
its part, in 2011 supported a total of 51 productions, including feature films, fictions, soaps,
short films and TV adverts: a total amount which brings the spending of productions on
Piemonte territory to 28,4 million euros, and therefore shows a ratio of about 1 to 9 euros
invested (the balance sheet of the Film Commission is just over 3 million euros) and
investments brought to the area.
The Film Commission – also through its collaboration with Fip – has studied different ways
of offering support to productions. First of all through its office base: 7 units of about 450
square meters which are made available to all productions, during the preparation period
and the filming, who choose Piemonte to make their film. Then through the benefits of certain
agreements made with local administration of almost all of the Piemonte area, aimed at
cancelling or reducing minimum costs for the occupation of public territory and for the use
of public locations (in virtue of the interesting results of investments on the territory for each
production made).
And finally through the activity of the Fip, which offers a consulting service concerning the
| 269
activity of external tax credit through companies from Piemonte, for production companies
who use this area, with the goal of attracting further resources for those who choose
Piemonte to make their film or fiction.
The operative of promotional investments – which are very import in the start-up phase of the
Film Commission- have also greatly changed compared to the initial years, favoring
promotional synergies with other organizations of the cinema system in Piemonte, in
particularly with the National Film Museum, with regard to promotion abroad and during
festivals. In addition the Film Commission Torino Piemonte promotes, together with the
National Film Museum and the Torino Film Festival, the TorinoFilmLab. It is an initiative for
development and independent film production all over the world. The projects, which are
selected by a panel, are then followed through in every phase, from the development to the
production. An experiment which was born alongside the Torino Film Festival (as happens in
the biggest European Festivals) but which brought the Piemonte cinema system (and thus
also the Film Commission) to interact with many independent producers contributing to the
making of films such as Four Times by Michelangelo Frammartino, which have received
important acknowledgements on an international level.
Further numerical data on the activity of the Film Commission Torino Piemonte can be found
on the website (www.fctp.it), and information on the activity of Italian Film Commissions on
the site of Italian Film Commissions (www.italianfilmcommissions.it).
Conclusion
Faced with a crisis which will necessarily change the makeup of cultural institutions in a
profound way, the Film Commissions (although they are more tied to activities concerning
production) will have to greatly modify their activity and their support in the short time. The
possibility of obtaining free incentives will become more and more difficult, whereas the
supply of services and facilities could increase. In addition, the activity of financing partners
will become even more important: both through funds and financing companies which are
already active or which will start up in the coming months, and through initiatives which will
utilize the legislation on tax credit in an explicit way on territory.
Film Commissions therefore will have to act as a guarantee for the credibility of the cinema
product to the possible private investors, organizing the participation and arranging
consultancies concerning financial correctness and credibility of each film.
For this to happen it is important that Film Commissions are publically acknowledged as
productive interlocutors for films and documentaries, and their existence and activity must be
considered in every reform made in the future concerning the future competences of the Fondo
Unico per lo Spettacolo. The Film Commission in turn will have to see to the professional training
of their employees and collaborators. With regard to the location manager, which over the last ten
years has been the main professional figure in the field of Film Commissions, this figure will have
to create a role as a financial promoter of tax credit in companies in the area. For this to happen
270 |
the participation of entrepreneurial associations is fundamental in order to guarantee an initial
contact with companies, and also the ability of each promoter to be able to analyze the financial
plan and commercial prospective of each and every product.
All of this, once again, is evidence of the essentially productive nature of Film Commissions, which
looking ahead will deal less and less with tourist promotion and image and much more with the
complex financial aspects which concern the making of any type of audiovisual product.
| 271
by CFS Legal
Leonardo Coletti
Regional funds
to film production
1. Short preliminary remarks
If we had the opportunity to “spy on” the business plan on the desk of any Italian film
producer which is about to carry out a financial plan to find the resources needed to cover
the budget of a film, we would certainly find the item related to a regional contribution.
Everybody knows how in Italy, due to the substantial condition of television duopoly, to
the permanence of obsolete distribution logics and of the constant contraction in the
budgets of MiBac-Ministry of Cultural Heritage and Activity (which are not adequately
supported by Rai Cinema or Meusa), Film Commissions, as simple and efficient
instruments for the administration of regional funds, are becoming first-rate funding
subjects, and not second-rate ones.
The support instruments that are currently offered by Italian Regions to film and audiovisual
production, start weighting both in terms of extent of the single contribution granted and in
terms of high number of audiovisual projects that benefit from the contribution.
In order to launch a small provocation, we are tempted to state that direct regional funds
to the film sector have all the opportunities to go from a merely “complementary” position,
compared to the position of the support given by the State Law of the sector, to a real
“alternative” to state funding.
NOTES ON THE NORMATIVE EXCURSUS
The normative event that catalysed the development (on our territory) of many different
regional funds to support the production of audiovisual contents is represented by
Constitutional Law no. 3 of 2001 which, by amending article 117 of the Constitution,
reshaped the structure of State/Regions competences, stating that “the valorization of
cultural and environmental heritage and the promotion and organization of cultural
activities” fall within the issues of concurrent legislation according to which “Regions hold
the legislative power, except for the determination of the fundamental principles, which is
reserved to State Law”. As a result, the Proxy Law no. 137 of 6th July 2002 was passed. Among
other things, according to article 10, as regards cultural and entertainment heritage, the
government should:
a) adapt to articles 117 and 118 of the Constitution, to Community law and International
agreements, particularly within the cinematographic area;
b) rationalize the advisory bodies and their functions, simplify the contributions’ payment
procedures and redefine the procedures of establishment and operation of the bodies which
take part in the individuation of subjects that are eligible for contributions and in the
quantification of these contributions;
c) adapt the organizational structure of bodies and authorities of the sector;
d) revise the system of the control over the use of resources assigned and the effects
produced by interventions.
In the implementation of the Proxy Law of 2002, the Italian State, after nearly forty years (in
fact, until then, the last Framework Law on Cinema dated back to 1965) of partial and
fragmented interventions on the normative supporting the films sector, has finally reshaped
the fundamental principles of the whole subject through Legislative Decree no. 28/2004 (also
known as “Urbani Law”) through which, among other things:
I) in compliance with the 50% “obstruction” of State funds to cinematography as per article
87, paragraph 3, letter d), of the CE1 treaty, state financial intervention was limited to a
maximum amount of 50% of the film cost in the production of Italian “cultural” full-length
films, on condition that the producer finds on the market the remaining resources needed
to cover the budget;
1
In this connection, it is necessary to remember how the “Commission Statement to the Council, to
European Parliament, to the Economic and Social Committee and to the Regions’ Committee about
some legal aspects concerning cinematographic and other audiovisual works” of 26th September 2001
confirmed that «the specific criteria according to which the Commission currently estimates the State
contributions to cinematographic and television production in compliance with the cultural derogation
provided for by article 87, paragraph 3, letter d), of the CE treaty, have been stated in its decision of June
1998 according to the French system of automatic contribution to film production. The criteria are the
following: (1) grants can be allocated to cultural products. Each member country must assure the cultural nature of the content of the funded production, according to verifiable national criteria (in compliance with the principle of subsidiarity); (2) the producer must be free to spend at least 20% of the
film budget in other member states without undergoing reductions in the contributions provided for
by the regime. In other words, as eligibility criterion, the Commission accepted territorialisation in
terms of expense up to a maximum of 80% of the costs for the production of films or television works
which make use of subsidies; (3) generally speaking, funds must be limited to 50% of the production
budget, in order to stimulate the normal commercial initiatives of a market economy, and to avoid
a race for funds among the member States. Difficult films, or films with modest financial resources,
are not subject to this limit. The Commission believes that, according to the principle of subsidiarity,
each member State should define the concept of “difficult film and with modest financial resources”
according to national parameters».
| 273
II) a rating system for production companies and film projects, called “reference system” was
introduced. As everybody knows, this system gives ministerial commissions a mandatory
“filter” for the choice of projects eligible for funds, thus reducing their discretionality and
favouring producers which are able to catalyze the audience attention.
III) the Territorial Authority for Cinematographic Activities was established. It is a body for
the relationship State/Local bodies about cinematographic subjects for the adoption, in
agreement with the State-Regions conference, of the three-year plan as per article 4,
paragraph 3 of Legislative Decree 28/2004.
Finally, it should be noticed how the action of regional funds to Italian cinematography, by
extent of funding and dimensional features of beneficiaries which usually operate within the
film sector, currently falls within the sphere of implementation of the Regulation (CE) no.
800/2008 of the Commission of 6th August 2008, which also points out some categories of
funds consistent with the common market according to articles 87 and 88 of the treaty (c.d.
General Regulation of exemption by category).
Regional support to cinematography is usually directed to production companies which fall
within the category of small and medium sized businesses, as defined by attachment I to the
aforementioned Regulation which, in article 15, among other things, states that:
«1. Funds to investments and occupation in favour of small and medium sized businesses
are consistent with the common market as per article 87, paragraph 3, of the treaty, and they
are exempt from the notification obligation as per article 88, paragraph 3, of the treaty, as long
as the conditions as per paragraphs 2,3 and 4 of the present article.
2. The intensity of the aid does not exceed:
a) 20% of allowable costs for small businesses;
b) 10% of allowable costs for medium businesses.
3. The allowable costs are the following:
a) costs for tangible and intangible investments, or
b) wage costs estimated for the jobs directly created by the investment project,
calculated over a two-year period».
NATURE OF GRANTS, SUBJECTS ADMINISTERING FUNDS AND ELEGIBILITY REQUIREMENTS
According to the general principles established by Urbani Law and by the Community law,
and in the execution of their “concurrent” normative power, Italian Regions started endowing
themselves with increasingly sophisticated legal and financial instruments for the administration and the allocation of funds to support the cinematographic production.
Even in the extreme fragmentation of the regional normative picture on this subject, it is possible to isolate some common features.
Firstly, the normative procedure adopted: usually, there is the promulgation of a sector Regional Law that provides, more or less organically, for definitions, purposes and implementing instruments; then, through regional committee’s resolutions, a regulation which controls
the procedures and criteria to access funds is adopted.
The nature of allocations is almost always the nature of a non-repayable aid, while, in some
274 |
cases like FIP (Film Investimenti Piemonte S.r.l.), the Region establishes a special purpose
vehicle which enters like a real venture capital in the most important cinematographic
productions, thus acquiring rights of economic use and/or revenue generated by the
exploitation of the film.
From the point of view of the allocation periodicity, there are public procedures (with the
publication of periodic calls for proposals, as in Lazio) or “office procedures” (as in Piedmont,
as for the allocations administered by the Film Commission Torino Piemonte).
As regards the nature of the subject that administers the funds – which is almost always
defined as “Film Commission”, from a merely nominal point of view – it can have autonomous
legal personality and, therefore, take (in general) the shape of the Foundation (as in the case
of Apulia with the Apulia Film Commission), or it can just be a simple body without any
autonomous legal personality, placed within a larger structure (as the Film Commission that
will be installed within the Regional Centre for Cinema and Audiovisual, as provided for by the
new Framework Law of Lazio Region).
Within the same Region, more than one funds administering subject can be pointed out (as
in the case of Piedmont with the Film Investimenti Piemonte S.r.l. and the Film Commission
Torino Piemonte).
Finally, for what concerns the eligibility requirements for the admission to benefits, we note,
first of all, in the implementation of the territorialisation principle, a mandatory expense on
the Region’s territory, from a minimum of 150% up to a maximum of 300% of the funds
allocated. In some cases (as the case of the regulation of Associazione Friuli Venezia Giulia
Film Commission) a modular contribution is provided, subject to a minimum expense
percentage and to the number of weeks of filming carried out on the region’s territory, that
is, a minimum percentage of use of the technical/artistic staff living in the Region (as in the
case of Apulia National Film Fund).
Moreover, the producer must mention the regional body which granted the contribution as
well as the feature of that body in both the opening and closing credits of the film and, in
some cases, in all advertising and communication materials.
2. Focus
THE NEWBORN: THE CINEMA LAW OF LAZIO REGION
On 14th March 2012, with a really impressive final rush and well in advance of the “rumours”
filtered out during the first months of the year, the Council of Lazio Region approved the legislative deliberation related to Regional Interventions for the Development of Cinema and Audiovisual. It is a real “Framework Law” made up of a very heavy regulatory body which aims
at reshaping and rationalizing the whole structure of regional discipline within the audiovisual
sector. Firstly, the allocation is striking, as it is really huge: 45 million Euros for the three-year
period 2012-2014, to fund interventions involving the whole cinematographic and audiovisual
chain. Among the important novelties, the institution of a “Super Administrator” of funds is
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reported, called Regional Centre for Cinema and Audiovisual, as an «authority independent
from the Region, with its own legal capacity in matters of public law, and with administrative,
patrimonial, financial and book-keeping autonomy», as stated in article 11 of the Law.
It is an instrumental authority in charge of the planning and carrying out of interventions in
favour of the audiovisual sector as provided for by article 9 of the Law, consisting in the
allocation of «grants, contributions, reductions (also tax reductions), economic aid and
benefits, also in the shape of financial guarantees» in order to support activities listed in
article 3 of the Law. The Centre will then establish its own Film Commission and an Office for
the Study and Research on Cinema and Audiovisual Contents.
As for the planning of regional committee activities within the audiovisual sector, it is stated
that the Regional Committee, by 31st October of the previous year, must approve the Annual
Operating Plan that defines the interventions to be carried out within the reference year,
beneficiary subjects, priorities and realization time, funds’ allocation procedures and
instrumental and financial resources.
Moreover, an advisory body made up of experts and named Regional Council for Cinema and
Audiovisual Contents was established.
While writing this report, the regulation has not been passed yet and the first Annual
Operating Plan has not been published, so, in order to describe the type of aid and the
procedures and the criteria of funds allocation, we have to refer to the recent resolution of the
Regional Committee no. 578 of 2nd December 2011 (which includes the Regional interventions
for cinema and audiovisual contents, ex article 1, paragraphs 107, 108 and 109 of Regional
Law no. 12 of 13th August 2011) which will probably constitute the structure of the future
regulation. The aforementioned resolution provides the allocation of funds in favour of
businesses and companies (partnerships and capital companies) which incur a certain
percentage of expense “under the line” in Lazio, on condition that the audiovisual work can
be considered a “cultural product” on the basis of a special test of “cultural eligibility”.
The extent of the contribution for cinematographic works reaches a maximum of 13% of the
eligible expense (according to the aforementioned criteria), a percentage that can increase up
to 15% for teen movies, first and second works, research and experimentation of new
multimedia and interactive languages, documentaries and low-budget works.
The maximum subsidizable amount of 500 thousand Euros is also important, whereas the
opportunity to cumulate different forms of funds (including tax credit and tax shelter) for the
same work is explicitly stated, within the parameters set by the State and Community Law.
3. Focus
THE REBIRTH: THE CINEMA LAW OF EMILIA ROMAGNA REGION
As for the support to audiovisual contents’ production, Emilia Romagna has always shown a
merely “documentary” vocation.
The normative instrument which is currently in force is the Regional Law no. 13/1999, which
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contents Rules on Entertainment field, in particular in article 8, according to which, among
other things, the Region can directly provide for the organization of activities in order to promote the regional territory as location for film and television productions.
Within the purposes set by Law no. 13/1999, the region’s support intervention is limited to the
production of documentaries and animation works which, through the development of subjects related to culture, history, landscape, social and economic news, promote and improve
the regional territory.
The regulation is given by the Regional Committee’s Resolution no. 204/2012, which provides
for criteria and conditions of the Region’s intervention that aims at covering a percentage of
30% of the expense incurred on the territory, up to a maximum of 20,000 Euros for documentaries and 30,000 Euros for animation works, with a total allocation of 190,000 Euros for
the 2012 financial year.
The Regional Council is currently examining a law and the related wider regulation that will
place Emilia Romagna at the forefront among the regional laws of the sector.
In fact, a fund with an endowment of nearly 3 million Euros per year is expected to be established, destined to the support of all genres of audiovisual works, with the only exception of
music videos and advertising spots.
A strong bond between production and territory will be constituted by the eligibility condition
to get the funds, through:
I) the individuation of a small group of technical staff that was born or living in the Region,
which will be involved in the production;
II) an expense limit on the territory, not less than 150% of the granted fund;
III) a minimum number of weeks of filming on the regional territory.
As for the limit of financeable (non-repayable) amounts, it should be equal to about 10% of the
film production cost, with a maximum contribution of 300,000 Euros for each audiovisual
work. In order to meet the bureaucratic simplification requirements and the need of readily
available cash flows from producers, the payment of the contribution should be divided into
three tranches, and the final payment shall be settled on delivery of optical supports (DVDs)
reproducing the film and it will be accompanied by particularly simplified reporting requirements.This is because it has been recorded that extremely analytical and complex reporting
requirements represent a disincentive to productions to invest in the Region; in fact, producers often prefer looking for a not extremely high share of budget somewhere else, rather
than fully using one or more resources for the preparation of the documents for the reporting activity, perhaps of the whole film, as required by some regional regulations.
4. Focus
ITALIAN PRODUCERS’ FAVOURITE: THE CINEMA LAW OF APULIA REGION
The support provided to the audiovisual sector by Apulia Region stood out, over the last years,
because of the efficiency and attractive force of Italian film companies’ investments on the
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regional territory. From the technical-legal point of view, Apulia Region promulgated a
Framework Law in 2004 (Regional Law no. 6 of 29th April 2004).
In compliance with article 7 of the aforementioned regional law, the Apulia Film
Commission (“Afc”) was established in the form of a Foundation. It is considered the
linchpin and the nerve centre of the whole system for the administration of regional
allocations to film and audiovisual production. In 2007, the Afc obtained the legal
personality on a national scale, and it was recorded in the register of legal personalities
at the prefecture in Bari, with the number 52/P.
Afc, as reported in the annual report as at 31st December 2011, «is a private legal entity which
has been established through regional law. It aims at promoting and enhancing the artistic
and environmental heritage of Apulia within the Mediterranean, in order to stimulate media
productions on the territory, also in coordination with other “Film Commissions” and along
with the appropriate institutions and administrations, also promoting and spreading the image
and the popularity of Apulia in Italy and abroad, also thanks to researches and studies
favoured by the establishment of a special Centre in which activities are carried out in
collaboration with Universities and the main Apulia university Departments».
In order to allocate funds to support the production of films and audiovisual works realized
in the Region, which can promote and spread Apulia’s image and popularity, Afc was endowed
with a specific fund named “Apulia National Film Fund”2 .
As regards the procedures to access the aforementioned fund, on 14th March 2012, Afc’s Board
of Directors approved the new “Regulation for the allocation of funds Apulia Film Commission
Foundation”, which provides for three annual sessions (whose applications expire on 31st
January, 30th April and 31st August, respectively).
Afc allocates non-repayable funds up to the maximum competition (for full-length films,
TV movies and TV-series), for each production, of 150,000 Euros, on condition that the
beneficiary:
a) is producing an Italian film;
b) spends, in the territory of Apulia, an amount equal to at least 200% of the allocated funds
(the contribution rises up to 250% in case of combination with the Hospitality Contribution);
c) guarantees at least a three-week filming of the first photographic unit in the territory of
Apulia (which become four weeks in case of combination with the Hospitality Contribution);
d) guarantees that at least 35% of the technical/artistic staff lives in Apulia.
Moreover, it is pointed out that the Afc also allocates the so-called Hospitality Contributions.
The call for proposals for the Hospitality contribution aims at reducing the expense incurred
by the film production in Apulia while carrying out the film project, with references to the
following types of expense: accommodation (hotels, service flats, apartment rentals), board
2
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The adjective “National” is useful to distinguish the fund from the “Apulia International Film Fund”, a new
financial instrument with international vocation, destined to European and extra-European audiovisual,
film and television productions that will be introduced in advance by the Afc at Cannes Film Festival 2012.
(restaurants, catering and packed meals) and transportation within the region (vehicles’ rental
included). The financial endowment for the hospitality services related to April 2012 amounts
to 230,000.00 Euros.
The so-called Hospitality call for proposals, that can be combined with the Apulia National
Film Fund, grants maximum contributions of 100,000 Euros for full-length films, TV-movies
and TV series; 20,000 Euros for documentaries, docudramas and mockumentaries; 15,000
Euros for fiction shorts.
Finally, here are some data related to the activity of the Afc.
In 2011 more than forty audiovisual productions were funded and Apulia Film Commission
administered an endowment fund with a ceiling of about 2 million Euros.
Many and prestigious productions benefited from the fund or are currently producing the film
with the support of the Apulia Film Fund. Among the latter, the following should be pointed
out: Andrea Leone Films, which is producing the full-length film Amiche da morire directed
by Giorgia Farina; Blue Bastille, with the full-length film La meteora - Pino Pascali directed
by Pasquale Squitieri; Habana Film, with the full-length film Eppideis directed by Matteo Miti.
5. Focus
A WIDE AND ARTICULATED OVERVIEW OF THE FUNDS: THE FILM COMMISSION
TORINO PIEMONTE
Piedmont has always been very close to the world of film production.
Through the Film Commission Torino Piemonte, in fact, Piedmont has been the protagonist
in the support and promotion of Italian audiovisual works for more than a decade.
The Film Commission Torino Piemonte (“Fctp”) was established in 2000 in order to
promote Piedmont Region and Turin, its chief town, «as excellent location and workplace
for the film and television production, by attracting Italian and foreign productions and
supporting the local film and television industry, thus creating new job opportunities for
the operators of the sector»3 .
At International level, the Fctp also plays an important role in the promotion of the Italian
audiovisual product abroad, it being a well-known presence at the most important
international Film Festivals and film markets (Cannes, Berlin, Venice, Locarno), where the
Fctp stand has become an institutional meeting point for the different operators of the sector.
Other than supporting productions from the organizational point of view, through the
allocation of facilities, the Fctp also contributes to the support to productions which choose
to carry out part of the filming on the territory of the Region, thus reducing hospitality costs
with contributions related to the production commitment on the territory, also from the point
of view of the employment of local technical and artistic personnel.
3
Source: website www.fctp.it.
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Moreover, from 2007, a fund supporting documentaries was established, Piemonte Doc Film
Fund, which makes use of regional funds and of the Fctp itself.
However, the most innovative instrument adopted by the Region is the Fip – Film Investimenti
Piemonte Srl, a company that administers a revolving fund destined to finance film
productions.Established in 2008 with a capital stock that is currently 100% owned by Fctp,
Fip participates through a venture capital in the most important film productions, thus
acquiring Sunday shares, distribution rights and/or revenues obtained from the economic
exploitation of the films funded. No public procedures (calls for proposals) nor “office
procedures” are required to activate the fund administered by Fip, as projects are evaluated
each time by the Board of Directors of Fip according to the editorial, financial and economic
features that distinguish them. The activity of Fip is mainly directed to finance Italian
productions with a high commercial impact and a good cultural coefficient, or, “first and
second works”, that is, limited-budget Italian productions with a strong innovative value.
Moreover, an “activation” intervention to finance the development phase of audiovisual works
is expected. The maximum contribution is 300,000 Euros, which decreases to a maximum of
100,000 Euros for first and second works. As for eligibility requirements, territoriality
constraints are provided for, represented by obligations to spend at least 100% of the
investment within the regional territory.
Moreover, the contribution allocation by the fund is subject to the provisions of a distribution
agreement that has been already signed, or it is being negotiated, by the producer.
The procedure for the evaluation of the production project is carried out through two
progressive steps. In the first step, the “preliminary” evaluation of the project is carried out
through the analysis (conducted by Fip) of: synopsis, subject, applicant’s business profile,
curriculum of the director and the producer, general financial plan, distribution agreements
or options, budget for the costs to be paid in Piedmont and artistic cast.
Once the first step has been passed successfully, we get to the second step, which consists
in the evaluation, by Fip, of an analytical dossier of the film which is made up, among other
things, of: final screenplay, artistic and technical crew, detailed financial plan including the
cash flow, the rights chain and the co-production and distribution agreements as well as an
eventual loss of “antenna rights”.
Finally, as anticipated, in view of the investment, Fip assures itself the cession of distribution
rights in Italy or abroad and, a s a guarantee for the recovery, some revenues of the film.
6. Notes on the funds allocated by other Italian regions
(and more)
In a survey without any encyclopedic purposes nor completeness ambitions, it seems
important to mention the system of funds in favour of the film sector (and audiovisual, in
general) granted by Friuli Venezia Giulia and Tuscany, and, finally, to speak briefly about the
Film Fund Alto Adige which, even though it is not granted by a Region, but by the Autonomous
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Province of Bolzano, stands out for the extent of the total allocation (5 million Euros for 2012)
and for the amount of the single contribution that can be allocated (up to 50% of the total
production costs, with a maximum ceiling of 1,500,000 Euros for each contribution).
1. FRIULI VENEZIA GIULIA
The normative instrument which regulates the system of the regional funds to the audiovisual
sector of Friuli Venezia Giulia Region is a complex Regional Law, the R.L. no. 21 of 6th
November 2006, which establishes the endowment fund for the aid to audiovisual production,
named Film Fund, and the subject that administers it, the Associazione Friuli Venezia Giulia
Film Commission.
The regulation, instead, is provided by the Regulation including criteria and procedures for the
al location of funds to support film and television productions, which was approved through
the regional committee’s resolution no. 1787 of 29th September 2011.
Through the Film Commission, the Region allocates a non-repayable aid to the production of
cinematographic and similar works, which varies according to the duration of filming carried
out within the territory and which goes from a minimum of 5,000 Euros for 5-14 days of filming
up to a maximum of 150,000 Euros for filming that lasts more than thirty-five days.
In any case, the duration of filming carried out in the regional territory must not be inferior
than 50% of the total filming, and the beneficiary must demonstrate that an expense
corresponding to 150% of the allocated aid has been incurred in the territory. Moreover, it is
necessary to involve personnel living in the Region for at least 20% of the total crew.
As for the applications’ submission, three sessions expiring on 15th March, 15th July and 15th
October have been scheduled. However, in this connection it is pointed out that, according to
the Ranking as per Minutes of the Technical committee’s session of 04/18/2012 – 1/3 session
of year 2012, published on the website www.fvgfilmcommission.com, four films (out of the
seven films eligible for the Film Fund) will not be granted any funds due to lack of resources
within the Fund.
2. TUSCANY
The support given by Tuscany Region to different sections of the audiovisual sector is currently
given through two instruments: the “Cinema Fund” and the “Incoming Fund”.
The first Fund (whose regulation is provided by an implementing regulation of article 6,
paragraph 4, of R.L. no.69 of 24th December 2008) aims at supporting original screenplays,
production of first and second works and documentaries, and it assumes different
characteristics according to the type of funded project.
In particular, original screenplays and first works are funded through the allocation of a
capital account contribution which amounts to a maximum of 15,000 Euros for the screenplays
and to a maximum of 50% of the production cost up to a maximum ceiling of 200,000 Euros
for first works, for which at least 50% of the filming must be carried out outdoor in Tuscany,
and at least 100% of the allocated funds must be spent in this territory.
As regards the second works, the Fund acts like a private equity fund, acquiring dominical
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shares of the film, that is, purchasing the film’s exploitation rights (or shares of them) in
advance. In this case, the contribution can cover up to 10% of the production cost, with a
maximum ceiling of 450,000 Euros per film, it being understood that the beneficiary must
spend an amount of not less than 150% of the allocated aid in Tuscany. Moreover, the Region’s
investment must be guaranteed by the issue, from the beneficiary, of a bank guarantee policy
in favour of the Region of Tuscany, as a guarantee for the realization of the funded production.
In all cases, territorialisation must be guaranteed through the realization of works that
enhance Tuscany’s regional identity.
Instead, the Incoming Fund, which is administered directly by Fondazione Sistema Toscana –
Toscana Film Commission, is a fund that only aims at reducing costs paid for services they
were provided with in the region, among which: accommodation, food, car rentals, postproduction services.
The maximum amount that can be allocated by the Incoming Fund is 50,000 Euros, with a
mandatory expense in the territory (for films and TV series) of 150% of the contribution allocated.
Cinema Fund’s contributions cannot be combined with the Incoming Fund’s ones.
3. FILM FUND ALTO ADIGE
With the Provincial Law no. 1 of 17th January 2011, the Autonomous Province of Bolzano
endowed itself with an important instrument to support audiovisual productions, the so-called
Film Fund Alto Adige, administered by the Business Location Südtirol Alto Adige (“Bls”).
The contribution that can be allocated is a non-repayable aid that finances, through three
different types of intervention, the production and the pre-production phases (pre-production
meant like the preparatory phase of the film, excluding, except for special cases, the
financeability of the screenplay development).
As for the funds to production, territoriality constraints are represented by expense
obligations on the territory of Alto Adige which vary from a minimum of 100% to a maximum
of 150% of the contribution allocated, according to the cultural reportability extent of Alto
Adige project, and to the recognizability (in Alto Adige territory) of the locations used for the
main scenes.
As already mentioned, the Fund which can rely on an allocation of 5 million Euros, for 2012,
can get to grant contributions up to 50% of the total production costs, with a maximum ceiling
of 1,500,000 Euros for each work.
This limit (50%) can be increased up to 80% for difficult films with modest financial resources.
A particularity, compared to the other regional support instruments considered, is that a
minimum financial contribution is required by the producer, made up of “own resources” which
will have to be allocated as cash (to which bank deposits or loans are assimilated).
As regards the support to pre-production, it is possible to apply for it only for projects that show
a cultural reference to Alto Adige (this condition was not required for the funding to production).
The funding can reach 50% of the estimated pre-production costs, with a maximum ceiling
of 50,000 Euros.
The preliminary activity for the evaluation of projects and the determination of the
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contributions’ extent is carried out by Bls, even though the decision on the funds allocation
is then taken through the competent assessor’s Decree, under concomitant resolution of the
Provincial Committee.
As for the allocation schedule and procedures, four tranches are scheduled: 25% at the
determination of the costs’ budgets and the presentation of the related documents; 30% at
the beginning of filming; 25% after the delivery of the first version of the editing; 20% after the
verification of cost accounting.
However, these are merely theoretical terms in that the allocation schedule is actually wide,
at the expense of the “atavistic” certainty requirements and the quick achievement of cash
flows by film producers.
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by Intesa Sanpaolo
Banks backing the cinema:
new formulas and means of support
The experience of Intesa Sanpaolo
in supporting quality cinema
1. Banks and cinema, an ever-closer relationship
Who knows if the Lumière brothers ever imagined that sooner or later a relationship between their invention and banks would have been formed, an unlikely link seeming to join
two separate worlds?
This question may seem pointless and the answer would most probably be negative. However today it is a fact that a relationship has been established between cinema and banks
(as, more generally, between cinema and business) and it appears to be more and more
solid and promising, so much so that Abi and Anica decided to dedicate two conferences
concerning it in the autumn of 2011 on occasion of the Venice Film Festival and the Rome
Film Fest.
The sector’s dimensions are easily shown: over 6000 active companies in the country with
an overall turnover in Italy of almost 6 billion euro, 200 thousand workers, among independent workers and employees, self-employed and freelancers.1 In 2011 the total public
and private investment capital to support cinema productions was 333 million euro.2
Today, the figures, half way through 2012, may be slightly different, but they are enough to
underline the point that we are looking at a major industrial sector, so much so to make Abi,
at the end of the conference in Venice, say «the cinema will be one of the main businesses
of developed economies in the next years and a tool towards the success for the internationalization of the national economic system»3 .
1
2
3
The data, referring to 2008 and 2009, can be found in the Anica press release distributed at the opening of
the conference in Rome (www.anica.it)
From the report Il cinema italiano in numeri – Anno solare 2011, by Ministero per i Beni e le Attività Culturali and Anica.
From the presentation of the conference on www.abieventi.it .
2. Intesa Sanpaolo and cinema: a passion that comes from afar
A leading bank such as Intesa Sanpaolo has developed, especially in recent years, a
growing interest in the language and industry of film, leading it to develop a relationship
on a larger scale.
It’s a relationship which is shown not only through the original solutions for supporting and
promoting all the sectors and the development of an art which Italians have much to be proud
of; but also (we could say above all) allowing the cinema to enter into its projected image of
a bank which is attentive, with regard to respecting its own role, towards social and cultural
issues, with initiatives which have explored and opened new possibilities to the world of
business communication.
Today, the commitment of Intesa Sanpaolo towards the cinema industry can be outlined in
three key areas:
image and communication projects:
the project perFiducia, launched in 2009 and centered on the production of short art films
caused quite a media stir and contributed significantly to the consolidation of the bank’s
image. The common theme in the short films was the positive and vital forces which give life,
especially in times of crisis, to our country and therefore offer reason and hope for a return
of trust; the sponsoring of the Turin Film Festival since 2008;
financing: specifically formulated activity, a specialized unit set up within Mediocredito
Italiano (the bank of the group specialized in the support and development of small and
medium sized businesses throughout the country) entitled “Media & Entertainment”, with
specific resources and skills dedicated the sector;
merchant banking activities: acquisition of shares, generally minority shares, in companies’
capital with the aim of supporting development and strengthening market position.
In the field of merchant banking activity can be found another form of intervention, with a
particular and unique importance, which has been strongly developed over the last two-three
years and in which Intesa Sanpaolo paved the way: the direct in the production of films, with
investments made easy thanks to the tax reliefs of the so-called External Tax Credit.
As we can see, the Group’s commitment to cinema comes in different shapes and sizes and
although relatively recent, this commitment has come about piece by piece with
determination in pursuing diverse strategies and experiences which have led to an
increased knowledge of the sector and its employees.
The basis of this commitment lies in a firm faith in Italian quality cinema and in its
intellectual and artistic resources combined with the conviction that the cinema has a
social and cultural function worthy of being revitalized and supported. This, allied to the
conviction that Italian cinema represents a sector with a high growth potential, a sector on
which we can rely for its excellence.
It is in fact an industry still of relatively modest dimensions compared to other countries, with
a number lower number of productions than what could be expected given the capacities and
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experience present in Italy, but it has a promising future, judging by the number and quality
of young talents coming to the fore, especially directors, following in the footsteps of our great
maestri of the film camera.
In addition, cinema has interesting linked activities made up of culture, technology, art and
crafts. It is based on a large patrimony of skills built up over time, and not always fully
exploited, but offering great potential internationally, both for its entrepreneurial abilities to
bring Italian productions to the world and for its ability, through film, to represent Italy and
its excellence worldwide.
It is then, a resource which helps give life to skills, assets, knowledge and experience which
Italy has in large quantity.
So the cinema is of one of the elements which distinguishes our culture and values, an
important sector both for the economy and for the image of “Italy brand” abroad. At the same
time however it is a sector which is characterized by a rapid transformation concerning the
traditional sources of financial support, resulting in difficulties in raising the necessary
resources; today the amount of both direct and indirect public contribution is about 30% of the
total of Italian investments. In order to provide the Italian film industry with a structured and
long-lasting financial model it will be important to widen the bases of the participation by
private operators who do not operate in the film industry, encouraged by the tax incentives of
External Tax Credit and aim to always work towards an international product, possibly made
in coproduction with foreign operators.
The film industry is therefore a sector in which the Bank feels the responsibility to invest in a way
that is consonant with its role as an institute which contributes to the country’s development.
Also in the case of investments with External Tax credit, there are certainly operations which
involve a risk factor, which are assessed singularly, and are dealt with in a way to maximize
the risk/gain profile, thanks both to the mechanism of tax credit which lowers the risk of the
investment by 40% of the amount invested, and the contractual structure model adopted by
Intesa Sanpaolo.
In 2011 the Italian cinema market registered, in comparison to the previous year, an over-all
drop in admissions (little more the 100 million spectators, -8%) and of takings (660 million
euro, -10%), however it showed a positive forward leap of the market share of home grown
productions, which was recorded at 36% (in 2010 it was equal to 29%).
THE INTERVENTION MODEL
Leaving aside the perFiducia project, we can take a closer look at the Group’s involvement in
the film industry.
Sponsorships
The most important is of the Turin Film Festival, the Bank has been its Main Sponsor since
2008. In 2012 the event celebrates its thirtieth birthday, and especially since 1998, when it
changed name, from the original – Festival Internazionale Cinema Giovani – to the current
one, it has confirmed year after year its legitimate ambition to number itself among the top
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international festivals.
The Turin Film Festival has often, with its choices, anticipated the discovery of film-makers
who by participating find strong motivation and the necessary acknowledgement to continue
their work successfully. The festival has for example seen the debut of important Italian
names such as Mimmo Calopresti, Daniele Gaglianone and Matteo Garrone.
Financing: Desk Media & Entertainment of Mediocredito Italiano
In June 2008 Mediocredito Italiano, the bank within the Gruppo Intesa Sanpaolo organization
specialized in the support and development of small and medium sized businesses, set up
Desk Media & Entertainment, a specialized unit for the support of financing for active
businesses in the audiovisual sector, targeted specially at independent producers and
distributors, editors of televisual content, cinema businesses and workers in the industry
(other specialized desks present in Mediocredito Italiano cover areas such as: shipping,
Tourism, website development, Energy, Food processing, Building, Mechanics, and Housing).
In the audio-visual sector, thanks to efficiency of the Department, Mediocredito Italian
participates mainly in the production and distribution stages, to minimize the temporary
issues of cash flow, and thus cover part of the financial requirements (production, purchasing,
promotion and launch).
The package is made up of financial solutions developed to satisfy the specific features of
the sector, considering in particular the needs of the operators, the contractual aspects,
and guarantees.
Thanks to the specialization of the section it is possible to combine, along with the customary
credit appraisal of the requesting company, a specific and in-depth analysis of the different
aspects of the project put forward: financial, qualitative, trends and norms. With regard to
cinema projection another specific financial product is available to support investments for
the digitalization of cinema halls.
When making a cinematographic or television product normally the greatest financial
requirements (70-80%) are in the production stage (the “filming”), which last between five
and twenty weeks depending on the type of film being made, while the returns (the takings)
coming from different sources to cover the budget may take a period on average between
twelve and eighteen months from when the filming began.
For this type of situation, Mediocredito Italiano anticipates liquidity which would otherwise
only be available at a later stage, therefore allowing the producer to have the resources
necessary for production.
With the aim of increasing its know-how, of protecting this industrial sector in an organic
and knowledgeable way, to follow trends and to be constantly updated, the Desk has
developed relationships with the main public bodies, with industry bodies, and with the
operators of the sector.
Thanks to the experience and proficiency of Desk Media & Entertainment, Mediocredito
Italiano has allocated over 200 million euro over about three years to support the production
and distribution of cinematographic and television products.
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Venture Capital Investments: merchant banking activities
As we briefly mentioned at the beginning, a branch of Intesa Sanpaolo supports the cinema
industry through the acquisition of minority shares in the company’s capital in order to
promote its development. This is a different type of financing, as it implicates a share in the
company’s venture capital. Currently Intesa Sanpaolo possesses shares in two of the leading
cinema and television production companies namely Cattleya and Lux Vide.
The acquisition of shares in Cattleya dates back to 2000: the operation was carried out under
the name of Gruppo Sanpaolo Imi. Today, the bank holds an 8% share in the company. Since
the Bank’s acquisition of company shares the turnover has registered a significant growth
especially in the most recent years, and the productive activity has developed and affirmed
itself, not only in cinema production, but also in television programmes and adverts. Today the
company boasts one of the most important Italian film libraries, with films which realized
great success both from critics and public such as Don’t Move (2004), Don’t Tell (2005),
Romanzo criminale (2005), Ho voglia di te (2007), Lezioni di cioccolato (2007) and other well
known films.
The Bank holds a share of about 14% in the Lux Vide capital, which was acquired in 2007 to
support some of the company’s growth projects. Some of the most well known and popular
fictions according to the television audience, produced by Lux Vide, were Padre Pio (2000),
Papa Giovanni XXIII (2002), Don Bosco (2004), Chiara e Francesco (2007), Guerra e Pace (2007),
Coco Chanel (2008), Pinocchio (2009), Cenerentola (2011), Don Matteo (2000-2011), Che Dio
ci aiuti (2011), Un passo dal cielo (2011), Maria di Nazareth (2012).
Capital Venture Investments: Direct participation in production
In 2010 Intesa Sanpaolo kicked off a new season, taking part in the production of This Must Be
the Place by Paolo Sorrentino. It was in fact the first private body to invest directly in the
production of single cinema works, making use of the benefits of the so called External Tax Credit
(Etc). It was a pioneering operation, carried out by the banking group, which was part of the
venture capital investments, which so far has concerned seven more films and has paved the
way for other similar operation by other companies, both banks and industrial companies. Let’s
now take a brief look at the features of External Tax Credit, the mechanism introduced with the
Financial Law in 2008, which came into force in 2010 and is currently expected to be valid until
December 2013, to facilitate the participation in production by subjects who do not belong to the
cinema sector, such as banks.
It allows investors to benefit from tax credit equal to 40% of the resources contributed to the
production of an Italian film, with a ceiling of 1 million euros per year per investor, corresponding
therefore to a maximum contribution of 2,5 million. The contribution from external sources
connected to production may not go over 49% of the total cost of the film’s production. A share
of the profits made from the film is also open to the investors, in this case the maximum is 70%,
regardless of the extent of their contribution and involving a tax relief system which is particularly
convenient. In addition there are contractual structures planned to cushion the inevitable risks
connected to the investment.
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These risks are connected, as one can easily imagine, to the hope that the film will meet the
audiences’ tastes; but they are also connected to the time in which the film is released and the
audience numbers determined over relatively short periods of the year.
The complexity of the distribution market cannot be ignored. It is organized, as we well know,
according to the temporary windows which define the follow up of the economic capitalization
opportunities according to the time over which the film is screened over various channels: from
its appearance in cinema halls (the first real encounter of the film with the public and the key
factor for determining the value when it is then released) to the distribution on home video, payper-view platforms (satellite, digital, mobile phones, web etc) and then to free channels, usually
a few years after its release in cinemas, however nowadays times are being shortened in order
to limit piracy.
Access to the benefits of external tax credit is subject to the “cultural eligibility”
(acknowledgement that the work is of Italian origin), to the territorial commitment (the producer
must spend at least 80% of the funds received in Italy) and naturally to the getting the go-ahead
for public screening. Intesa Sanpaolo is very selective about projects, investing based on a
partnership with the producer on a production qualifying for an External Tax Credit. The analysis
is entrusted to a dedicated team where the bank workers work alongside experts in film and in
the film market, critics, independent operators, specialists in legal and contractual matters.
The main criteria depends on the themes concerned, the director, the cast, the estimated success
rate, the financial structure of the project, which has to cover both production and distribution and
the contractual structure.
In 2011, for example, numerous different films were firstly assessed: after an initial filter, a dozen
projects passed to the next assessment stage and in the end only a few films were taken into
consideration to be assessed for a final decision.
External tax credit seems to be a particularly effective innovative device, as it allows private
investments to be channeled to the cinema, selective investments rather than mass public
investments. With this conviction Intesa Sanpaolo will do its best, in relation to the productions
it invests in, to involve further partners with the aim of supplying a more complete response to
the budget needs of those working on the film.
The returns expected for this type of investment can be divided into two categories:
media/promotional investments and economic investments. The latter, everything else being
equal, are undoubtedly favored by the external tax credit norm, as the recovery of 40% of the
contribution helps to lower the risks related to the operations. Nevertheless, the returns from
communication projects – which although as we know are difficult to quantify – can be consistent:
it is enough just to consider the events surrounding a film launch, the media interest, the brand
that appears on all the communication materials (also in the film credits) on all the different
occasions and in the many places where the film is the protagonist.
2010 - 2012 INVESTMENTS UNDER EXTERNAL TAX CREDIT
Since 2010, the Bank has invested a total of over 7 million euro in the film industry and has taken
part in the production of eight films.
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2010
This Must Be the Place
After his father’s death, a retired rock star who has closed himself away for years sets off to
find the person who in the past had tortured his father in the Nazi camps and who is now a
refugee in the United States.
The director is Paolo Sorrentino, author of – among the other films that have gained him numerous acknowledgements both in Italy and abroad – One Man Up (2001), Tha Family Friend
(2006), and especially The Deity (2008; winning among others, The Special Jury Award at the
Festival of Cannes in the same year).
The film, with leading actors Sean Penn and Frances McDormand, who have won Oscars and
received numerous nominations, was produced by Medusa Film, Indigo Film, Lucky Red, Arp
(France) and Element Picture (Ireland), and was released in cinemas in October 2011. It won
the Prize of the Ecumenical Jury at the Festival of Cannes in 2011 and 6 David di Donatello
awards in 2012.
2011
The Cardboard Village
Immigration is the theme of the film directed by Ermanno Olmi, one of the icons of Italian cinema, in which the story is told by a priest who is in close contact with illegal immigrants.
In the film cast we find Michael Lonsdale, Rutger Hauer, Alessandro Haber, Massimo De
Francovich. The film was produced by Cinemaundici and distributed in Italy by Rai Cinema,
prof. Claudio Magris and Card. Gianfranco Ravasi contributed to the screenplay. It was presented in the non-competing section at the Venice Film Festival in 2011 and was released in
cinemas in October of the same year.
Annalisa
Directed by Pippo Mezzapesa, a young author who has already obtained important
acknowledgments from the critics, the film narrates the story of two teenagers from a small
town, their unrequited love for a girl and the changes in their lives following a fatal event. The film,
based on the eponymous book by Mario Desiati, was produced by Fandango and Rai Cinema (coproducer) and distributed in Italy by Fandango. Actors in the cast were Aylin Prandi, Nicholas
Orzella, Rolando Ravello, Valentina Carnelutti, Antonio Gerardi, Luca Schipani.
It was presented at the International Rome Film Fest in 2011 and was released in cinemas in
November of the same year.
Immaturi – Il viaggio
“Sequel” of the extremely successful The Immature (January 2011), it is a comedy with new
adventures and new journeys in the attempt to “grow up” for the six protagonists from the
previous story, who are on an Island for their “end of school” holiday.
It was directed by Paolo Genovese, famous among others for The Santa Claus Gang (2010), which
obtained great success with the public.
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Raoul Bova, Barbora Bobulova, Ricky Memphis, Luca Bizzarri, Paolo Kessisoglu, Ambra Angiolini,
Anita Caprioli, Luisa Ranieri are the leading actors of this Medusa Film production (executive
producer Lotus Production), distributed in Italy by Medusa Film in January 2012.
Reality
Director: Matteo Garrone.
The film by the director who made his name with the film Gomorrah (2008) is a comedy about the
ephemeral power of the Tv to turn normal people’s lives upside-down.
The film produced by Fandango (co-produced by Rai Cinema) and distributed in Italy by 01
Distribution (Gruppo Rai), had actors such as Claudia Gerini, Aniello Arena and Loredana Simioli.
It was presented at the Festival of Cannes in 2012 and won the prestigious Grand Prix. The film
is due to be released in cinemas this year.
2012
Baby Blues
Directed by Alina Marazzi, who was brought to the attention of critics and international audiences with her first documentary For One More Hour with You (2002), winner of numerous awards
which was followed by Per sempre (2005), about female monastic life, and We Want Roses Too
(2007), about the feminist revolution in Italy.
This time the theme was post-partum depression in young mothers.
The cast members are Charlotte Rampling, Elena Radonicich, Maria Grazia Mandruzzato, Valerio Binasco. It was produced by Mir Cinematografica, and is due to be released in cinemas before the end of 2012, distributed by BIM Distribuzione.
Me and You
Directed by Bernardo Bertolucci, one of the “maestri” of Italian cinema, the film, based on the
eponymous book by Niccolò Ammaniti, tells the story of a shy, fourteen-year-old searching
for his “existential balance”.
A Fiction and Wildside production, distributed in Italy by Medusa Film and abroad by HanWay,
and in its cast are Jacopo Olmo Antinori (his cinema debut), Tea Falco, Sonia Bergamasco,
Pippo Delbono, Veronica Lazar.
It was presented in the non-competing section at the Festival of Cannes in 2012, where it was
very well received, the film will be released in cinemas by the end of the year.
Magnificent Presence
Directed by Ferzan Özpetek, who is extremely well known especially for His Secret Life
(2001) and Saturn in Opposition (2007), worthy winners of several David di Donatello
awards, Silver Ribbons, Golden Ciaks and Golden Globes. It is a film about the adventures
of a gay boy who after going to live on his own, in a house in the Monteverde area of Rome,
discovers that his “flat mates” are the spirits of a group of actors who were against the
fascist regime and who died during the Second World War.
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The cast members are Elio Germano, Paola Minaccioni, Margherita Buy, Vittoria Puccini,
Beppe Fiorello, Alessandro Roja, Andrea Bosca, Bianca Nappi, Matteo Savino, Daniele
Pecci. It is a Fandango and Faros Film production and was distributed in Italy by Rai
Cinema (01 Distribution). The film has been in circulation since March 2012.
THE PERFIDUCIA PROJECT: AN ORIGINAL JOURNEY CONCERNING BIG AUTHORS AND
YOUNG TALENTS
perFiducia (inTrust) is the meaningful name given to an extremely innovative
communication project, promoted and supported by Intesa Sanpaolo since the spring of
2009, during one of the darkest periods of the international financial crisis. Its aim was to
add value, with the use of cinema, to the positive and vital energies which give life to our
country and to talents, especially young talents, which are flourishing, and therefore
contributing to spreading the feeling of trust in the future and the acknowledgement of
our ability to obtain success.
The idea is to support the production of short films which talk about solidarity, courage,
sense of duty and ability to make sacrifices, promoting a positive and strong message of
hope, passion and dreams.
The first cycle of films came from the inspiration of three important directors – Ermanno
Olmi, Gabriele Salvatores and Paolo Sorrentino – whose contribution was important short
films, entitled Il premio, Stella and The Slow Game.
The following cycle involved three young directors who in a certain sense had been
entrusted with this next step by the “maestri”: Pippo Mezzapesa filmed L’altra metà,
Alessandro Celli with The Report Card and Massimiliano Camaiti with L’ape e il vento.
A third cycle saw the active involvement, via web, of all those (mostly young people) who
desired to put forward their ideas, subjects and screenplays. Three subjects were selected
and were entrusted to other young directors: Laura Bispuri (Biondina), Paolo Zucca (Cuore
di clown), Marco Chiarini (Omero-bello-di-nonna).
The perFiducia project films, can be viewed on the website www.perfiducia.com and have
been broadcast on different digital tv channels and in cinema. In total they have received
twenty-five national and international acknowledgments. The website registered a total
of almost 2 million visitors.
With Baggage, a short film by the Bosnian director Danis Tanovic (Oscar 2001 for best
foreign film with No Man’s Land; Id.) presented in July 2011 at the Sarajevo Film Festival,
Intesa Sanpaolo wanted to give the perFiducia project an International feel, taking it out
with Italy to play its part in the social and cultural identity of the countries the Group works
with. At the presentation of this initiative it was emphasized that «It was a different way of
communicating, through which Intesa Sanpaolo intends to launch a positive message of
trust and hope, and to open a new path of dialogue with the public».
The project perFiducia represents an extremely positive experience which has allowed
Intesa Sanpaolo to continue communicating, even in a period of uncertainty and
turbulence, in a completely new but credible way.
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by Studio Legale Jacobacci & Associati
Claudia Scapicchio
Evolution of the Product Placement
New instruments to reduce the risk of a possible
failure and to maximize the investment
E
ight years after the Urbani Law entered into force – in 2004 – the Product
Placement (PP) has deeply changed, from being an instrument of occult advertising, somehow tolerated even though it was strongly combated, into an
accepted promotional instrument that is unequivocally communicated to the
audience. Over the years, great expectations have been put on the PP and its
cathartic power of revival of Italian cinema, as a new source of private investment. As a
matter of fact, the PP is a great means of promoting one’s own brand/product, with lower
costs compared to more traditional advertising forms, and it is characterized by higher
flexibility, even from the contractual point of view. From the birth of cinema, on 19th March
1895, with the film La sortie des usines Lumière (Workers Leaving the Lumière Factory),
a film which was self-promoted by the Lumière brothers themselves, to one of the first
cases of a company that expressly requested the placement of one of its products in a
film (1945, the film was Mildred Pierce, when Joan Crawford is framed while drinking
some Jack Daniels), up to the first real cases of PP as it is meant today, that is, as a form
of communication and marketing, with 2001: A Space Odyssey, directed by Stanley Kubrik
(1968), American Gigolo (Id.), with the consecration of Giorgio Armani, in 1980, and E.T.:
The Extra-Terrestrial, directed by Steven Spielberg in 1982, the PP has constantly improved, mixing up and mingling with other forms of brand promotion, which contribute to
increase its power and impact over the spectator/consumer the PP is directed to.
The main purpose of the following analysis is to determine, besides the fundamental and
consolidated features of the PP – as it is used today by the film industry and the
companies that aim at turning films into a channel for the promotion of their
brand/products, with the advantages that this involves, in terms of cost and return of the
investment – which are, today, the most innovative instruments that support the
traditional PP and change it. The purpose is to verify if the product placement, which is
still undervalued and underutilized – at least in Italy and mainly by small and medium
sized businesses, which make up the majority of the industrial picture in our country – can
represent an alternative to more classical, more used, increasingly expensive and often
less effective forms of investment for the promotion of a brand. However, it should be
noticed that our Country is listed among the top five countries which invest in the PP,
occupying the third position after the USA and France.
FIGURE 1
INVESTMENTS IN THE PAID PRODUCT PLACEMENT
Cinema: the top 5 countries
34 Spain
41 Japan
43 Italy
57 France
600 USA
Data expressed in Dollars
1. Definition of Product Placement – Notes on the reference
regulations
The product placement is a: «Marketing technique that foresees the placement of a product
and/or a brand in a film and the payment of a fee (in the form of money or other goods or services)
from the company owning that product/brand to the film producer». By broadening this definition,
we specify that product placement is every form of audiovisual commercial communication which
consists in the placement of a brand/product within a cinematographic work (or
videogames/mobisodes/social network), so that the brand and the product can be recognized
by moviegoers/consumers, and that the product/brand is placed in the narrative context in the
most pleasant way possible, as if it were used by the film’s actors/protagonists/characters
spontaneously.
Up to 2004, in Italy, the promotional placement of brands or products within films was considered
illegal: this conduct was punished as forms of occult and misleading advertising. With the
Legislative Decree no. 28 of 22nd January 2004, also known as Urbani Law, the placement of a
product or brand within a cinematographic work is allowed if it is truthful, clear, fair, coherent
and integrated in the development of the plot, without representing an interruption in the
narrative context of the film (article 9 of Urbani Law).
The PP is allowed is the audience has been informed about its presence within the film through
the closing credits, with a specific indication of the companies that recurred to it.
An explicit prohibition of product placement still exists today for cigarettes and tobacco, drugs and
medical treatment requiring mandatory prescription, whereas strong limits (nearly a prohibition)
are provided for spirits.
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Further conditions for product placement operations have been stated in the EC Directive no.
65/2007. According to this Directive, products can be placed in cinematographic works, films, TV
series, sport and general entertainment programs, with the exception of children/undereighteens programs. Moreover, it states that products can be placed both upon payment of a
compensation and free supply of products or services.
The product shall not play a fundamental role within the work in which it is placed (even though
there are some striking cases of films, not only American, in which the product becomes the real
protagonist, like in the recent Italian movies Lezioni di Cioccolato [2007] and Benvenuti al Sud
[2010], in which Perugina and Poste Italiane are the true protagonists) nor it shall directly
encourage the purchase of this product.
The Directive, similarly to our Urbani Law, also provides for an absolute prohibition as regards
the PP of tobacco and cigarettes, banning the companies which produce the aforementioned
products, or whose main activities can be related to the tobacco industry, from placing these
products or services in any type of TV program or film. Pharmaceuticals and/or drugs that require
a medical prescription are subject to the same prohibition.
The Directive, similarly to our national regulations, foresees that the presence of PP is to be
somehow indicated, thus leaving each Country free to decide which image or message use to
inform moviegoers/consumers about the presence of products for commercial purposes within
the film. It is a common practice, in Europe, to use logos with a “P” to indicate the presence of
products related to the PP, whereas in Italy it is necessary, more simply, to insert the words
“Program with product placement for commercial purposes” (or similar) during the broadcast
or at the beginning of the program, as for TV programs, and in the closing credits for films.
Implementing the Directive, Italy issued the Legislative Decree no. 44/2010, according to which,
among other things, the Authority for Communications Guarantees (Agcom, Autorità per le
garanzie nelle Comunicazioni) shall verify the correct enforcement of the rules contained in the
Directive, thus holding the power of taking measures against those who break the
aforementioned rules, among which, for instance, the suspension of the program or film.
CINEMA AND TELEVISION PRODUCT PLACEMENT
Cinema and television PPs are, in their base form, the most traditional and well-tested models
for the placement of products for commercial purposes.
Products/services/brands can be placed within a film/TV program in different ways:
1. screen placement: the product/brand is placed in the scenic context. For instance, Sex and
the City (1998-2004), up to the more sophisticated examples of American Gigolo and Armani®,
Brioni® and the films of the “007” series, Everlast® in Million Dollar Baby (2004).
2. script placement – name placement – explicit placement: actors (protagonists or not) explicitly
talk about the product, placing it within the narrative context, more or less pleasantly. We
should remember about Qantas® in Rain Man («the company with fewer accidents»), or the
more recent case of Alberta Ferretti® in Mine vaganti (2010).
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3. plot placement: it takes place when the plot is developed around the product, which is
rationally placed within the plot itself, thus becoming suited to the screenplay, until
becoming sometimes, the protagonist or co-protagonist of the film. The goal that should
be achieved through this type of placement is more complex: to transmit the story,
message, placement and references of a brand. Let’s think about Nike® shoes in Forrest
Gump (1994), about Tiffany® jewelry in Breakfast at Tiffany’s (1961), about Wilson® ball in
Cast Away (2000), and about the aforementioned cases of Benvenuti al Sud (Poste Italiane)
and Lezioni di Cioccolato (Perugina®).
Today, PP also places itself within more authorial productions which, until some time ago,
seemed to snub this form of funding, as if using it would mean renouncing to reach a certain
artistic level. Recently, even a sophisticated Italian-French production, Ciliegine (2012) by
Laura Morante, seemed to surrender to the lure of Apple® (which has become omnipresent
whenever a computer or mobile phone is framed).
WHY INVESTING IN THE PRODUCT PLACEMENT?
Investing in the Product Placement means to incur a limited expense in view of the possible
return in terms of audience reached by the brand/product, a large and varied audience that
will not coincide, if not partially, with the reference target of the brand. This will allow the
product to be noticed by potential costumers belonging to a different target compared to the
usual costumers of the brand, not to mention the further effect of the audience enlargement
in geographical terms, considering that, with one
FIGURE 3
product
placement
operation
only,
more FIGURE 2
markets/Countries can be covered.
• Italy (figure 2);
• France (figure 3);
• Usa (figure 4);
• Spain (figure 5);
• Germany (figure 6)1.
Moreover, investing in the product
placement allows to obtain its
FIGURE 4
FIGURE 5
FIGURE 6
extension in terms of time, without
budgeting a new expense item
every month or every year, as it
happens in the traditional forms of
promotion of a specific brand or
product. Then, if we think about the
fact that the brand/product, as it
happens in the majority of cases,
1
296 |
Images taken from Power Point Presentation by JMN & DY of Lecco.
can be transmitted into the film through an actor, it is clear that, by investing in the product
placement, the company that owns the brand is given the unique opportunity to use an already
famous subject as a testimonial: an actor at a minor cost compared to the amount the
company would pay for a contract with the same actor for a traditional advertising campaign.
Moreover, the actor is not only exploited in its role of actor/testimonial, but also, often in a
more effective way in terms of audience attraction, as the character he plays in the movie
and, therefore, his role, his values and his ideas within the narration; in other words, his own
story within the cinematographic story. This is often the origin of a long-lasting mental
association in the audience, which goes beyond the extent and expectations of the
investments made, between a brand and a specific actor/character: let’s think about
Tiffany® and Audrey Hepburn or Steve McQueen and Ford Mustang®, just to mention
some of the most famous examples.
Therefore, could we say that it is worth investing in the product placement because this
investment represents a cost saving compared to the usual and traditional costs for the brand
promotion? Moreover, does the PP have a real return and, in other words, is it a type of
investment that “pays”?
Upon closer examination, the recent information about PP, even the economic information,
proves that PP does not have any direct and immediate effects over the purchase of a specific
product/brand by consumers.
Nonetheless, we suppose we should not ignore that: «In the branded new world we live in
logos and the products and services they represent are familiar sights»2 , and, therefore, we
should give increasing importance, when selecting the possible means to promote the brand,
to those which, more indirectly than traditional communication, manage to emotionally involve
the potential consumer, who is not a passive spectator of the advertising message anymore,
creating a credible image of the brand, which improves and strengthens within the
imagination of the people, who increasingly look for a “story” in the product they purchase and
in the reference brand.
Among these means that are available on the market today, product placement represents,
for many reasons, an advantaged instrument, as it has got many of the aforementioned
characteristics.
Moreover, as it is a flexible instrument, also for its uniqueness from the contractual point of view,
PP can assume different forms and become a useful investment instrument both for small and
medium sized businesses, with few economic resources destined to promotion, and for
multinational companies, which can combine product placement with more structured marketing
and communication activities, that can maximize the investment, thus increasing its importance.
PP, CO-MARKETING AND CO-BRANDING
Including a PP project within a more articulated co-marketing and co-branding plan is,
2
N. Klein, No Logo, Flamingo, London 2000, p. 107
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today, one of the opportunities offered by the market in order to strengthen the effects of
the investment.
Among the possible definitions, a particularly useful one has been elaborated by Professor
Sergio Cherubini3 , according to which co-marketing is: «the process through which two or
more operators, both public and private, carry out a series of marketing initiatives (organized,
planned, controlled activities) in partnership, in order to achieve marketing objectives
(common or autonomous, but compatible with each other) through consumers’ satisfaction».
In other words, this is an agreement that is drawn up by two or more businesses in order to
create a common marketing project, for more brands, sharing the costs incurred.
When applied to cinema and particularly to product placement, we speak about “horizontal”
co-marketing, through which two companies carry out a common promotional project,
promoting completely different products (film and product/brand) that are directed to the
same consumers.
On the whole, this is also a “temporary” co-marketing, which is drawn up for a single
marketing project (promotion, release and screening of the film) with a stated duration. Good
examples – from the scientific point of view, ignoring the operation’s commercial result – of
co-marketing projects that have been also carried out through the cinematic product
placement are: Coco avant Chanel (2009) and The Dark Knight (2008). In the first example, the
film protagonist, Audrey Tautou, who played the role of fashion designer Coco Chanel,
becomes the testimonial of the new advertising campaign of the perfume Chanel no. 5®,
taken on the Orient Express train.
In the second example, actor Christian Bale, who plays Bruce Wayne, Batman’s alter ego,
becomes the testimonial of a new Armani® collection, launched simultaneously with the
film release, as communicated by film posters, which create a mixture of film and reality,
actor and character.
Co-marketing operations are often associated with co-branding operations. Co-branding is
defined as: «an alliance between two or more famous brands which are contextually
presented to consumers, thus
FIGURE 7
FIGURE 8
generating a new supply, or a
supply which is perceived as new
or different by the consumer,
thanks to the support or the
presence of a new brand»4. The
co-signing of the “common and
new product” from the brands
involved in the agreement, which
often change from the graphic
3
298 |
Sergio Cherubini, in Marketing trends in Europe, Documents of the Meeting held in Venice, at Ca’ Foscari University, on 24th November 2000.
point of view, is usually a typical element of the relationship between
the brands that carry out a co-branding project. Collaboration between
brands is, clearly, explicit, as the association of the brand to the film
title generates further symbolic characteristics, which realize a kind of
symbolic-emotional co-branding (also called co-naming). Great cobranding examples are: Breakfast at Tiffany’s and The Devil Wears
Prada (2006). In these cases, more than in cases in which the film title
does not show a famous brand that has been registered by the company
that places its brand within the film, it would be a good rule to register
the title of the film as a brand, in order to facilitate and share the comarketing and merchandising activities connected with the film release.
FIGURA 9
PP AND VIDEOGAMES
Videogames constitute a constantly evolving platform with a particular focus on
products/services placement. As in the television and film context, also in videogames we
can notice that products and services get into the plot of the game and develop an interactive
relation with the user/consumer, that is “thrown” in the virtual reality of the videogame.
One of the first cases, among the most successful ones, of videogames product placement is
represented by The Sims: from Alienware® (a computer brand) to Renault®, up to brands of
the body-care products, like Dove®.
Interactivity is the main characteristic of the videogames PP: the user, who is the protagonist
of the game, and other characters directly interact with products/services of the PP (for
instance, a character of The Sims drives a Renault). Due to this ability to mix real elements
(brands) with a virtual world, thus allowing the user to live experiences that he could not live
in the real life (like driving a Ferrari® or wearing a Gucci® dress), videogames are an
excellent platform for the PP, as they fully “exploit” the sense of real life.
Also the agreements drawn up between companies and videogames producers/creators for
the product placement for advertising purposes fall within the category of the atypical
contracts, with various contents.
The development of product placement in the videogame is often involved in a more complex
co-marketing agreement in which the presence of the product in the videogame, that maybe
was specifically created for the film release, is one of the opportunities for the company which
owns the brand to expand the visibility of its product through a more structured
cinematographic project, which makes the categories of people attracted to technology to
get closer to the item, even though not necessarily to the product, if it is presented through
traditional channels.
When the videogame is entirely based on the plot of a film, so, made ad hoc not only to convey
a product or a service placed in the film, but the film itself, which therefore becomes a
4
Prof. Francesca Cecchinato, Co-branding, Cedam, 2007.
| 299
product, we can talk about the so-called Movie Tie-In Videogames, which are often confused
with the more traditional PP described above. This is a widespread collaboration between
film companies and videogames creators, aimed at promoting the release of the film, and
at the same time generating a higher revenue both for production companies and
videogames makers.
A fundamental element for the tie-in is a license through which exclusive rights over the film
screenplay are ceded to videogames makers for the production of a videogame. Videogames
makers, on their turn, assume the obligation to create a product/videogame whose object is
the film being released. Then, revenues obtained from the sale will be shared between the
videogames maker and the film company, which often (but not always) receives them in the
form of royalties.
One of the particular features of tie-in videogames is that they often anticipate the film release
or they are put on the market simultaneously with the release of the film in the cinemas.
One of the first tie-in videogames was E.T., created by Atari® in 1982, whereas nowadays
those related to films that achieved a great success among teenagers, like Harry Potter
and Spiderman.
For intellectual honesty, we should say that the instrument of Movie Tie-In Videogames has
not generated the expected success yet, and it was basically a flop for the videogames industry
and it did not prove an effective means within cinema communication strategies.
PP AND MOBISODES
Mobisodes are a relatively new method to broadcast television programs. Though they do
not show a specific connection, at least in the current use recorded, with cinema, we
decided to include them in this analysis as they could be soon extensively used within
cinema (as an additional instrument for the promotion of the film) to be included in a
bigger co-marketing project.
In particular, Mobisodes are brief examples of programs, specifically elaborated and
formatted in order to be broadcast, and so viewed, on mobile phones. This technology has
been made possible thanks to the developments in the transmission of 3G data and through
wireless devices. As a matter of fact, the data transmission speed of 3G networks allowed TV
productions to make these episodes available, through wireless connections, streaming or
download modalities, thanks to the mobile network. Fox Broadcasting Company has been
among the first to use the term “mobisodes” and to broadcast them. However, mobisodes
are a product of the telephone operators, which was created to obtain higher revenues from
wireless data services. In fact, the aforementioned telephone operators try to create
increasingly appealing contents, available in the wireless modality, related to music, TV and
cinema, in order to progressively increase the percentage of users of these technologies.
Probably this technology, over time, will become increasingly widespread, keeping pace with
the development and evolution of mobile phones technology. As a matter of fact, the average
consumer tends to increase his mobile accessibility to media contents. With the advent of
high consumers satisfaction products, such as iPhone and Google G1, mobile telephony
300 |
consumers are becoming much more interested and well up in the access to contents on
mobile devices. The more the consumption of the aforementioned technologies spreads,
the higher will be the demand, addressed to telephony operators, so that these operators
create increasingly high-quality contents. Obviously, this will encourage the growth of this
type of contents.
From the strategic point of view, it is clear that this mechanism creates interesting
opportunities. A mobile phone is always with the person who owns it (sorry for the
commonplace). As consumers increasingly use their mobile phones to access certain types
of entertainment, there will be an increasing number of opportunities to reach the
consumer/viewer through advertising messages, product placement and TV advertising.
Advertisers and contents’ designers will have to become increasingly creative and they should
adapt themselves to the advantages and disadvantages of this technology. Content providers
should be able to adapt their advertising messages to smaller screens and size of advertising
spaces. On the other hand, the number of users achieved should be able to balance the
remarkably reduced size of messages.
Let’s imagine, therefore, to realize a mobisode (something more than a trailer) about an
upcoming movie or a movie that has just been released, or, simultaneous with the film
release, and to associate it, for instance, with an amusement with prizes. Or, the election of
one’s favourite character through sms survey.
There are many opportunities to develop an up-to-date instrument to promote a product and
the film in which this product s placed.
PP 2.0 - FACEBOOK®
However, social networks seem to be the instrument with the highest development potential
for new and increasingly effective forms of cinema product placement.
A very interesting opportunity of PP 2.0 is offered by Facebook®, through the function of
“tags”, which were initially used only to identify and “name” the persons in the pictures
uploaded in one’s profile.
If PP aims at advertising a product, which instrument could be better than a social network
to promote products and services? The absolute advantage in the placement of product and
services – which are already present or are to be placed in a film – within a social network is
represented by the potential users and, therefore, the possibility to transmit the “advertising
message” to much more targets (even different) at a low cost; but, as we will see, this
reduction in costs is more apparent than real. Taking the new opportunity offered by
Facebook® as an example, now we describe a typical hypotheses of PP 2.0.
We said that Facebook® offers the user the opportunity to “tag” people in the photos; today,
it is also possible to “tag” products and services (which are present or not in the picture),
thus associating logos and products to the real world (user’s photos). “Tagging” a product
within a picture uploaded by a user is based on the so-called “Interest pages” on Facebook®.
When a user decides to “tag”, for instance, a can of Coca-Cola®, he only has to position the
pointer in a point of the picture (not necessarily on the can), click and start typing the word
| 301
“Coca-Cola”®. As the first letters are typed, Facebook® system will give the user a series of
pages related to the key-words typed. These pages are just some Facebook® profiles that are
similar to normal profiles (unlike the latter, they can be viewed without any friendship request
approval) created by the different companies owning a product/brand for marketing and
communication purposes. In fact, as the tag is created by the user, along with the immediate
opportunity to access the page of the product by clicking on the tag, the company will see, on
its turn, the user’s picture uploaded on its page.
We can imagine to make this operation possible, within a co-marketing contract, in order
to connect the tag both to the page of the product placed in the film and to the page created
for the upcoming film. In order to carry out this, the company owning the brand and the
film production companies just have to create a page that “mentions” the product or the
title of the film.
The real opportunity consists in making the film/products placed in the film visible, at a very
low cost, also relying only on the simple cybernetic word-of-mouth advertising generated by
users themselves. An example that usually works to let people understand the potential of this
means involves a group of friends who shall meet at the weekend: they write to each other
on their walls on Facebook® and decide to “tag” the name of the movie they are going to see
in one of their photos or posts. In few clicks, all friends of each of the tagged subjects will
know that those friends will go and see that movie, and they will have the opportunity to
immediately access, just clicking on the “tag” of the movie, the page related to that movie, with
the opportunity to see all uploaded information and images.
This type of PP has enormous advantages related to costs, considering that it is almost always
free, but, at the same time, it shows disadvantages and “shades” related to illegal aspects
which, on their turns, reflect on costs.
The most tangible risks are those related to the possibility that fake pages or products and
fake pages of non-original films are “tagged”, which would lead to counterfeiting, unfair (and
also disparaging) competition, loss of costumers. The user “self-management”, almost at no
cost (considering that the cost for businesses and production companies only applies to the
creation of the interest page), turns into monitoring cost for companies.
At the same time, it is such a great opportunity that it is worth grasping it, disciplining it,
being aware of any possible distortions implied in the system.
THE PRODUCT PLACEMENT CONTRACT – TYPICAL CLAUSES
It being an atypical contract, the content can change significantly. As for the object, for
instance, it can be a provision of services aimed at placing a specific brand/product/service
within a specific film or, as an alternative, a contract similar to the typical mandate (for
instance, in the common case in which one of the parties is a company specialized in PP).
A PP contract, however, is a consensual agreement, with obligatory effects, onerous and
with corresponding obligations. Obligations are a fundamental part of the agreement, as
through them the “weight” of the product/brand/service in the film or television program
will be determined.
302 |
As for the compensation, PP can take place upon payment of an amount (paid PP), or upon
supply of products and services of a certain value.
To obtain their availability for a film, a certain amount of money should have been invested
(barter PP).
Besides the indication of the object and compensation, other fundamental clauses in a PP
agreement are those related to the modality and type of placement and, in general, to the
limits, prohibitions and obligations of the parties.
As it is an atypical contract and an instrument that should combine legal profiles with
marketing and artistic profiles, most of the time it is drawn up by agencies specialized in the
individuation of product placement projects that are attractive to companies which, even
though they are the most suitable and competent to combine demand and supply and,
therefore, film projects and companies that want to place their products within the film, in my
opinion, they should not be assigned the drawing up of a contract.
As a matter of fact, contractual structures of the average PP contracts is often very simple
even though, considering the interests at stake, more complex structures would be more
appropriate, in that they allow, firstly, possible intermediate controls during the carrying out
of the project, so that the investor can control that the project, in the different production
stages, is still following the brand’s image, according to the company’s purpose.
Sometimes the real and concrete placement is too invasive, superficial, not suitable to the
narrative context: therefore, as a result, we could get a negative reaction of the viewer,
opposite of the expected one.
In an ideal world, far from the actual film development procedures, it should be necessary to
involve scriptwriters, directors and actors in the realization of the project and in the
communication of the message. In a more real world, instead, it is fundamental that the
contract includes a clause that allows the company owning the brand to carry out controls
over the realization of the placement in the meantime.
Moreover, experience teaches that the minimum content of a product placement contract to
protect the investment of the company should provide for:
• a minimum number of scenes/minutes shot for the placement of the brand within the film;
• exclusive rights for the actors involved in the PP, in order to avoid devastating distortive effects of the investment;
• right of veto for the company, if any actors involved in the PP are replaced during the filming;
• clear obligations for the realization of the agreed co-marketing plan;
• maximum term for the beginning of filming and maximum term for the film release;
• avoid film releases in certain months of the year;
• clear obligations about the film distribution networks (at least the number of cinemas on
the national territory).
A lawyer’s assistance when drawing up or carefully revising the standard PP contract
proposed, according to procedures, by specialized agencies, would be good practice, in order
to avoid unpleasant consequences and investments that prove to be fruitless – afterwards
and with the risk, that cannot be foreseen in advance, of success among the film audience.
| 303
LOAN CONTRACT
The loan contract is a “fixed-term” alternative to a real PP contract. In fact, it should not aim
at making involved subjects achieve the same goals of a PP contract with reduced obligations
and responsibilities (also economic ones), but at brightening an interesting and underexplored
market, that is, the Italian market of small and medium sized businesses, in order to make
it carry out a first investment in the PP, in the hope that this will repeat in due form.
As a matter of fact, as the PP is based on a contract structure that foresees corresponding
obligations, every party must assume some obligations (also economic obligations) which
are not considered as too onerous in terms of investment, but too uncertain from the point of
view of the success of the investment made, in such a historical moment in which film industry
(and other industries) is facing difficulties and considers any type of investment too onerous.
A hybrid solution, that can be proposed as first alternative to enter an unknown market
without risking a lot, is the drawing up of a loan contract.
The loan contract is defined as the contract according to which one party (bailor) gives the
other party (bailee) a tangible – or intangible – asset, which can be used for a given period
or for a specific purpose, with the obligation to return this asset (article 1803, paragraph 1,
Civil Code).
The loan contract, used to achieve the goals of a PP contract, is usually characterized by the
presence of the following clauses, which are reported below just as an example:
Object: «By signing this agreement, X – the company which own the brand – provides Y –
production company – goods as agreed upon by the representatives of the companies, which
are constituted by ………. (PRODUCT) with the brand “A”. The material shall be used during the
realization of the film “Z”, directed by …….. The material shall be used in accordance with the
script and according procedures in order not to damage the image of X and its brand “A”»;
• Material delivery terms and place;
• Terms and place for the return of materials;
• Freight charges;
• Condition of materials upon return;
• Insurance policy;
• Specific obligations of the production company “Y”;
• Modes of citing X and A in the closing credits;
• Mandatory use of the material provided by X and its name and brand A during filming,
though without any obligation of close-up shots and in full compliance with regulations in
force about the product placement;
• Obligation to provide X some set photos to use for editorial and advertising purposes.
As it results from the analysis of these clauses, loan contract’s constraints are less onerous
than those provided for by PP contracts and, at the same time, they allow to achieve the same
goals set with the PP contract for commercial purposes.
Suggesting the loan contact to companies which, due to their size (small and medium sized
businesses) or sector (see below) are not ready for the PP as described above, can allow to
approach companies that are skeptical about the convenience of the use of this instrument
304 |
which, with the passing of time, maybe spurred on by the first success achieved, could become
frequent investors in the PP.
In this connection, the case exemplified by the Table below is emblematic. As shown by this
Table, Italian businesses of the goldsmith sector, which have been recently studied as regards
the use of the PP, consider as limits to this type of investment:
(I) the fact that it is meant like an expensive investment, (II) the lack of a well-known brand
(probably unaware of the case of the movie Kill Bill (2003 and 2004) and the trainers’ brand
Onitsuka Tiger®, which was unknown to most people until then), (III) not to know who to apply
to. In similar situations, it seems appropriate, for all the aforementioned reasons, to propose
the loan contract as an alternative to PP.
PP AND TAX CREDIT – NOTES
Film tax credit was introduced by Law no. 244/2007 (2008 Financial Law).
Provisions about tax credit allow, also companies that are not specifically in the film sector,
to balance fiscal debts with the credit accrued after the investment in a film.
Thank to this mechanism, an increasing number of companies (film companies and others)
decided to invest in film distribution or production. According to Law, this film must pass a
cultural eligibility test so that funds can be granted.
The beneficiaries of the scheduled tax concessions are the so-called Internal Investors (for
instance, film production and distribution companies, executive production and postproduction companies) and the so-called External Investors (businesses that are not in the
film chain), on condition that they are subject to Italian taxes.
As for tax credit for External Investors (interesting hypothesis for the subject we have treated),
they benefit from a tax credit corresponding to 40% of the amount, up to a maximum of 1
million Euros for each tax period, invested for the Italian films they took part in, through
partnership or profit sharing contacts with the producer.
Funds shall be always allocated within the aforementioned partnership or profit sharing
contracts and the duration of these contracts shall not be less than eighteen months.
Moreover, the total allocations for each film must not exceed 49% of the film production cost,
and partners’ profit sharing shall never exceed 70% of profit generated by the film
exploitation. On the other hand, the producer must meet the “territoriality” requirements and
spend at least 80% of the funds received from the external investor on the national territory.
Under certain conditions, even the production of foreign films can benefit from tax credit.
Moreover, and this is the most interesting matter in this connection, External Investors can
also associate a product placement investment to the tax credit one, on condition that the
funds recovery will be higher than 10% of the overall production costs – 5% for “difficult” and
“low budget” films.
Finally, the great, further fiscal advantage for external investors is that the eventual profit
gained after the funds recovery will be subject to a 5% taxation over their amount.
Today, the interest in cinema of any potential investor should have increased a lot compared
to the past, if we consider that it is possible to combine a tax credit investment – with its
| 305
immediate benefit in terms of tax concession, as described, which is absolute and prescinds
from the success of the film in the cinemas and from the film release itself – with a product
placement investment, according to the recommended terms.
FIGURE 11
SURVEY ON THE PRODUCT PLACEMENT
What, in your opinion, could represent a limit in the development of a product placement
activity for your company??
Our brand is not famous yet
We imagine the cost
will be high
We do not know who to apply to
Other (Specify)
No limits
ORO AREZZO - 25 marzo 2012 - 11.30
Un gioiello di film
Images taken from Power Point Presentation by JMN & DY of Lecco.
N. Klein, No Logo, Flamingo, London 2000, p. 107.
Sergio Cherubini, in Marketing trends in Europe, Documents of the Meeting held in Venice, at
Ca’ Foscari University, on 24th November 2000.
Prof. Francesca Cecchinato, Co-branding, Cedam, 2007
306 |
The contributions in the appendix to this edition of the Report
are by
Si ringraziano:
Laura Fratellizzi
Martina Innocenzi
Francesca Onorati
Matteo Zara
ISBN 978-88-85095-64-…
Copyright © 2012
by Edizioni Fondazione Ente dello Spettacolo
Via G. Palombini, 6 00165 Roma
Tel. +39 06 9651 9200
e-mail: [email protected]
www.cineconomy.com
€9,90
RAPPORTO Il Mercato e l’Industria del Cinema in Italia 2011
Report
industry in Italy
2011
fondazione ente
dello spettacolo

Report Report

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