REPORT. The Market and the Cinema Industry in Italy. Executive Summary

Transcription

1 REPORT The Market and the Cinema Industry in Italy 2014 Executive Summary

2 In collaboration with Sponsored by President: Davide Milani Editorial Activity Coordination: Dario Edoardo Viganò Study Area Coordination: Antonio Urrata Scientific Counseling: Redento Mori Research Unit: Sergio Perugini, Chiara Supplizi, with the collaboration of Michelangelo Iuliano Editing: Chiara Supplizi, with the collaboration of Margherita Bordino, Marianna Russo Technical Counseling: PRC srl Roma Layout and Graphics: comevoi.com Director-General Cinema - MiBACT: Nicola Borrelli Head of Audiovisual and Film Production Office - MiBACT: Maria Giuseppina Troccoli Research Unit Coordinator - MiBACT: Iole Maria Giannattasio The Report can be dowloaded for free in pdf form from the website

3 Preface system, the leitmotif repeated over the years not only in this Report but also in all sectors of the cultural industry, proves to be a priority in building up an increasingly Making strategic and structural collaboration. In fact, the Fondazione Ente dello Spettacolo and the Directorate-General Cinema of the Ministry of Cultural Heritage and Activities and Tourism took, two years ago, a common path and started a partnership based on real projects and initiatives. The sense of this partnership is to be found in the shared commitment to point out strengths and weaknesses of such a lively sector for the national economy and culture, and to find the opportunities of growth and development together, both in Italy and abroad. In order to achieve this objective, the FEdS and the Directorate-General Cinema - MiBACT started a series of analyses, a scientific surveying model used for this seventh edition of the Report - The Market and the Cinema Industry in Italy. The Report provides a detailed picture of the film and audiovisual industry. In fact, 2014 was a year of transition: although the first signs of recovery appeared, the effects of the persisting economic crisis remained unchanged. This affected above all the box office, within a decline that involves all movie theatres, not only the small ones. The same goes for investments, and this inevitably leads to a broader and more articulate reflection on the production, given the increase in the number of low-budget films. In fact, in 2014 national films reached the record number of 194, while they were 156 in the previous year. This process is supported by public incentives from the FUS to the extension of tax credit until the synergy with the regional Film Commissions, which

4 found their operating instrument in the web portal La Bussola del Cinema, with increasingly specific measures to grasp the ferment occurring in the audiovisual sector. The public commitment is internationally acclaimed, as demonstrated by the success achieved during the 68 th Cannes Film Festival, at the Marché du Film and finally at the box office by the Italian films in Competition: Tale of Tales by Matteo Garrone, Mia madre by Nanni Moretti and Youth by Paolo Sorrentino. Without forgetting audacious films such as Leopardi by Mario Martone and Black Souls by Francesco Munzi, which impressed the critics and captivated the audience. The 2014 Report, with the Institutional policy section focusing on the Semester of the Italian Presidency of the Council of the European Union, curated by the DG Cinema - MiBACT, also outlines a picture of the Italian and Community strategies implemented, with a look at the forthcoming challenges for the sector. The joint venture between the Fondazione Ente dello Spettacolo and the Directorate-General Cinema of the MiBACT proves to be strategic to grasp the ferment and the opportunities throughout the audiovisual universe, on a path of renewed support to the Italian cinema and its stories. Dario Edoardo Viganò Member of the FEdS Board of Directors in charge of publishing Nicola Borrelli Director-General Cinema at MiBACT

5 Introduction Seven editions, seven years of collaboration. The partnership between the Fondazione Ente dello Spettacolo and the Istituto Luce-Cinecittà continues with the 2014 Report - The Market and the Cinema Industry in Italy, co-published by the FEdS and the Directorate-General Cinema of the Ministry of Cultural Heritage and Activities and Tourism. Besides sharing an active commitment in the promotion of the film culture and a particular attention to research and training, the two institutions are involved in educational activities to help young people live in the world of films and audiovisual products fruitfully. Fondazione Ente dello Spettacolo and Istituto Luce-Cinecittà work together with a look at the foreign market through a series of projects aimed at promoting Italian films out of the national borders. This is also the reason why the seventh edition of the Report includes, for the first time, a Focus on a foreign Country. An innovative choice that will be certainly proposed again in the future editions, in order to provide a thorough picture of the current players of the sector as well as the emerging film industries. This time the choice fell on Cuba, a reality that boasts a long and articulated tradition within cinema and culture even with deep ties with the Italian neorealist school, with a contribution provided by the Festival Internacional del Nuevo Cine Latinoamericano focusing on The Italian cinema and the Havana Film Festival. In the year of the normalization of the international relations between the United States and Cuba, this Focus has a particular value that, other than underlining the incredible Cuban interest in cinema, emphasizes the great success achieved by the Italian films in Havana. 3

6 Again, on the level of international initiatives, the collaboration between the Fondazione Ente dello Spettacolo and Istituto Luce-Cinecittà is valuable, thanks to the shared commitment in the promotion of the Italian cinema in the major Audiovisual Festivals and Markets throughout the world, from the Venice International Film Festival Venice Film Market to the Cannes Film Festival Marché du Film, from the Berlin Festival European Film Market to the Rome Film Festival with the new formula of the MIA - Mercato Internazionale dell Audiovisivo (International Audiovisual Market) The Business Street - New Cinema Network. Istituto Luce-Cinecittà and Fondazione Ente dello Spettacolo, along with other institutional partners, work on the project of the candidacy of Rome as Creative City for the Cinema UNESCO, to recognize and promote the huge film and cultural heritage of the capital of Italy. The look beyond the national borders adds, therefore, value to this Report and is one of the driving forces of the long-lasting collaboration between the Fondazione Ente dello Spettacolo and Istituto Luce-Cinecittà. Davide Milani President of the Fondazione Ente dello Spettacolo Roberto Cicutto President and Chief Executive Officer of Istituto Luce-Cinecittà Srl 4

7 The Italian cinema on the narrow edge between quality and budget In the most recent phase of its development, the film system underwent a controversial season in However, under many aspects, this season revealed the factors that, in line with the other major European film industries, determine its current activity and the further development opportunities. Outlining the overall picture of the sector, the seventh Report - The Market and the Cinema Industry in Italy, drawn up by the Fondazione Ente dello Spettacolo and published in collaboration with the Directorate-General Cinema of the MiBACT, places the data relating to this process at the centre of the field of observation. The key elements are the investment cycle and the reference products, on the narrow edge between budgets and high-quality production. ThE double results of ThE box office The results in the primary channel of movie theatres were sharply lower than those generated by the market in The Tables included in the annual report Tutti i numeri del cinema italiano, drawn up by the joint Study Unit DG Cinema/ANICA, provide a representative perception. y e a r 2014 DOMESTIC MARKET SUMMARY FOR 2014 Table 21) General data of the 2014 domestic market vs and 2012 ALL FILMS RECEIPTS ATTENDANCE FIRST RELEASES of which complementary* *events, special editions, re-editions, restored editions ITALIAN FILMS + CO-PRODUCTIONS RECEIPTS ATTENDANCE FIRST RELEASES Mkt share of receipts Mkt share of attendance Database: 1/1/ /31/2014 Fig. 17) In films were distributed and are subdivided by nationality as follows: ITALY Total 1187 USA EUROPE OTHERS CO-PRODUCTIONS Data: Joint Study Unit DG Cinema/ANICA As regards the box office, the budget is double. As for the annual financial statements, the final balance of the box office is slightly decreasing compared with Analysed in terms of assets (its base assets, that is, moviegoers) the results are not so negative. 5

8 From the comparison between the results of 2014 and those of the previous year it emerges that the different trend of the total earnings (and the total attendance) is determined by the top five and top ten Italian and foreign films. Despite these films reached new peaks in the number of copies distributed in the 2014 season, the added value that the most acclaimed films usually bring to the box office lacked. TAblE 1 box office WIThouT AddEd VAluE 2014 Millions of Total Top Top Top defense of ASSETS between ThE PublIC S SPENdING ANd CoNSuMPTIoN The last survey on the Aspects of everyday life of the Italians conducted by Istat on a regional scale also recorded a considerable increase in the consumption indexes in 2014: 47.8 people out of 100 chose to see at least a film, compared with 47.0 people recorded in TAblE 2 CINEMA IS AlWAYS AT ThE ToP of ENTErTAINMENT Consumption regional CoNSuMPTIoN of ENTErTAINMENT IN 2014 by PEoPlE of AT least 6 YEArS of AGE every 100 film Sporting Clubs Theatre Non-classical Classical Museums Archaeol. sites people showing events & dance shows music music exhibitions monuments ITALY NORTH CENTRE SOUTH/ISLANDS Source: multi-purpose survey Aspects of everyday life, chapter 8 Various social and cultural activities in Noi-Italia 100 statistiche per capire il Paese in cui viviamo by Istat-National Institute of Statistics (Rome, 2015). According to the different consumption intensity, the amounts of economic resources that the Italians of the three macro-areas spend in the consumption of films out of their homes are obviously different. However, the surveys on consumption show that (with relation to the availability of resources for the artistic and cultural entertainment in the different areas of Italy) the southern regions invest a higher amount in cinema: 47.27% compared with 42.27% of the central regions and 33.47% of the northern ones. 6

9 TAblE 3 film CoNSuMPTIoN PEr PErSoN IN ThE different regions Monetary regional film CoNSuMPTIoN PEr PErSoN IN 2013* values Number Tickets sold Spending in Spending in Share out of in Euros of shows per per person* per ticket per person* expanditure for 100,000 people* entertainment ITALY 5, % NORTH 5, % CENTRE 7, % SOUTH/ISLANDS 3, % * Values are calculated by Istat using the data on the average population residing in the regions in The indicator is subject to re-calculation according to the availability of the reconstruction carried out through the last national census of the population conducted in Source and analysis of the indicators on the cultural institutions and activities in Aspetti della vita quotidiana, chapter 8 Attività culturali e sociali varie in Annuario statistico italiano 2013 by Istat-National Institute of Statistics (Rome, 2014). ClIMbING ThE ProduCTIoN rankings On the fifth consecutive year of growth, the sector, with the all-time record of 201 Italian films (34 more than the previous year), brought the Italian cinema back to the top ten of the world film industry, whose activity recorded a further development with the production of 6,503 works compared with the 6,307 films produced in Italy surpassed Great Britain and is now tenth, just behind Japan. With 194 films, it also climbed the European top ten ranking of the 100% domestic movies for the first time in the 2000s, reaching the top place before the other four major film producing Countries of the European Union and the whole continent: France, Great Britain, Germany and Spain. TAblE 4 World ToP TEN EuroPEAN ToP TEN Films by nationality 100% domestic films 1. India Italy United States** France Cina Great Britain Japan Germany France Spain South Korea Netherlands Germany Poland Spain Belgium Great Britain Sweden Italy Romania 30 Source: World Film Market Trends by the European Audiovisual Observatory of Brussels. AN INVESTMENT CYClE WITh less CAPITAl The variation recorded in the film production in the last five years is equal to %. In the first three years, the investment cycle remained basically unchanged 439.5, then 7

10 424.0 and million Euros and linear compared with the increase from 131 to 155 in the number of films produced. In 2012, the total resources then increased up to million Euros invested in 166 films. In 2013, instead, a trend reversal occurred. The number of works increased by one unit, while the flow of resources dropped by nearly one-third (-32.08%) to million Euros. To completely break the chain of value, the last season of the national film industry hit the record with the production of 201 films (+20.36%) and the flow of capital decreased to million Euros, with a variation of % over TAblE 5 All CAPITAl INVESTEd IN ThE NATIoNAl ProduCTIoN data of ToTAl ITAlIAN films ITAlIAN SPoNSorEd films Co-ProduCTIoNS WITh foreign CouNTrIES films Trend Million Trend Million Share Trend Million Share Trend % % % % % % % % % % % % % % % +1.32% % -2.54% % % % -0.73% % % % % % +0.62% % % % % % +4.85% % % Source: Il cinema italiano in numeri (years from 2009 to 2014) written by the Ufficio Studi Ced/ANICA ( ) and the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT ( ). 8 ThE WIdESPrEAd decrease IN resources IN ThE EuroPEAN CINEMA Compared with the Italian cinema, the other European film industries have not recorded any peaks in the film production and there is a widespread belief that the structure of their funding is not subject to similar phenomena of decline. Actually, behind the partial containment in the amount of works produced there is a smaller amount of resources, with a dizzying share of resources pushing the value of the average budget per film downwards this is a common problem. According to the data gathered in the Report, it can be noted that in france the global resources, after four consecutive setbacks, decreased below the threshold of 1 billion Euros for the first time in twenty years. With million Euros, it decreased by one-fifth in only twelve months, that is, by million Euros (-20.78%) compared with Compared with the 1, million Euros of 2009 peak of all the 2000s it reduced by , that is, over one-third (-30.91%). In England, after a two-year increase, the financial resources reached the absolute peak of 1.47 million Pounds, corresponding to billion Euros (in 2013 it was only 1.49 billion Euros) for the production of 223 films (alltime low since 1994): 100 less than the previous twelve months and 150 less than five years before. However, the collection shows more marked imbalances between national and foreign capital. The first corresponded to million Euros (+26.58% compared with 2013) while the latter exceeded for the first time the threshold of 1.60 billion (by 95 million), with a jump of 40.84% compared with 2013, used for 37 mega productions of the USA studios. In Spain, the film production underwent a setback with

11 only 26 films produced compared with the 76 made in 2013 and a drop in national investments equal to 50%, partly offset by the exponential increase in co-productions, which went from 68 of the previous year to 100. ThE difficult links IN ThE ChAIN of fund CollECTIoN The Report provides a comparison between the fund sources in the Countries (Italy, France and Great Britain) for which reference data is available, though not homogeneous. The comparison, particularly complex, shows a substantial balance in the percentage contribution of the four main catchment areas: private capital, public funds, allocations from TV networks and foreign resources. However, the incidence shares correspond to completely different absolute values. Depending on the general decrease in the investment flows, the different links of the chain seem to be taut. In fact, all sources are fuelled only by the financial leverage of tax credit (France and Great Britain have recently intervened to further strengthen its influence). TAx CrEdIT AS first (ANd only) financial leverage The adoption of this type of indirect support made the level of the financial requirements of the Italian cinema still affordable, though it decreased in the last three years. Moreover, it gave cinema more than 64 million Euros, in 2014, for the production of new works, facilitating the allocation of 32 million Euros from production companies and the initiatives of investors operating out of the sector. TAblE 6 four YEArS of TAx CrEdIT for ThE ITAlIAN films Annual ITAlIAN films VAluE of ThE TAx CrEdIT ClAIMS IN data Claims Share* Variation Million Variation Average in Trend TOTAL TAX CREDIT CLAIMS % % % % 300, % % -1.50% % 273, % % % % 248, % FILMS WITH AT LEAST ONE TAX CREDIT CLAIM Annual data Claims Share* Variation Million Variation Average in Trend % , % +6.00% % 566, % % -9.43% % 561, % % % % 517, % * The percentage of claims expresses the relationship between the amount of tax credit claims submitted and the actual number of national sponsored films produced. The percentage relating to films, instead, expresses the relationship between the films for which tax credit investments were made and the total number of national sponsored films produced during the year. Source: Tutti i numeri del cinema italiano (years ) written by the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT. 9

12 TAx CrEdIT AS first PublIC INTErVENTIoN To confirm the key role played by the public intervention in supporting the production and the whole chain, in all countries the tax credit is becoming the only financial flywheel to increase the level of public aids in favour of the film business. TAblE 7 AMouNT of resources from fus ANd TAx CrEdIT Millions of Euro GrANd ToTAl* Chain partial** Chain total 65.37% 64.81% 70.32% 70.90% 77.07% 79.66% 77.75% 84.67% SHARE OF FUS FUNDS 87.38% 88.02% 80.66% 55.23% 49.22% 50.01% 48.75% 43.60% SHARE OF TAX CREDIT 12.62% 11.98% 19.34% 44.77% 50.78% 49.99% 51.25% 56.40% * The values relating to totals are rounded off according to the amounts of less than thousands of Euros. ** Other than the amounts related to tax credit for all segments of the sector it includes, within the scope of the FUS funds, the following entries: Project production, Films made and Film exhibition. Source: Sostegno economico al cinema italiano nel 2014, document by the Directorate-General Cinema of the MiBACT (Roma, 2015). funding WIThouT foreign PArTNErS In the balance sheet of funds, the real suffering entry for the Italian cinema corresponds to the inflow of foreign resources. During last years, the allocation of foreign capital has been decreasing also in the other markets (Great Britain included, as regards the domestic production), but in Italy the gradual reduction of foreign contribution to investments in production seems to be decisive. TAblE 8 foreign INVESTMENTS IN Co-ProduCEd films data of ToTAl CAPITAl PrIVATE INVESTMENTS PublIC funds Million Variation Million Share Variation Million Share Variation % % % % % % % % % +6.25% 2013* % % % % % 2014* % % % % % * The value relating to the allocation of private capital to foreign investments for the years 2013 and 2014 results from estimates based on cumulative data. Source: Il cinema italiano in numeri (years ), by the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT (years ). 10 SubdIVISIoN of ThE VAluE by ProduCT unit In the analysis of the flow of resources and the investment cycle it emerges, as combined effect between the increase in production and the simultaneous need for capital, the subdivision of the value by product unit. In these terms, the Italian cinema suffered a phase of deep involution in 2014, as demonstrated by the general averages of costs per film.

13 TAblE 9 AVErAGE CoSTS of ProduCTIoNS ANd Co-ProduCTIoNS Values ITAlIAN ProduCTIoN ITAlIAN SPoNSorEd films 100% NATIoNAl films Co-ProduCTIoNS in millions of Number AVG films AVG fus Number AVG Number AVG Number AVG film cost with fus funds film cost film cost film cost Source: Il cinema italiano in numeri (years ) by the Study Office Ced/ANICA ( ) and the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT ( ). ClASSES of ThE ITAlIAN CINEMA The over-production of works reflected on their quality. Those produced with industrial costs of less than 200 thousand Euros set a record in terms of number (69) and incidence (35.56%) on the total number of Italian sponsored film. Only 25 films, instead, were made with budgets of over 3.5 million Euros, in what can be considered as the business class of the Italian cinema, which guarantees its most representative benchmark in terms of quality, box office results and international competitiveness. TAblE 10 QuAlITY of ITAlIAN SPoNSorEd films by ClASSES of CoST Values AVErAGE CoST PEr film IN, INduSTrIAl CoST IN, in, VS VS ESTIMATE OF COSTS FOR THE FILMS PRODUCED up to 200, % 3,072 6,126 5, % , % 14,067 11,516 19, % ,163 1,108 1, % 27,920 21,065 30, % 1,501-2,500,000 1,867 1,915 1, % 26,136 38,302 35, % 2,501-3,500,000 2,839 2,932 2, % 36,912 29,329 35, % over 3,500,000 6,621 5,826 5, % 225, , , % ToTAl* 2,221 1,663 1, % 333, , , % SUBDIVISION OF THE FILMS PRODUCED BY CLASSES OF COST data of NuMbEr of films ShArE out of films ProduCEd ShArE out of ToTAl CoST up to 200, % 34.19% 35.57% 0.92% 2.38% 1.97% , % 16.13% 22.16% 4.22% 4.46% 7.11% 801-1,500, % 13.55% 13.40% 8.38% 8.17% 11.30% 1,501-2,500, % 9.68% 9.79% 7.84% 14.86% 13.13% 2,501-3,500, % 8.39% 6.19% 11.08% 11.38% 13.13% over 3,500, % 18.06% 12.89% 67.56% 58.75% 53.36% ToTAl* * % 100.0% 100.0% 100.0% 100.0% 100.0% * Values have been estimated according to the industrial cost of the Italian sponsored films (100% Italian and majority/equal co-productions). As regards 2013, the new 2013 version of a film produced in 2011 was excluded, as its cost was counted for that year. Source: Il cinema italiano in numeri (years ), by the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT (years ). 11

14 ThE low-cost overbooking SYNdroME The exponential increase in the number of low-budget works in the list of Italian production is usually considered as a completely local process. Actually, the other European film industries are not immune to the low-cost overbooking syndrome either. Findings are not completely homogeneous, since the top three cost ranges in Italy stand at 1.5 million Euros and at 2 million Euros in France, while the two lowest are found in England, with 1.37 Million Euros (1 million pounds). However, they seems to provide significant indications. The smallest impact of the French low-cost works, the share of low-cost production in Italy and Great Britain exceeds 70% of the total and corresponds to 20% of value out of total costs. TAblE 11 resources used for low-cost films data ToTAl up To 800,000 up To 1,500,000 ToTAl low-budget (1,500,000 ) and years films films out of total out of costs films out of total out of costs films out of total out of costs ITALIAN SPONSORED FILMS* % 5.14% % 8.38% % 13.52% % 6.84% % 8.17% % 15.01% % 9.08% % 11.18% % 20.26% FRENCH SPONSORED FILMS data ToTAl up To 1,000,000 up To 2,000,000 ToTAl low-budget (2,000,000 ) and years films films out of total out of costs films out of total out of costs films out of total out of costs % 3.86% % 3.96% % 7.82% % 3.44% % 4.39% % 7.73% % 2.87% % 4.11% % 6.98% ENGLISH SPONSORED FILMS* data ToTAl up To 685,000 up To 2,700,000 ToTAl low-budget (2,700,000 ) and years films films out of total out of costs films out of total out of costs films out of total out of costs % 5.56% % 14.95% % 20.51% % 9.10% % 25.90% % 35.00% % 4.43% % 15.15% % 19.58% * Data relating to the Italian sponsored films of 2011 corresponds to that (the only available) of the 100% national works. As for the English films, the data relating to the so-called domestic films and to majority co-productions has been considered, excluding films funded by the American major corporations whose budgets could alter the comparison and the other independent films produced by foreign companies with foreign investments. ** The cost levels of the French sponsored films correspond to values estimated according to data relating to cumulative surveys. Source: as regards Italy Tutti i numeri del cinema italiano (years ) ), by the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT (Rome); as regards France, Bilan du CNC, by the CNC-Centre national du cinéma et de l image animée of Paris; as for Great Britain, Statistical Yearbook by the BFI-British Film Institute of London. 12 from low budget films To low box office films In terms of box office trends, instead, a substantial homogeneity can be noted: in the three Countries, more than eight films out of ten get scarce box office results, amplifying the presence of low-budget films on the market. By about 10% for Italy and Great Britain, but more than 40% in the case of France. Out of the total box office receipts of the national films, the percentage of the so-called English low box office films is more contained than the shares of Italy and France.

15 TAblE 12 from low budget films To low box office films low budget films ITAlY france GrEAT britain* and low box low box office - up to 1,500,000 low box office - up to 2,00,000 low box office - up to 1,370,000 office films films % of total receipts out films % of total receipts out films % of total receipts out of total of total of total % 10.35% % 13.80% % 4.82% % 11.43% % 14.83% % 3.58% % 12.48% % 11.17% % 4.95% * Data refers to national films, excluding minority co-productions. As for the English films, the data relating to the so-called domestic films and to majority co-productions has been considered, excluding films funded by the American major corporations whose budgets could alter the comparison and the other independent films produced by foreign companies with foreign investments Source: as regards Italy Tutti i numeri del cinema italiano (years ), by the joint study unit DGCinema-ANICA on data provided by the Directorate-General Cinema of the MiBACT (Rome); as regards France, Bilan du CNC, by the CNC-Centre national du cinéma et de l image animée of Paris; as for Great Britain, Statistical Yearbook, by the BFI-British Film Institute of London. ThE difficult CoMPETITIoN on ThE MArkET ShArES According to the available data, the trend of the Italian cinema seem to be reflected on the not entirely positive trend of the business in Its market share, in fact, went from 31.16% to 27.76% in terms of attendance and from 30.64% to 27.19% in terms of receipts. However, in this case, the additional differentials generated in 2013 by the extraordinary success achieved by Sole a Catinelle should be considered. This film achieved 8.22% of annual receipts and attracted 8.38% of moviegoers. By subtracting, from the results of the two seasons, the results of the two corresponding national leaders (in 2014 it was A Boss in the Living Room, second place at the box office with receipts of million Euros and 1.88 million people), the final balance would change its sign and would become largely positive. TAblE 13 MArkET CoMPETITIoN between ITAlIAN ANd foreign films Nationality of films* TITlES ShArE receipts IN EuroS ShArE ATTENdANCE ShArE 2013 Total Italy % 189,581, % 30,358, % Europe % 64,749, % 10,507, % United States % 334,304, % 51,996, % Other Countries % 30,086, % 4,572, % Total foreign Countries % 429,140, % 67,076, % Grand total % 618,722, % 97,434, % 2014 Total Italy % 156,314, % 25,387, % Europe % 95,423, % 15,765, % United States % 288,569, % 45,410, % Other Countries % 34,532, % 4,902, % Total foreign Countries % 418,524, % 66,077, % Grand total 1, % 574,839, % 91,465, % * Data refers to all films distributed (until 31st December by receipts and attendance), including sequels. Source: Cinetel data drawn from Sintesi dati Cinetel ( ), by ANEC-Associazione Nazionale Esercenti Cinema, ANEM-Associazione Nazionale Esercenti Multiplex, Cinetel and ANICA-Associazione Nazionale Industrie Cinematografiche Audiovisive e Multimediali. 13

16 If ThE lists lacks blockbusters Despite having scored the highest number of films earning over 1 million Euros (45), the national production totalled the lowest receipts since 2007 with its leaders (35 from 1 to 5 million Euros), only equal to the lowest result already achieved in 2012 ( million Euros) but with only 17 works. The average yield of its million-grossing films decreased to 3.06 million per capita, which does not find results for less than 4 million Euros in the 2000s. TAblE 14 four YEArS of MIllIoN-GroSSING ITAlIAN films last films GroSSING MorE ThAN 1 MIllIoN EuroS VAluE of receipts IN EuroS 4 years from 1 to 5 from 5 to 10 from 10 to 15 over 15 Total films Annual total Average per film * * Data relating to 2014 can be subject to further verifications. Source: Sintesi dati Cinetel (years ) by ANEC-Associazione Nazionale Esercenti Cinema, ANEM-Associazione Nazionale Esercenti Multiplex, Cinetel and ANICA-Associazione Nazionale Industrie Cinematografiche Audiovisive e Multimediali.. TAblE 15 receipts ANd ATTENdANCE from SINGlE-SCrEEN CINEMAS To MulTIPlExES of ThE CINETEl CIrCuIT Cinetel SINGlE-SCrEEN CINEMAS 2-4 SCrEENS 5-7 SCrEENS MulTIPlExES (+7) ToTAl SCrEENS circuit receipts Attendance receipts Attendance receipts Attendance receipts Attendance receipts Attendance MILLION OF EUROS AND PEOPLE BY TYPE OF CINEMA IN THE CINETEL CIRCUIT PERCENTAGE VARIATION OF RECEIPTS AND ATTENDANCE BY TYPE IN THE CINETEL CIRCUIT % -5.06% -8.34% -7.54% -5.28% -3.97% -7.40% -6.60% -7.09% -6.13% * Data relating to multiplexes only was obtained by extrapolating the values of the single-screen cinemas from the total cinemas. Source: Sintesi dati Cinetel ( ) by ANEC-Associazione Nazionale Esercenti Cinema, ANEM-Associazione Nazionale Esercenti Multiplex, Cinetel and ANICA-Associazione Nazionale Industrie Cinematografiche Audiovisive e Multimediali. 14 PErforMANCE of ThE THEATRICAL CIrCuIT For the film exhibitors the 2014 trend was undoubtedly disappointing if compared with the 2013 final balance, which was favoured by the presence of Sole a Catinelle in the film schedule. For the second time in the last eight years, the percentage variations in terms of attendance and box office receipts have all a negative sign for any type of cinema of the Cinetel circuit, from single-screen theatres to multiplexes. This had already happened in 2011, with an even more considerable decrease in the annual business and even after one positive year thanks to a film schedule that could rely on blockbusters

17 like Avatar (2009), Alice in Wonderland (2010), Welcome to the South (2010) and Harry Potter and the Deathly Hallows: Part I (2010). CoNSEQuENCES of A WEAk ToP TEN In the absence of real blockbusters, the influence of the single-screen cinemas on the total receipts and attendance has finally met its first progress, after eight years of repeated setbacks, albeit by only one decimal place, thus getting to 7% of receipts and 8.6% af people. Instead, the decline of 2-4 screen cinemas continues, as opposed to the steady progress of the multiplexes with 5-7 screens. TAblE 16 receipts ANd ATTENdANCE from SINGlE-SCrEEN CINEMAS To MulTIPlExES of ThE CINETEl CIrCuIT Cinetel SINGlE-SCrEEN CINEMAS 2-4 SCrEENS 5-7 SCrEENS MulTIPlExES (+7) ToTAl SCrEENS circuit receipts Attendance receipts Attendance receipts Attendance receipts Attendance receipts Attendance PERCENTAGE INCIDENCE OF RECEIPTS AND ATTENDANCE IN THE CINETEL CIRCUIT BY TYPE % 9.5% 18.0% 19.0% 17.6% 17.3% 55.8% 54.2% 91.4% 90.5% % 8.9% 17.4% 18.6% 18.3% 18.0% 56.5% 54.5% 92.1% 91.1% % 8.5% 16.9% 17.6% 19.0% 18.8% 56.5% 55.1% 92.4% 91.5% % 8.6% 16.6% 17.4% 19.4% 19.2% 56.3% 54.8% 92.3% 91.4% Source: Sintesi dati Cinetel ( ) by ANEC-Associazione Nazionale Esercenti Cinema, ANEM-Associazione Nazionale Esercenti Multiplex, Cinetel and ANICA-Associazione Nazionale Industrie Cinematografiche Audiovisive e Multimediali. AWAkENING of ThE SINGlE-SCrEEN CINEMAS In 2014, a small case occurred: the Cinetel circuit finally recorded the increase by one single-screen cinema in its sample. Certainly, this does not offset the non-stop loss recorded in this type of cinemas during the last eight years. This resulted in the loss of 183 units over a quarter (25.66%) of the total number of 713 of However, the phenomenon is important, as in the turnover of openings and closures in the different Regions, alongside an outbound market, an inbound one is also taking shape. TAblE 17 STruCTurE of ThE CINETEl CIrCuIT of film ExhIbITIoN Cinetel SINGlE-SCrEEN CINEMAS 2-4 SCrEENS 5-7 SCrEENS MulTIPlExES (+7) ToTAl MoVIE ThEATrES circuit Cinemas Screens Cinemas Screens Cinemas Screens Cinemas Screens Cinemas Screens NUMBER OF MOVIE THEATRES OF THE CINETEL CIRCUIT BY TYPE ,272 1,071 3, ,272 1,074 3, ,291 1,063 3, ,286 1,063 3, ,295 1,065 3, / Sources: Annuario Cinetel editions from 2006 to 2014, by Cinetel (Rome, 2014). 15

18 However, the decrease in the number of 2-4 screen cinemas continues and the overall balance of the two smaller types of theatres remains negative, with the loss of 201 cinemas and 225 screens from 2006 onwards. Instead, the group of cityplexes and multiplexes (from 5 to 7 screens and with over 8 screens, respectively) increased by 56 cinemas and 424 screens. Therefore, the total balance shows the loss of 145 theatres and the increase by 199 screens. how ThE TurNoVEr of SCrEENS ChANGES The data relating to the whole market shows that from 2007 to 2013 the total amount of national movie theatres lost 581 cinemas, 476 of which (81.92%) were active for less than 60 days a year. However, flows changed on this path during the last two years. In fact, 192 (69.75%) of the 271 closures occurred between 2011 and 2012 concerned the movie theatres opened for more than 60 days, against the 79 closures in the other group. At the end of 2014 the digital screens were 3,446, that is, 89.13% of those active for more than 60 days a year, while at the end of 2013 it was 67.14% of the total 5,132 screens. TAblE 18 EVoluTIoN IN ThE universe of ACTIVE MoVIE ThEATrES SIAE cinemas SCrEEN ACTIVE for SCrEENS ACTIVE for ToTAl less ThAN 60 ShoWS AT least 60 ShoWS ACTIVE SCrEENS Number Share Trend Number Share Trend Number Trend ACTIVE CINEMAS ON THE TOTAL MARKET OF SIAE , % +3.63% 3, % -2.08% 5, % , % -9.79% 4, % +2.68% 5, % , % -6.21% 3, % -2.78% 5, % , % +1.11% 3, % -2.00% 5, % % % % -2.64% % Sources: Cinque anni di cinema (editions of , and ) by the statistical office of SIAE-Società Italiana degli Autori ed Editori (Rome, 2015). ThE TWo MArkETS of ThE film ExhIbITIoN NETWork The sharp selection process emphasizes the distinction between the two film exhibition markets: the Cinetel circuit and the extra-cinetel circuit, with an attendance of over 8 TAblE 19 WhICh MArkET out of ThE CINETEl SAMPlE Annual ExTrA-CINETEl PEoPlE receipts IN EuroS PEoPlE PEr SCrEEN receipts PEr SCrEEN data Screens Share Millions Share Millions Share Attendance Variation Euros Variation , % % % 4, % 16, % , % % % 4, % 16, % , % % % 5, % 14, % , % % % 4, % 13, % 2013/ % % % % -6, % Sources: Cinque anni di cinema ( , and ) by the statistical office of SIAE-Società Italiana degli Autori ed Editori (Rome, ) and Cinetel data. 16

19 million. The overall picture, however, denounces its steady weakening. In the last seven years the decrease of movie theatres by 28.42%, but the decrease in attendance ( %) and box office receipts (-52.44%) is even sharper. INCrEASE IN ThE NuMbEr of ShoWS The increase in the number of shows continued in 2014, too. While the showing days increased by 4.58% in seven years (the variation was equal to 4.06% until the previous year), the number of shows after exceeding the threshold of 3 million for the first time in 2013 increased by %. Starting from the base of 1.17 viewings per day, film exhibitors got to 2.71 shows during that period. TAblE 20 how ThE film offer ChANGES IN ThE CINEMAS of ThE SIAE universe Total SIAE NuMbEr of PErCENTAGE days of PErCENTAGE AVErAGE daily * ShoWS VArIATIoN ACTIVITY VArIATIoN ShoWINGS ANNUAL SHOWING ACTIVITY ON THE SCREENS OF THE TOTAL MARKET OF SIAE ,975, % 1,121, % ,983, % 1,110, % ,014, % 1,114, % * 3,044, % 1,123, % ,748, % +49, % * Data relating to 2014 is the result of estimates. Sources: Annuario dello Spettacolo 2006, Cinque anni di cinema (editions of , and ) by the statistical office of SIAE-Società Italiana Autori ed Editori (Rome, 2015). ThE real PlACE IN ThE World ranking In the international statistics by number of screens (estimated thousand) of the different Countries, Italy never occupies a top place. In fact, the data relating to the Cinetel circuit was considered, related to the same year, and not that of the total market (which is the common and actual base of reference of rankings), as the final balances of SIAE are analysed after one year. Actually, the film exhibition network of the Italian cinema is sixth in the world and second in Europe after France. In terms of box office receipts, instead, it is twelfth in the world (after Mexico, by 23 million dollars) and fourth in Europe, after France, Great Britain, Germany and Russia and before Spain (by over 60 million dollars). In terms of attendance, Italy is eleventh in the world ranking, before Spain and Australia, after Brazil (65 million people more than 2014), and fifth in Europe, after France, Russia, Great Britain and Germany and before Spain, for a difference of nearly 5 million viewers in ECoNoMIC results ANd INTEGrATEd ProduCTIoN With the million receipts recorded in the Cinetel circuit, it is estimated that the spending at the box office of the total market of SIAE corresponds to , with an 17

20 TAblE 21 World TOP TEN EuroPEAN TOP TEN Number of screens Total screens 1. United States 40, France 5, China 24, Italy 5, India 11, Germany 4, Mexico 5, Great Britain 3, France 5, Russia 3, Italy 5, Spain 3, Germany 4, Poland 1, Great Britain 3, Czech Rep Russia 3, Sweden Spain 3, Netherlands 741 Source: World Film Market Trends by the European Audiovisual Observatory of Brussels. overall expenditure of 684 million Euros and a total turnover of 686 million for the film exhibition network, with further 24 million invested in advertising. It is then estimated that, in the promotion activity, distribution companies invested about 100 million Euros. From the sale of films on the home-video channel which has significantly slowed its decline million Euros were earned (25 of which from e-commerce), while the distribution of films by TV networks through pay TV and video on demand generated 400 and 30 million Euros, respectively (data is not disclosed). The production of TV movies and TV series, instead, earned nearly 310 million Euros. Moreover, the turnover of over 800 technical post-production and service-providing industries amounts to about 250 million Euros. According to these results, the revenue for the chain corresponds to billion Euros. Finally, in the parallel sector of video games, with Italy as the third market in Europe and the ninth in the world as regards the number of players (21 million), a turnover of 959 million Euros was recorded. business STruCTurE ANd ProfESSIoNAl CoMMuNITY A homogeneous base of reference for the evolution of the business activity in terms of trends of the film industry during last season cannot be obtained, as the surveys conducted by Istat on the structure of companies are updated to The field of observation has been also radically renovated and examined through the database Asia- Statistical archive of active companies with an in-depth analysis (the results of which are shown in the Report) by business areas and size classes, territorial distribution, types of working contracts and employee placement. Instead, the statistics conducted within the social security system of ex Enpals of INPS refer to 2013 and focus on the resources of the artistic and creative areas and on all short-term workers. The professional community of cinema lost almost 4 thousand units in twelve months, 2,884 of which only among actors. 18

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22 In International scenario: The Focus features the participation of: The Special contents were provided by: The contributions in the Institutions section were provided by: The contributions in the Associations section were provided by: The contributions in the Production section were provided by: The contributions in the Testimonies section were provided by:

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