· The large number of sites.
 
· The high level of integration of the three leading national players.
 
· The central role of the public authorities.
 
· Paris' privileged position in the economy of exhibition.
 
· The absence of international players in the French exhibition industry.
 
· The maintenance by European films of a substantial share of admissions.
 
· The phenomenon of "municipalisation" of theatres in rural areas.

 
The market share of independent exhibitors is still high in France, in line with the European average. The existence of numerous groups of independents should, however, be emphasized: these carry out their programming in a centralised fashion, or coordinate with other members of the group to which they belong. Cinemas where programming is carried out in a centralised fashion, either through circuits, or through groups of independent cinemas, are estimated to have a 60% share of all admissions.
 
The exhibition sector is dominated by three national circuits, collectively bringing together 517 screens which they own, or nearly 1,000 (if we include all the screens which they programme). They therefore own only a half of the screens which they programme, the others being affiliated and which benefit from the circuit's programming in exchange for a share of their takings. Their market share of admissions is 33.5% for the theatres which they own, and more than half the French market by admissions if we include the screens which they programme.
 
Amongst the three dominant circuits, UGC leads with 14.8% of the market by admissions with only 5.2% of the screens owned. This big group integrates the majority of activities of the audiovisual sector: production, distribution and advertising. It is also present in foreign exhibition markets, and its Belgian subsidiary manages three important complexes in the city of Brussels. The UGC cinemas, like those of the other two circuits, are located exclusively in urban areas with more than 100,000 inhabitants, and the group's strategy is orientated towards top quality cinemas and multiplexes programmed with a majority of "mass market" films.
 
 
Access by Films to Screens
 

Companies involved in both distribution and exhibition - 1992	Distribution market share (% admissions)	Exhibition market share (% admissions)
UGC	8.5%	14.8%
Gaumont	7%	11.4%
Pathé	15% (AMLF)	7.3%

 
 
The national market is distinguished from its European counterparts by the significance of the vertically integrated national players within it. All three principal exhibition circuits are in fact also present in the distribution sector, where they are solidly established, with a cumulative market share of over 30%. UGC and Gaumont also engage in feature film production. It is generally agreed that the maintenance of the positions of the three circuits protects the market against the constitution of either a quasi-monopoly around a national player, as can be seen in Portugal or Ireland, or, more importantly, from the penetration by US players into all segments of the film industry, as is the case in the United Kingdom.
 
The level of competition between the exhibitors who are found in local markets differs according to the type of geographical area. It has been considerably modified in the last two decades as a result of a large number of cinema swaps, carried out by the three national circuits (particularly Gaumont and Pathé). Following these agreements, Pathé have almost completely withdrawn from the Paris area, and a certain number of provincial cinemas have been exchanged, to achieve, in several towns, monopoly situations for one circuit over the whole catchment area.
 
It is remarkable to note that, nationally, the cinemas of the three circuits - owned and programmed - control 70% of the sites and 95% of the admissions in towns with more than 100,000 inhabitants, which bestows on them a privileged position in the majority of the most profitable markets. (There are, of course, still some urban areas where an independent exhibitor, with several establishments, controls the majority of the market, but this is more often the case in middle-sized towns than in the main urban areas.)
 
Because of its statistical importance (23% of the market) and also because of its historic role as a cultural and economic centre, the Parisian area plays a determining role in the success of film releases: a run in the capital's cinemas, or rather the cinemas in key parts of the city decide the success of a film at national level, and is a staging post which cannot be ignored in a successful release strategy.
 
There is a specific structure in France for resolving conflicts between the various players involved in the distribution of films to cinemas: the "Médiateur du Cinéma". Although this cannot impose sanctions or fines, it has a role of arbitration and mediation; it is a unique arrangement and an increasing number of exhibitors have asked this mediator for help. Conflicts are rarely linked to vertical integration. They mostly concern disputes between the bigger independent exhibitors in the provinces and other independents or the circuits, and deal with the access by cinemas to specific films, granted exclusively to another establishment (named or otherwise).
 
 
Ticket Prices and Exhibitors' Shares
 

1992	France	EU average
Average ticket price incl. taxes (ECUs)	5.11	4.19
Average rental as a % of box office net of tax	47%	47.2%
Exhibitor's average share (%)	53%	52.8%
Exhibitor's share of ticket price (ECU)	2.20	1.93
Exhibitor's average share per screen (000 ECUs)	58	63

 

The CNC closely supervises all the commercial practices of players in the film industry. It is a public body which has oversight over exhibition.
 
It regulated ticket prices until 1986. Nowadays, they are not regulated, and are at a level substantially higher than the European average. Some feel that such high prices create a barrier to increased cinema-going.
 
Strictly proportional remuneration dominates commercial practice. Rentals estimated at 47% after tax, are also relatively high in relation to levels observed elsewhere in Europe.
 
By contrast to what happens in Germany, Denmark and the Netherlands, French industry organisations (the exhibitors' federation and exhibitors' associations) rarely get involved with negotiations about the commercial conditions which govern relationships between distributors and exhibitors. Rental rates in practice are negotiated case by case between exhibitors and distributors, but they are nevertheless formalised by the State, which stipulates that rentals must be between 25 and 50% of net takings (the average in practice was 47% in 1992).
 
After deductions of the various levies, and paying the distributors, the exhibitors' share of box office receipts still remains higher than the European average. Part of the levies taken by the State are returned to the exhibitors in the form of subsidies to renovation or to programming.
 
 
Cinemas Provision
 

1992	France	EU*
Number of screens per 100,000 population	7.69	5.24
Number of seats per screen	221	266
% large screens	10%	24%
% Dolby	50%	51.4%
% multiplexes (7+ screens)	11%	10.7%

* weighted average
 
The density of sites is particularly high in France, as it reaches 7.7 screens per 100,000 inhabitants, which is 50% more than the European average. This high density partly explains why the performances of screens, expressed in terms of admissions per seat (118), is lower than the European average (124), despite a high annual number of visits in France.
 
The level of modernisation is very uneven: the creation of cinema complexes resulted in the 1980s in there being a majority of multi-screen establishments, but the subsequent stage, which consists of equipping theatres with top of the range equipment (stereo sound, amenities, restaurants) has only been attained by the circuits and a handful of independents. The State is now planning action to improve cinema quality throughout the sector (particularly the "Sound Plan", which seeks to equip 100% of theatres with stereo).
 
The concentration of public subsidies on the renovation of theatres in the less populated areas, combined with the effect on the industry of the construction of multi-screens in the big cities, must result in a significant improvement in the average quality of the screens in the short term.
 
The larger multi-screens - 8 screens or more - have only been operating in France since 1991. The initiative to build came mostly from the national circuits, who were already dominant (UGC, Pathé, Gaumont). The complexes already built include up to 15 screens and are located near the centre of the big cities (Lyon, Lille, Toulon, Marseille) and, above all, in Paris, which also accounts for most of the planned multiplexes.
 
In 1992, complexes with more than 8 screens made up 5% of the market (by screens); those with more than 7 screens made up 11%; this corresponds with the European average, but is still significantly lower than Belgium and the United Kingdom.
 
 
Programming
 

1992	France	EU*
US films' market share	58%	74%
European films' market share    - of which national films	39%   35%	24%   17%
Art-house & experimental: screens as % of all screens	14%	10.8%
Art-house & experimental: share of admissions	15%	9.7%

* weighted average
 
Although American films have risen at a lightning speed in terms of numbers of visits to the French cinema in the last twenty years (20% in 1973; 60% in 1992!), France is still distinguished today from the other European countries by the lowest penetration rate of films from the other side of the Atlantic, far weaker than the countries in North Europe, where the US films have a market share of 80% or more. This statistic is mostly due to the strong position of French films - admittedly, supported by the public authorities - and not to the maintenance of "consumption" of European films in general. In practice, the market share of films which come from the rest of the EU (4-5% by admissions) is not very different from that found in other EU countries. French films still attract 35% of admissions, which is nearly twice the European average for the market share of national films.
 
The big integrated circuits each have slightly different approaches to programming: particularly Pathé, which has developed a slightly more "cinéphile" programming policy than the other networks, like UGC. This is because of the history of the company, and of the Edeline family who are closely linked with it, and their involvement in both production and programming at key periods in the evolution of the French cinema.
 
Generally, few exhibitors and, amongst them, even fewer independents, have sufficient freedom to develop a proper programming strategy. Globally, for both circuits and independents, programming policy is very dependent on relationships with distributors, and on the number of prints released on to the market.
 
Independent exhibition has therefore not developed around programming policies different from those of the integrated circuits; it is only distinct from the circuits because of a lack of integration, and because of more limited means.
 
 
There is, however, a sub-group of independent exhibitors with a particular identity: this is the art and experimental cinemas, distinguished by a subsidised economy, a precise schedule of conditions on the subject of programming, and a network logic. The targeted programming of the Art and Experimental sector, and the significant subsidies given to its approximately 600 theatres (these theatres are classified as "Art and Experimental" by the CNC if they programme a significant proportion of films which are themselves classed as art-house and experimental) have enabled the cinemas in this group to maintain a substantial market share (15%) and a satisfactory level of performance, since their share of admissions is higher than their share of theatres, a rare position amongst the different national cases studied.
 
 
Role of the Public Authorities
 

1992	France	EU*
Taxes:                                - VAT                                - Other taxes                                - Rights (musical)	5.30% 11.00% 1.50%	10.80% 5.18% -
- Total/ticket (in ECU)	0.88	0.65
Financial assistance:                                - Total (in ECU Millions)	34.4	52.7
- Per ticket (in ECU)	0.30	0.09

* unweighted average
 
 
The system of public subsidies to the film sector is one of the most distinctive elements of the French market. Measured both by the size of funds distributed, and by the diversity of actions taken, France is the country in Europe where the public authorities play the greatest structural role in the cinema's economy.
 
The amount of subsidy per ticket sold is effectively three and a half times that of the EU average. However, it must be stated that the major contribution of the State in this domain is to organise the re-distribution of revenues within the audiovisual sector: the majority of funds distributed come from levies on tickets (TSA) and on the returns of the other audiovisual industries (broadcasters, pay TV etc.).
 
The effect of this transfer system on exhibitors' returns is quite significant, because TSA represents 11% of gross takings. However, the rate of real taxation (VAT) is lower than those practised in the rest of Europe.
 
Amongst the different types of subsidies granted, we must emphasize the importance of print subsidies print. The ADRC - a dependent agency of the CNC - manages a programme financing the making of supplementary prints destined for provincial cinemas. A significant number of prints resulted from this measure in 1992 (nearly 4,000) for a total of 100 US and European films.
 
Owing to the ADRC's activities, a large proportion of the subsidies are specifically directed towards encouraging exhibition in the regions: particularly its initiative to renovate and maintain the quality of cinemas in the less-populated areas.
 
As well as action by the national public administration, local government is also significantly involved in the management of the exhibition sector: it is estimated that nearly 20% of screens are owned and at least partly managed by the local authorities. A large proportion of the single-screen cinemas in areas of low population are owned by the local council, and constitute a separate segment of the exhibition industry. The programming of these cinemas is not very different from that of commercial cinemas.
 
This wave of local government involvement in the exhibition industry is gathering momentum. A large number of regional governments have now signed agreements with CNC concerning the development of exhibition in their area of influence, and are already involved in the financing of programmes to support exhibition.