A report has surprisingly revealed that while the Italian government upped its investment in Italian films by 34.8% last year compared to 2002, private investment in local titles dropped a worrying 5.25%,

The Italian film industry invested a total of Euros 301.7m in films in 2003, up 8.68% on the previous year.

But while Silvio Berlusconi's government, through the Cultural Ministry's Film Department, backed 57 films in 2003 - five more than in 2002 - and poured Euros 108.4m into the local film industry, private investment dropped from 204m in 2002 to Euros 193.3m.

State supported films last year included I'm Not Scared by Gabriele Salvatores, Buongiorno Notte by Marco Bellocchio and The Heart Elsewhere by Pupi Avati.

Data released this week by Italian entertainment body ANICA showed that Italy produced 98 films last year, two more than in 2002, although the number of Italian co-productions fell last year to 117 from 130 in 2002.

On a positive note, the average budget of Italian films was around Euros 2.57m - up an impressive 20.8% on 2002.

In addition, 21 Italian films earned more than Euros 1m at the local box office, a 5% rise on 2002. However, statistics underlined that the majority of Italian films are still not making any money at the box office, as almost 80% of all earnings for Italian titles were registered by just 13 films.

Meanwhile, as in other European countries, ticket sales in Italy dropped in 2003 - although statistics showed the drop was less severe in Italy than elsewhere.

According to Cinetel, which monitors around 80% of the national market, 1.7m fewer tickets were sold (-0.38%), for a reported loss of Euros 2m (-1.94%) despite the fact that the number of multiplexes with five to seven screens increased 4.74% and cinemas with more than 8 screens grew by 18.19%.

Multiplexes still proved popular, as the number of people who went to 8-screen multiplexes rose 7.8% to 31.5m in 2003 with over 46% of the cinema-going population now preferring multi-screen cinemas.

"The fact is that while the number of screens has increased in certain cinemas, the number of seats has not," said Carlo Bernaschi, head of national multiplex association ANEM. "Cinemas such as the Adriano in central Rome used to have 2 screens; it now has 10 screens, but still the same number of seats."

"One of the main problems is that 300 films come out in Italy each year, and if their release were to be spread out across the 12 months of the year, we'd all be a lot better off," he added.

In the meantime, the Italian market share remained virtually static at 22%, although box office earnings for Italian films dropped Euros 2.5m and spectator numbers fell by 602,087.

At the same time, the number of foreign films distributed in Italy grew by 38%, thanks to a 16% increase in US films and a 14% rise in European films.

Hollywood titles recorded a 64.47% market share (up 4.29% on 2002), but French films fared particularly badly in Italy, dropping 4.10% to a market share of just 1.94%.

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