Archive for October, 2009

Hollywood and the European Film Industry

October 6, 2009

US films account for an average 68% of the European market. In return, European movies represent 5% of the North American box office. What are the reasons of such unbalance?  Some authors think that the dominant position of US companies comes from the higher identification of American films with the tastes of the European audience. Others argue that the Hollywood success is mainly due to its control of the distribution system.

European policy-makers have introduced the “quota system” to protect national industries and cultural identities. But such policy is both inefficient and old-fashioned:

– It is increasingly more difficult to identify the ‘nationality’ of a given film, which is often created by people from various countries and which is produced by a company owned by hundreds of small shareholders.

– Producers could pay most of their attention to flatter the agencies (usually controled by governments) which give the subsidies; the risk is to discard the preferences of cinema-goers.

– A strong quota system could be against the viewers’ interest.

Regulators should forbid some activities that distrort free competition like ‘block bookings’. This practice is used by the largest distributors to control the exhibition sector. Such abuse of a dominant position hurts the interests of consumers and exhibitors.

Policy-makers should implement some ways to foster efficiency and creativity of European organizations: grants to young film makers, subsidies for exchange of experiences between companies which can lead towards joint-ventures or joint-projects, financial advantages for investors in film production, or more transparency requirements.

It is time to find efficient substitutes of the “quota system”.

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No advertising in RTVE

October 1, 2009

RTVE, the Spanish public television, will finish its current business model in January of 2010. Until now, RTVE had financed the public company by advertising and state subsidies. In the last year, the incomes in advertising was around 700 million Euros, 58% of the total budget.

The first of January RTVE will not broadcast advertising anymore. The public TV will be financed by state subsidies (580 million €) and funds obtained from the companies which use the radio electric space and a percentage of the incomes of the private televisions.

One of the questions now is where the advertising of RTVE will go. Supposedly, the majority of this amount will move to the private televisions, which have been putting pressure on the Government to stop the advertising in the public television. However, other media also want to profit from this decision. Free dailies think that they can gain some of the advertising because their readers are very similar to TV watchers.

Anyway, the decision of the Government getting the ads out of RTVE has produced that all the marketing departments of the media companies are working to get the best advertising contracts in 2010.