Introduction
 
In Section 3 we described the activities of the US majors in Europe and their impact on exhibition and on the exhibition of European films in particular. We concluded that the majors' dominance of the theatrical market is both a function of and reinforces the competitive advantage they enjoy as providers of a "pipe-line" of product that has been commercially-proven and which exhibitors know will be extremely well-marketed and widely-distributed. The majors' films provide a commercial benchmark that very few European films, especially outside their home markets, can satisfy. It is not surprising, therefore, that exhibitors orient their offer to the public to take advantage of the majors' pipe-lines.
 
In Section 4 we focused on the question of how European films perform outside of their home markets, with particular emphasis on the importance of marketing expenditure and the number of prints. We based our analysis on a sample of films supported by EFDO, because they are representative of the vast bulk of films made in Europe and - crucially - because data are available for these films, albeit on a highly confidential basis, such as the size of marketing budgets, the number of prints, the number of cinemas where the films played, and the admissions, box office and rentals achieved. But the EFDO analysis also highlights the role of and need for public support to make available to cinema-goers films which it would not otherwise be commercially viable to distribute or to exhibit.
 
In this Section, we pursue the theme of public support by looking at publicly-supported cinemas. In particular we describe how they are programmed - and the ways in which this resembles or differs from the commercial sector. We assess their success in making films available to audiences and in attracting audiences to those films.
 
As with the EFDO analysis, our choice of subject is partly dictated by the availability of data. The British Film Institute - the state-funded body responsible for promoting the moving image in the UK (which embraces both film and television) - gave us access to the records of the cinemas outside of London that receive support and which comprise the Regional Film Theatre (RFT) network.
 
Through the Regional Film Theatres (RFTs), the British Film Institute pursues the policy of widening "the range of cinematic experience, for as many people and as many regions of the United Kingdom as possible, by seeking to improve the availability of prints, the range of formats in which they are available, and the number and quality of cinemas and other venues in which they can be viewed."
 
The BFI provides discretionary support to cinemas. In 1992/93, £0.6 million was provided to cinemas, mainly members of the RFT network. In all there are 39 BFI-supported theatres/media centres with 51 screens and 12,773 seats. In 1992/93 they achieved 1.496 million admissions.
 
The size of the RFT network means that distributors can contemplate commercially-viable releases outside of London. Films handled in this way include not only productions in which the BFI has invested, but also commercial films (e.g. Reservoir Dogs) that failed originally to attract the interest of commercial distributors. The most striking characteristic of RFT programmes is the prevalence of European films: while non-domestic European films only represent 14 per cent of all films released in the UK, they accounted for 27 per cent of the films shown and 26 per cent of screen time in the sample period (September to December 1992). In the whole of 1992, the UK box office for non-domestic European films totalled some £2.5 million. Based on our sample period, the RFTs probably accounted for £1.3 million of that box office.
 
 
The data
 
The sample used in the analysis covers all the 680 films shown in RFTs outside London in the period from September to December 1992. For each film, the dataset contains information about:

• title
• nationality
• year of production
• distributor
• type of release (first, second, repertory or festival)
• admissions
• box office
• number of performance days(22)
• number of cinemas in which the film has been shown

For much of the analysis undertaken here, countries were grouped into the following 13 different regions:
 

North America	NA
Latin America	LA
France	FR
Germany	G
Italy	I
United Kingdom	UK
Spain	SP
Scandinavia	Scan
Other Europe	Euro
Eastern Europe	E Euro
Far East	F East
Australia and New Zealand	Aus/NZ
Rest of the World	RoW

                                       
 

• very small distributors
• US large
• small
• medium
• other large
• specialised 16mm distributors

• first run
• second run
• season/festival
• repertory

Approximately two thirds of all films were repertories, with first runs accounting for only 15% and second runs for 10%. Medium-size distributors have the largest share of first and second runs, while major US distributors account for 30% of repertories.
 
The success of films: a descriptive analysis
 
We now turn to consider the success of the films in the different groups. The indicator we have chosen is the average rate of attendance for each day and each cinema in which the film has been shown.
 
It is worth noting that this is not the best indicator one could construct, but its choice is dictated by data availability. In particular, two aspects have to be kept in mind when interpreting the results. First, our indicator does not take into account the number of daily performances of a film in each cinema in which it is shown. More daily performances may give people more chances to watch the film, and therefore may lead to a higher rate of daily attendance. Unfortunately, we have no information on the average number of daily performances in each cinema. Second, we have no indication of the seat capacity of the cinemas in which each film is shown. Larger cinemas would impose less stringent capacity constraints on the number of admissions to each performance. This second aspect however should be less important, since RFT film theatres are fairly homogeneous in size and the levels of daily cinema admissions recorded in the dataset are relatively low with respect to the typical size of RFT theatre.
 
Table 50 presents the average rate of daily attendance in each cinema for the films in the sample, and for different nationality/distributor combinations. Not all these combinations have a sample sufficiently large for the average attendance rate to be a reliable statistic. In Table 50, therefore, we have highlighted in bold those averages which refer to a sample of at least 10 films (still a very modest sample).
 
On average, films shown at RFT theatres attract 55 viewers per day to each screen. French films, which are more often art-house and for this reason may match typical preferences of RFT cinema audience, appear to have the highest attendance rate with 70 viewers per day in each cinema. Films from Australia and New Zealand are the least popular, with only 37 daily attendances in each cinema. (Latin American films have even lower attendance, but the sample is not large enough to be reliable). Apart from French films, European productions attract daily attendances at each cinema which range from 41 viewers for Scandinavian films to 56 viewers for German films. North American films have on average 55 viewers per day in each cinema.
 
Looking at the success of different group of distributors, large US and non-US distributors are those whose films have, on average, the greatest success, with daily cinema attendances rates in excess of 60.
 

First run films receive wider circulation if they are distributed by medium size or large non-US distributors, but lower than average circulation when distributed by BFI. This pattern is repeated for second run films, even though within the smaller sample. Circulation strategies are instead much more similar across different type of distributors in the case of repertory films.
 
Finally we consider the possible effect of a wider circulation on the rate of daily cinema attendance. There are two hypotheses here. The release of a film in more cinemas may be part of an aggressive marketing campaign which may attract a larger attendance rate. Alternatively, with more cinemas showing a film, the rate of capacity utilisation may be lower, if the wider circulation does not attract a proportionately larger audience.
 
Table 54 presents the average rate of daily cinema admissions for different types of release and width of circulation.
 
Generally speaking, the rate of daily cinema attendance increases with the level of circulation that a film receives. However, the increase in such rate is not very substantial when circulation is limited to less than 20 cinemas. It is only when the film is shown in a very large number of cinemas that the rate of daily cinema attendance increases substantially to a level 65% above the overall average. Films which are shown in only one or two cinemas have the lowest rate of daily cinema attendance.
 

• Second runs are the most successful type of film shown in RFTs.

• First run films are only successful if they are distributed by large distributors; otherwise they are amongst the least successful films shown in RFTs

• On average, the way a film circulates varies very little with different distributors. The only exceptions are films distributed by specialised 16mm distributors, which are shown in only one cinema, and those distributed by the BFI, which are shown on average in two cinemas.

• First and second run films receive on average a wider circulation than repertory and films featured in special seasons or festivals.

• Wide circulation substantially increases the success of a film: films shown in only one or two cinemas are the least successful.

• the country of production
• the distributor
• the type of release.

 

To arrive at the best equation, we first considered the most appropriate specification including only non-dummy variables and then tested each of the dummy variables, and some appropriate combination of these, for inclusion in the equation.

Equation (1) presents the best specification for a linear model.

ln(ADM)=₀+₁*ln(PRICE)+₂ln(DAYS) +₃*ln(CINEMAS)+₄*N_F+₅*R_FR +₆R_FRL

where

 ADM  is the number of admissions
 PRICE  is the average ticket price
 DAYS  is the average number of days the film was shown in each cinema
 CINEMAS is the number of cinemas in which the film has been shown
 N_F  is the dummy for French nationality
 R_FR  is the dummy for First-run release
 R_FRL is the dummy for First-run release by a large distributor

Table 55 presents the estimation results having made and adjustment for three outlets:

		coefficient estimate	standart errors	t-ratios [tail prob.]
0	constant	3.8115	.12917	29.5064[.000]
1	Price	-.33395	.13785	-2.4226[.016]
2	Days	.90464	.084808	10.6670[.000]
3	No of cinemas	.37438	.11241	3.3303[.001]
4	France	.37584	.084893	4.4273[.000]
5	First run	-.33079	.10467	-3.1603[.002]
6	First run large	.65978	.16606	3.9731[.000]
d152		-3.3745	.076147	-44.3164[.000]
d267		-4.9478	.11167	-44.3081[.000]
d568		-3.4446	.056262	-61.2234[.000]

 
Price
Given that admission prices of the cinemas in the sample, film-going is characterised by inelastic demand, with a price elasticity of minus 0.3.(23)
 

Circulation
A wider circulation of the film, in more cinemas or for longer periods, has a positive effect on admissions. Various interpretations of this effect can be offered. In the first place, a longer run or the release in more cinemas makes more cinema capacity available for prospective film-goers. It is therefore interesting to compare the elasticities of demand with respect to the number of cinemas showing the film and with respect to the average number of days that a film is shown in each cinema.
 
The elasticity with respect to the number of cinemas is 0.4 and significantly lower than one. Admissions therefore increase less than proportionately with the number of cinemas showing the film. This indicates that the average number of admissions per cinema decreases when more cinemas are showing the same film. This is somewhat at odds with our conclusion that films receiving very wide circulation are characterised by higher success rates. It is possible that success was due more to these films being distributed by large distributors, than to the number of cinemas showing them.
 
 
Performances
The elasticity of admissions with respect to the average number of performance days in each cinema on the other hand has a value of 0.9. This value is not significantly different from 1. The number of daily admission for a particular film at an individual cinema does not appear to vary substantially with a lengthening of the period over which the film is shown. Note however, that films are not generally programmed at RFT cinemas for very long periods of time.
 

French Films
Of the thirteen regions of origin, only France was found to be significant: in this sample French films appear to be on average 40% more successful than films of any other nationality.
 

First Run
Finally, first run films are generally 33% less successful than others. The exception to this is when they are distributed by a large company. First run films distributed by US and other large distributors attract, on average, 33% more viewers than other types of releases.
 
 
Conclusions
 
The analysis of the determinants of the success of films shown in RFT cinemas suggests that second run films are on average the most successful types of movies, regardless of the distributor involved. First run films, on the other hand, are extremely successful if they are distributed by large distributors, and equally unsuccessful otherwise. This may be due to the typical audience of RFT cinemas which may be more predisposed towards "classic" movies and perceive these cinemas as "specialising" in these kind of films. The same viewers may then choose commercial circuits to see first-run films, unless these films are supported by an aggressive marketing campaign. French films are generally more successful, while there is little difference between other European and US productions. It is worth noting that RFTs do not get a free choice of first run films, while their choice of second run titles is wider, which is at least partly why they do better.

These results throw into relief the differences between the RFTs and commercial cinemas. First, US titles represent 42 per cent of all titles shown in RFTs in the period (versus 56 per cent for UK cinemas as a whole in 1992) and account for 43 per cent of admissions (versus 86 per cent for all UK cinemas in 1992). Many of the US titles will be playing in repertory. There were 339 European titles shown (49 per cent) versus 35 per cent for all UK cinemas in 1992, and they accounted for 51 per cent of the box office (versus 13 per cent for UK cinemas as a whole). The Rest of the World, excluding English-speaking countries, accounted for 27 titles (4 per cent) and 1.3 per cent of admissions; for UK cinemas as a whole in 1992, the figures were 2.5 per cent of titles and 0.1 per cent of admissions.
 
The role of the RFTs - and, we might generalise, for all publicly-supported cinemas - is partly to provide a much broader range of films, including many non-mainstream films, to audiences. But where RFT-based releases are successful, it is because the films are well-supported by distributors in terms of marketing and prints. This explains why the predominantly French titles (and some Spanish ones) handled by the major specialised distributors - Artificial Eye, Electric, Mainline and Mayfair - perform very well while other European first-run releases do not. In other words, access to screens, on its own, is not a sufficient condition for a successful film.

(22) This is the total number of days during which a film was available in any cinema

(23) A relatively low sensitivity of demand for films with respect to admission price would indicate scope for an increase in the admission price of Regional Film Theatres in the UK. Higher prices would yield higher revenues without losing admissions accordingly. An elasticity of -0.3 implies that a 10 per cent increase in admission price would result in a fall in admissions of 3 per cent. Taken together, box office revenue would still show a 6.7 per cent net increase. There are two explanations for this observation: one, that RFTs have a pricing policy that is not profit maximising; two, that RFTs are not able to increase prices because they face competition from other cinemas who would want to show the same films as the RFTs if this looked profitable, and would offer distributors better terms. The first explanation is more likely to hold than the second.

Associazione Nazionale Esercenti Cinemas (ANEC) - Italy
 
Fédération Nationale des Cinémas Français (FNCF) - France
 
Nederlandse Vereninging van Bioscoopexploitanten (NVB) - The Netherlands
 
Confédération Internationale des Cinémas d'Art-et-d'Essai Européens (CICAE)
 
Fédération des Cinémas de Belgique (FCB) - Belgium
 
Filmindustry's Steering Committee - Denmark
 
Hauptverband Deutsche Filmtheater e.v. (HDF) - Germany
 
Cinema Exhibitors' Association (CEA) - Great Britain
 
Associação Portuguesa de Empresas Cinematográficas (APEC) - Portugal
 
Federación de Entidades de Empresarios de Cines de España (FEECE) - Spain
 
The Finnish Cinema Owners' Association - Finland
 
Association of Independent Cinema Owners - Ireland
 
KKL - Norsk Kino - og Filmfond - Norway
 
Association Cinématographique Suisse (ASC) - Switzerland

J. Ph. Wolff (The Netherlands), chairman
J. Rykaer (Denmark)
W. D. von Verschuer (Germany)
E. Brunella (General Secretary of MEDIA Salles)