This document presents the results of Part 1 of the study of the cinema exhibition industry in the European Union (EU). It was commissioned by MEDIA Salles, an initiative of the MEDIA Programme of the European Union with the support of the Italian Government, and undertaken by BIPE Conseil. The study includes the results of a field survey carried out by BIPE Conseil with the contribution from the Centre National de la Cinématographie. The document aims to describe the principal characteristics of the cinema exhibition sector in Europe: cinema ownership and concentration; relationships between the different players in the value chain; the provision of screens, in terms of location and technical standards; the position of art-house and experimental cinemas, and state intervention in the industry. It is therefore intended to complement the European Cinema Yearbook first produced by MEDIA Salles in 1992 than revised annually. The Yearbook provided the principal statistical information on Europe's screens. This report is the product of several research initiatives carried out jointly by BIPE Conseil and a team of national consultants(1):
(1) The national consultants are listed in Annex 4
  More than 3,000 screens were surveyed by postal questionnaires, with a telephone "follow-up" in most cases. Nearly 1,000 questionnaires were completed and returned. Our sample represented 6 per cent of all screens in the EU - a respectable proportion for a survey of this kind.

These different sources were brought together to produce as complete a picture as possible of the cinema exhibition industry in the European Union.
Main Findings
 The principal weaknesses of the European exhibition industry

· The strong variations in national markets constitute a formidable obstacle to policy-making at the European level. These variations are particularly evident at the levels of:

 · The case of Greece, where the exhibition sector is almost dying, in the absence of any intervention by commercial players or the public authorities.
· The recent trends in the market (the increasing importance of multiplexes, the internationalisation of companies active in exhibition) seem to favour the US communications groups, which may well be at the expense of the European players. This phenomenon seems imminent in the case of markets lacking strong national players and without any substantial State support.
· At the European level, there is a weakening of the position of the less integrated players, particularly independent self-programming exhibitors. This weakening is accentuated by the absence of corporate structures which could bring independents together in consortia, and give them negotiating power with distributors and other players within the sector.
· Programming strategies are not used as a way of differentiating individual cinemas or circuits. This phenomenon is encountered throughout Europe and, with the exception of the networks of Art and Experimental cinemas, there is no fundamental difference in approach between the independents and the circuits. This state of affairs seems difficult to avoid in a context where the distributors' control over cinema programming is very great.
· The increasing marginalisation of the non-national European film at the European level in terms of admissions should also be noted.
The strengths of the European exhibition industry
· The existence of a handful of European players, who must work to maintain their national position and their expansion into the other European countries (the French circuits, Kinepolis Group, UFA, Lusomundo, Nordisk, etc.) and adapt their strategy to the new needs of the market (the creation of multiplexes, cinema modernisation, etc.)
· A sector which is still well-catered for in terms of the number of screens, even in countries which have experienced a strong market contraction (like Italy).
· A well-established tradition of industry organisations in the sector (numerous associations or specific agencies for the cinema were created after the Second World War) which provides a corporate or regulatory framework for an activity which otherwise is based on an economic model of an extremely competitive market. The existence of this administrative or associative framework provides the vehicles for creating a European strategy for the sector.
· The good health of the Art and Experimental sector, which functions as a network of its own. Even if the fact that art-houses have become the main channel for European films is to be deplored, one notices that Europe still boasts one group of exhibitors that have suffered little from the contraction of admissions. In certain countries, this sector even shows a potential for growth. It is necessary to turn our attention to the notion of art-houses, to look to enlarge them, and to maintain a modern concept of the activity of these cinemas, which are often the guarantors of a choice of programming in exhibition which is becoming increasingly standardised.
· The maintenance, at the European level, of a respectable share for national films in each country.