Despite record production levels and a near-doubling of the domestic market share to 19%, a report on the Spanish film industry describes the production sector as suffering from "endemic structural problems" and an enormous gap between the haves and have-nots.

In its annual report on the industry, the Spanish Film Academy concludes that 78.5% of local producers made just one film last year, while less than 8% were able to produce three or more features. This has created a small group of flourishing production companies which, together with their co-production partners and financial backers, benefit the most from the increased market share of domestic films and boast the necessary cash flow to build up stable production slates. They include companies like Lolafilms (11 films in 2001), Tornasol (8), Cartel (8), Sogecine (7) and Filmax (6).

Meanwhile the great majority of Spanish producers - suffering from a lack of affiliation to a powerful media group, distributor or broadcaster, particularly pay TV - struggle to make ends meet from one project to the next in a sector where TV sales and distribution rights comprise a combined 35.3% of the average film's budget. Add to that the average 10.7% gleaned from loans which must be repaid and the average 25.5% the producer contributes him or herself, and the situation looks even more precarious.

As many as one-fifth of the record 117 films produced in Spain last year did not have a theatrical distributor at year's end. Yet securing a distributor is only part of the battle: as the Academy report points out, a lack of commercial promotion, inadequate distribution, unknown talent and low technical quality further contribute to the poor box office performance of most domestic films.

High production levels, not consistently matched by high quality levels, characterise the market. It is significant that the 10 top grossing domestic films last year earned a whopping 73% of overall ticket sales.