Annex 2: Country Studies


Key Points  
Screens and Admissions
No. of screens
No. of screens
- 3%
- 9%
Number of screens
Number of seats ('000)
Number of admissions per seat
Total number of admissions (millions)
Number of admissions per head of population
* unweighted average
Concentration in Exhibition
Market share of Top 3 players
Market share of independents responsible for own programming
* weighted average
Since 1980, falling admissions have brought in their wake a certain concentration of the exhibition sector. But, in contrast to the experience of other countries, this has taken several forms. As numerous cinemas organised themselves into circuits, others associated themselves to programming groups or entered programming agreements; and the precise form that each of these took varied considerably. Certain circuits owned their theatres; in other cases they were simply affiliated; groups or agreements might programme the cinemas concerned, or merely give them technical, administrative or commercial support.
The areas of activity of these circuits or groups is also very variable: they can cover a whole region, or just a province, or even just one locality.
Given that such diversity exists, it is difficult to estimate the proportion of screens which are members of a circuit, a group or an programming agreement. Their number is, however, growing, and the power of these networks is developing. National circuits like Cinema Cinque, have begun to appear in a significant way only in the last few years.
This circuit, created in 1988 by Fininvest, on the basis of establishments owned by Gaumont and by Cannon (Paretti), owns 22 establishments (43 screens) located in the main towns in the centre and north of Italy. With three million admissions, it controls barely 4% of the Italian market. But its market share is nearly 20% in Milan and Rome, and reaches more than 45% in Genoa. Besides this, as well as the establishments which it manages directly, Cinema 5 programmes about 250 screens located throughout Italy.
The movement towards integration has only just begun, however. The existing circuits must effectively reinforce their positions in years to come. Cinema 5 has announced, for example, that it wishes to open new cinemas in Rome, Milan, Turin and Bologna. And other national circuits, particularly those linked to production or distribution houses (Cecchi Gori and Mikado) are in the course of being set up.
The picture which emerges is increasingly an industry moving at two speeds: on one hand, the cinemas organised into circuits, groups or programming agreements, which programme the majority of first-run, mainstream films, and, on the other hand, a collection of independent cinemas, fragmented, and in a difficult position in relation to distributors.
Access by Films to Screens
 Companies involved in both distribution and exhibition - 1992 
Distribution market share
(% admissions)
Exhibition market share
(% admissions)
Istituto Luce
The distributors, who have seen their power reinforced as a result of a reduction in the number of releases, and by the fact that films are released on the same day in the majority of towns (see below), generally prefer to deal with the circuits, alliances or groups, drawing up programming agreements with them.
The situation is, however, very varied from one provincial centre to another. In certain "piazze" (areas) a group of exhibitors, organised into a kind of circuit or group, controls programming. When dealing with the distributors, they are therefore in a position of power, and can choose films according to their own needs and obtain exclusivity. The "piazze" thus seems to be locked-in by more or less permanent agreements between certain distributors and certain exhibitors. In other cases, however, the situation is more open.

In the big Italian towns and cities, these programming agreements between exhibitors and distributors have existed for several years.
This brings us to consideration of a factor which favours the progressive integration of the sector. These agreements or privileged relationships between actors seem to be multiplying everywhere, even including some independent distributors (like Academy Pictures) and the art-house and experimental cinemas.
Distributors and exhibitors even hold some companies in common, in order to manage together a variety of services. And there are several cases of vertical integration: Cinema 5 belongs to the Berlusconi group, and accounts for 59% of its turnover from films distributed by Pentafilms, in which Silvio Berlusconi Communications (SBC) holds 50% of the capital. And, in a different sphere, Istituto Luce, a public network with a dozen screens, essentially programmes works with whose production it has also been associated.
These practices of exclusivity and phenomena of vertical integration are not subject to any specific regulation, except for an article of the recent law of cinema (see Tab. 16b): up to now, there have not been any important judicial proceedings. Legal intervention has instead been positive, seeking to encourage the industry. The Emilia Romagna regional government, for example, has passed a law which seeks to promote and help cooperation between cinemas, or the formation of consortia.
Ticket Prices and Exhibitors' Shares
EU average
Average ticket price incl. taxes (ECUs)
Average rental as a % of box office net of tax
Exhibitor's average share (%)
Exhibitor's share of ticket price (ECU)
Exhibitor's average share per screen (000 ECUs)

The average ticket price is nearly 4.5 ECU: after the very significant rise in price recorded between 1989 and 1991 (an increase of 20%), it is now clearly higher than the average European price. These price increases explain the rise in box office receipts, despite the continued fall in admissions.
Commercial relations between distributors and exhibitors take various forms: in certain cases, for certain provincial cinemas particularly, film rentals are on the basis of a fixed payment (generally between 150,000 and 200,000 Lit.); in other cases, it is subject to proportional remuneration (on box office net of tax) with payment of a guaranteed minimum; but the most usual form is that of a proportional remuneration without a guaranteed minimum.
Precise rental conditions were the subject of an agreement in 1993 between the exhibitors' association (the ANEC) and the distributors' federation (the UNDF). Rentals are a function of gross takings and the duration of the showing. For the leading cinemas in the region, the reference percentage according to which takings should be split is 53% for a period of showing from one to three weeks. The rate generally decreases after three weeks. There are four different levels of rental depending on the annual revenues: 50% above 700 million Lit, 48% between 450 and 700, 40% between 200 and 450 and 30% below 200.
The exhibitor also carries some of the cost of publicity (billboards, press, radio and local television). In certain exceptional cases, the costs relating to operating the theatre can be subtracted from rentals payable. Rentals therefore almost always fall between 40 and 50%; cinemas which are members of a group or a circuit generally obtain more advantageous conditions than the independent cinemas.
Cinemas Provision
Number of screens per 100,000 population
Number of seats per screen
% large screens
% Dolby
% multiplexes (7+ screens)
* weighted average
For a long time, Italian exhibitors have encountered difficulties in reacting effectively to the fall in admissions. Low investment, in particular, has hampered the renewal of the industry.
It was not until nearly half way through the 1980s that the first signs of modernisation were evident. This movement was accelerated by the adoption of measures to provide subsidies for restructuring the industry (law n. 378/1980 and n. 163/1985).
The development of multi-screens was therefore assisted: since that time, 72 establishments (totalling 179 screens) have been built consisting of 2 screens or more, and amongst them, at least 20 complexes with more than 3 screens. The Odeon in Milan, belonging to the Cinema 5 circuit, with 10 screens, is currently the largest complex in Italy. The same circuit has also announced plans to build much bigger multiplexes (up to 20 screens) in Rome, and in the Milanese suburbs.
However, parallel to the improvements in quality, there has been an extremely rapid fall in the number of cinemas: from 8,450 in 1980 to 3,100 in 1991.
Nevertheless, even if the density of cinemas (5.2 theatres per 100,000 inhabitants) is equivalent in Italy to the European average, finding a cinema which is open all week means living in a town with at least 15 to 20,000 inhabitants, and, in certain regions in the south, the situation is even worse.
This restructuring of the industry has already contributed to a slowing down in the fall in admissions. But the movement towards modernisation is still far from over. The number of screens equipped with a Dolby system or with a 70mm projection, and the proportion of screens found in multi-screen complexes are all well below European averages.
US films' market share
European films' market share 
               - of which national films
Art-house & experimental: screens as % of all screens
Art-house & experimental: share of admissions
* weighted average
At the beginning of the 1980s, films were initially released in cinemas located in the leading towns in the different regions, before being programmed in other districts. Today, after the closure of a large number of cinemas in the city centre, in the suburbs and in the small towns, this practice no longer occurs: films are released on the same day in the leading regional towns, in the provinces and in other important towns, indeed even in the middle-sized towns.
This practice of wide release of films allows investment apportioned to production or marketing to be paid off more quickly, and also frees works more quickly for the other windows (video, pay-TV etc.). It results, nevertheless, in an increased concentration of box office on a reduced number of titles. The art-house and experimental cinemas are defined as those which programme films "with cultural interest", traditionally excluded from the commercial cinemas. According to regulation, cinemas whose programming consists of at least 70% art-house and experimental films enter into this category, and have the right to subsidies reserved for this type of cinema. It is, however, difficult to collect accurate statistics for these cinemas, and even more difficult to estimate exactly either their revenues or their market share. This is particularly the case because some cinemas programme art and experimental films permanently, and others only show them on certain days of the week.
The Italian Federation of art-house (FICE) has under its umbrella 294 adherents, which, together with about 30 cinemas affiliated to A.I.A.C.E., represents more than a tenth of Italian screens. A.I.A.C.E. is a non-profit making organization, born in 1962. One can therefore assume that more than one cinema in ten is "Art-house", which puts Italy level with the European average. In Italy, the position of these cinemas is, if anything, more favourable, as they benefit from growing public success, particularly amongst young people, and also various subsidies from national, regional and local governments (subsidies for modernisation, and operating subsidies). This situation explains why even private companies are considering the possibility of investing in this sector. And it is through this channel that the majority of European films manage to reach Italian spectators.
Role of the Public Authorities
Taxes:  - VAT 
- Other taxes 
- Rights (musical) 
- Total/ticket (in ECU)
Financial assistance:                      - Total (in ECU Millions)
                    - Per ticket (in ECU)
* unweighted average
** receipts net of tax
Faced with the rapid restructuring of exhibition, a new law was published on March 1, 1994 (Law N.153). The law modifies the previous law dating since 1965.
This new law abolishes the obligation to programme Italian or EU films. From February 1, 1995 tax incentives will be provided if at least 25% of days per quarter of year are programmed with Italian or EU films.
As we have said above, there is no specific law which regulates access to films or the split of box office; box office is subject to a single control, by the Society of Authors and Publishers (SIAE) which, amongst its other activities, levies the VAT and the Entertainment tax.
The Law on cinema contains an article (Art. 13) which limits the integration of the sector: the antitrust Authority can forbid the ownership or control, by a single operator, of more than 25% of distribution's market share and, at the same time, of more than 25% of the number of cinemas, both on national or local (for the 12 main cities) basis.
The regulation defines the periods of the various release windows: 8 months for video, 12 months for pay-TV and 24 months for free-TV, starting from the first cinema release in Italy.
The rate of VAT which is applied to box office receipts is 9%, on top of which there is an entertainment tax (also 9%). Moreover, it is important to take into account the various taxes which are levied at local level. As there are no local taxes which are specific to the cinema, the taxes affecting exhibitors are those levied on all enterprises: ICIAP (a tax on commercial activities), ICI (a communal property tax), ILOR and INVIM (other fixed levies), a refuse tax.
For each day that an Italian or EU film is shown, a measure in the law of 1965 which is still in force provides for an exhibition tax refund of 35% to the exhibitors.