Explanatory Memorandum to COM(1999)658-2 - Implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA - Training) (2001-2005) - Main contents
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| dossier | COM(1999)658-2 - Implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA - Training) ... |
|---|---|
| source | COM(1999)658  |
| date | 14-12-1999 |
Contents
- 1. Introduction
- 2. The situation
- 2.1 Lack of investment in development
- 2.2 Obstacles to the transnational distribution of works
- 2.3 Absence of a European image
- 3. Guidelines for European action
- 3.1 General principles
- 3.2 Development sector
- 3.3 Distribution sector
- 3.4 Promotion and market access sector
- 3.5 Pilot projects
- Priority actions
The development of methods of dissemination, particularly those involving digital technologies, presents a new challenge to the European sector engaged in the production and distribution of audiovisual programmes, in that it is gradually changing the economics of the sector. Thus, the share of revenue generated by pay and pay-per-view television services rose by more than 200% between 1988 and 1998, although the proportion stemming from 'traditional' methods of dissemination (cinema, video, television) still represents 87% of overall income in by the audiovisual sector.
It has to be borne in mind, however, that digital TV channels have not yet replaced other audiovisual dissemination methods to any significant extent. Indeed, quite the reverse has been true in the cinema and video sectors (particularly on the sales side). Cinema attendance increased by almost 38% between 1988 and 1998, with almost 7% of that rise occurring between 1997 and 1998. At the same time, the video market has grown by 34% since 1992, with a rise of 10% between 1997 and 1998.
The proliferation and diversity of dissemination methods has led to a significant rise in demand for audiovisual programmes, thus enhancing the commercial potential of each individual production. However, audience fragmentation reduces the relative financing capability of each channel. Moreover, against a backdrop of heightened competition to capture the attention and purchasing power of viewers/consumers, new channels are focusing their resources in particular on acquiring products which are attractive but have a short exploitation time, e.g. sports events, games or entertainment programmes, making it more difficult to put together the finance required for creative works such as films and dramas, documentaries and animated works. Such productions are of strategic importance, however, as they lend themselves in particular to multiple dissemination over a long period. It is on the basis of such 'staple' productions that long-term marketing and exploitation can develop.
The audiovisual sector is in the process of developing from a short-term economy focused on national markets into a medium- to long-term economy geared to the international marketplace.
The European programme industry must be able to seize the opportunities opened up by the development of digital channels and methods of exploitation by taking due account, in all its strategic considerations, of the international dimension to the market. There is a serious risk that the domination of the European market by imported programmes, particularly American ones, will extend and increase with the new dissemination methods.
In this context, it is essential that operators be enabled to adopt an international development strategy throughout the production and distribution chain. In accordance with the principle of subsidiarity, the Community takes action only if and in so far as the objectives of the proposed action cannot be adequately achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be achieved at Community level. Given the results of the consultations conducted since 1997, and in particular the conclusions of the Birmingham Conference, the selected course of Community action (development, distribution and promotion) is to support and supplement the action of the Member States, whose own support to the industry is focused on the production side.
The development of an audiovisual work represents a key phase and is the determining factor for the decision as to whether the work should be produced or not. The development process comprises three essential elements: conception of the work (particularly the writing of the script), the search for (industrial, technical, artistic and financial) partners, and the establishment of the marketing plan. The development phase consists of specifying the details of project so as to facilitate evaluation of:
· production feasibility;
· the commercial potential of the product;
· the cost and return on investment.
Too many projects in Europe enter production at the end of an inadequate development phase. Put another way, they enter production without have benefited from sufficient investment at the development stage, and this hampers their marketability and economic viability. Average investment by the European audiovisual industry in project development is less than 5% of that in production, compared with 10% for the United States.
This under-investment upstream translates at the production stage into a work that is less attractive for potential distributors and broadcasters, which in turn means a lack of investment in promotion and distribution, resulting in lower profitability. This vicious circle, exacerbated by the under-capitalisation of companies, perpetuates the weakness of the industry's development strategy.
It is becoming essential for producers to take into account right from the development stage a clear strategy for marketing and distributing the finished product in as many countries and using as many media as possible. Moreover, this strategy must intermesh with a major distribution and promotion effort geared to achieving optimum exploitation of the work and achieving high revenue.
Most European markets are currently characterised by a double 'bi-polarisation':
· Television programming mainly comprises programmes of national or American origin; generally speaking, works of national origin predominate. On the drama side, American productions account for 74% of programme imports in volume terms, compared with 14% originating from other European countries.
· The cinema is dominated to varying degrees (from 60 to 95%) by works of American origin, with the remaining market shares being taken mainly by nationally produced films. Of the 550 cinema films produced annually in Europe, barely 20% are distributed outside their principal country of production; this represents barely 7% of the market.
The consultations conducted since 1997 in the context of the EU audiovisual policy review exercise have underlined, across the board, that Europe's biggest weakness lies in the low circulation of non-domestic films and audiovisual programmes, which erodes the profitability of these works and hinders the generation of revenue that could be ploughed back into the production of new works.
Various underlying factors can be cited to explain this situation. First of all, the European marketplace has traditionally been split up into national/language markets. National and European works are distributed by a large number of companies operating in one and the same country, which often sustains only a small market. Moreover, these companies are under-capitalised, and are hard-pressed to keep pace with the constantly rising financial investment that is needed to promote and publicise the works which they distribute. Finally, few of them have the resources to engage in investment upstream of distribution in the form of pre-purchases of distribution/dissemination rights and thus take an active part in financing productions with high commercial potential.
Cooperation agreements and co-ordinated distribution strategies at European level are still a rarity. They are nevertheless essential in the face of competition from far better structured major companies and the growing internationalisation of transnational dissemination methods, such as DVD video and international television channels. This necessary adaptation must, however, take account of the fundamental role played by audiovisual content in cultural and social terms. This contents must be accessible to all citizens, while respecting the cultural and linguistic diversity with which Europe is so richly endowed.
The fragmentation of the production and distribution sector into a large number of often under-capitalised small companies operating chiefly at national level also makes it difficult for these companies to gain access to international trade events in the sector (in Europe and beyond), given the high cost of participating. There are professional initiatives and associations in the Member States which put together logistical support packages for such events, as well as providing assistance in promoting national works. The visibility and impact of such activities, however, should be underpinned by better cooperation designed to exploit European productions overall.
The experience gained under the MEDIA I and MEDIA II programmes and the assessments of the results obtained have made it possible to establish general principles intended to provide guidance in the implementation of financial support mechanisms at European level:
· strengthening of support mechanisms geared more towards structural funding, depending on operators' commitments to medium-term objectives;
· setting-up of new, complementary mechanisms promoting the development of projects using digital technologies at the production or dissemination stage;
· integrated approach making due allowance, by means of 'positive discrimination' mechanisms, for the structural handicaps experienced by countries having a low audiovisual production capacity and/or restricted geographical and linguistic area.
The procedures for granting support are geared mainly towards mechanisms for direct intervention in the market and mechanisms for support in step with market developments.
1. Project support is granted mainly on the basis of financial incentive mechanisms encouraging the financial co-responsibility of the professional sector (conditionally repayable loans);
2. Stepped-up support for companies aimed at bolstering their medium- to long-term strategy: support granted automatically or on the basis of companies' performance in the marketplace, and support to companies submitting packages of projects (slate-funding).
Given the specific features and requirements of the market, there is a need to stimulate greater investment by the industry in the development phase of audiovisual works, with the emphasis on projects which are targeted at the European and international markets and offer the best prospects for commercial success.
Similarly, the most dynamic production companies need incentives to implement medium-term strategies for the development of their productions.
Particular attention should be paid to production projects using new creative technologies, and also to the inclusion right from the development stage of all the dissemination methods which could be used for commercial exploitation of the work.
The mechanisms put in place will have to accommodate all types of audiovisual works: drama productions, films, documentaries, animation, interactive products (on-line, off-line, hybrids).
Priority operations:
Two types of operation are planned:
· co-financing of the development of individual projects (script-writing, search for financial and artistic partners, assessment and marketing studies) put forward by European producers;
· co-financing of the medium-term strategies pursued by high-performance companies for the development of 'project packages' (slate-funding)
Over the medium to long term, the development of new dissemination methods based on digital technologies is destined to change the distribution structures for audiovisual productions, in particular by reducing the bottlenecks caused by the cost of the requisite investment for the physical distribution of products (printing, storage and transport of copies of cinema films or video cassettes, for example). This may enhance the scope for a wider range of works to gain access to the market.
Set against a backdrop of heightened competition to capture the viewer's/consumer's attention, however, the requisite investment will focus increasingly on advertising and marketing.
Optimum commercial exploitation of productions on all media requires major investment at the beginning of the exploitation phase in order to maintain public interest over the entire exploitation cycle. In particular, ever greater efforts are necessary when cinematographic films are released for screening, since the profile and success of a film in the cinema determines the revenue generated by exploitation of the film on other media (video, DVD, sales to television).
The lengthening of exploitation cycles, the fragmentation of revenues over a growing number of dissemination methods and the need for considerable investment in promotion and advertising call for the development of a distribution sector which is capable of:
· making the investment needed to promote and ensure the market success of European works on various media;
· compiling competitive catalogues of European works for exploitation on the international market;
· contributing towards the financing of new works.
Against this background, it is appropriate to encourage investment in distribution and promotion on various types of media, from cinema screening to on-line distribution, and to encourage the development of cooperative ventures and the structuring of distribution at European level.
The economic structures of distribution companies need to be strengthened, with priority being given to those companies which have the potential for development on the European and international markets and put forward long-term strategies.
Priority operations:
(a) Film distribution:
Selective support: a system of support in the form of conditionally repayable loans for film distributors who distribute European cinema works outside their country of production.
This system makes it possible to:
· network European distributors, in cooperation with international producers and distributors, so as to promote common strategies on the European market;
· encourage distributors to invest adequate amounts in the promotion and distribution of European films, whatever their production budget;
· support multilingualism in European works (dubbing, subtitling and multilingual production).
Support for the production of international sound tracks (music and effects) for European films: appropriate support for the production of international sound tracks (music and effects) for European films with strong dissemination potential, aimed at facilitating exploitation of the work in numerous countries and the production of high-quality versions in various languages.
Automatic support: a system of automatic support for European distributors proportionate to cinema attendance for non-domestic European films shown in the countries participating in the Programme, up to an upper limit per film and graded according to country (corrective mechanism for smaller countries).
Distributors can use this support solely for the purpose of investing in:
· the acquisition of non-domestic European films;
· editing-related work (copying, dubbing and subtitling), promotion and advertising for non-domestic European films.
Support for sales agents: a system of support for European companies engaged in the international distribution of cinema films (sales agents), the level of support being determined according to their market performance over a given period. Distributors may use this support solely for the purpose of investing in promotion, or for investing, including at the production stage, in new European works for the European and international market.
Support for cinemas: an appropriate level of support designed to encourage exhibitors to include in their screening schedules a significant showing of non-domestic European films in commercial first-appearance cinemas for a minimum period of screening. The support granted to each cinema may be determined, in particular, by the attendances achieved by the cinemas for non-domestic European films over a fixed reference period. Support may also be granted to encourage the creation and consolidation of European operator networks to devise joint measures in favour of such scheduling. Finally, particular attention will be paid to cinemas which engage in awareness-raising and educational activities aimed at young audiences.
(b) Off-line distribution:
This term designates the distribution of European works on media intended for private use.
Automatic support: a system of automatic support for European publishers and distributors according to their market performance over a given period. Distributors can use this support solely for the purpose of investing in:
· the publication, distribution and promotion of non-domestic European works using new technologies (such as DVD), particularly at European level;
· the advertising and promotion of new non-domestic European works published by them;
(c) Television broadcasting:
Here, the aim is to encourage independent producers to produce works (dramas, documentaries and animation productions) involving at least three broadcasters from several Member States belonging to different language areas. The criteria applied in selecting the beneficiaries may include provisions to distinguish between projects according to budget category. Particular attention will be paid to audiovisual works which are likely to raise the profile of European heritage and cultural diversity.
(d) On-line distribution:
This term designates the distribution of European works on-line using advanced distribution services and new media (Internet, video-on-demand, pay-per-view). The aim is to facilitate consumer access to Europe's audiovisual heritage by means of new technologies and advanced distribution services.
Support for catalogues: by providing incentives for the marketing of rights to works and for the dubbing/sub-titling of productions, this support is designed to encourage European publishing and distribution companies to create and exploit catalogues of European works in digital formal for commercial exploitation using new methods of dissemination.
The specific objectives of promotional aid generally intermesh with those of aid for distribution. However, there is a need for mechanisms which supplement those in place on the distribution side by granting subsidies tointermediate service providers (organisers of markets, festivals, etc.) so as to enable them to improve access for European works and programmes to the European and international markets.
The mechanisms must be geared to encouraging:
· the presence of European audiovisual professionals and programmes on the traditional markets, as well as on emerging European and international markets;
· the participation of European audiovisual professionals and programmes in all activities aimed at promoting the movement, exchange and sale of European programmes inside and outside Europe;
· the inclusion of European audiovisual works in European and international events and/or festivals;
· the networking of professionals and national associations at European level in order to optimise resources.
In parallel with promotion and market access measures, a specific measure is planned in favour of film festivals. Where they are open to the general public, these events give European films a 'showcase' to attract cinema-goers, as well as providing a forum at which to promote productions vis-à-vis potential distributors in the country concerned. European support must also be aimed at networking, exchanging information and experience, and implementing measures common to these festivals.
Priority actions:
1. Improving the conditions for access by professionals to European and international markets by means of specific technical and financial assistance measures in the context of events such as:
· the main European and international markets for films and audiovisual programmes;
· the thematic markets, especially those for animated films, documentary films, multimedia the new technologies.
2. Promoting the use of databases and any other tools suitable for exchanging information and experience relating to the exploitation of catalogues of European programmes.
3. In the field of festivals:
· supporting audiovisual festivals which are carried out in partnership and feature a significant proportion of European works;
· encouraging projects for cooperation with a European dimension between audiovisual events involving at least eight Member States with a joint plan of action to promote European audiovisual works and their movement;
· promoting the setting-up by professionals, in close cooperation with Member States, of a major event to spotlight European cinematographic and audiovisual creativity.
Current and expected developments in the field of the digital technologies mean that a flexible policy needs to be drawn up which is in step with a changing marketplace and takes due account of the growing content requirements of television channels broadcast as part of digital bouquets.
In order to ensure that the needs of industry dovetail with technological developments and programme mechanisms, pilot projects will be organised throughout the programme so as to promote conditions in which companies in the audiovisual content sector can seize the best opportunities offered by new production and dissemination services.
· Pilot projects, aimed in particular at exploiting the cinematographic heritage, digitising European audiovisual programme archives, and networking holders of rights to catalogues of European audiovisual works.
· Pilot project aimed at promoting the dissemination of European works by thematic digital audiovisual channels and services. In the first year of the programme, this project will be the subject of a feasibility study to determine possible arrangements for this support mechanism, with a view to establishing the conditions for its operational application starting from the second year of the programme.