Film crew

The European film and TV industry needs to increase its focus on audience needs and to embrace EU-based technology if it is to become more competitive in the face of growing market penetration by global giants.

These are among the conclusions of the European Commission’s second European Media Industry Outlook report, a follow up to its influential first study published in 2023 which has helped to inform EU thinking about support for the sector. 

The publication of the report comes as the European Union weighs up its future support for European media and audiovisual sector. In July, it published its proposals to replace the Creative Europe Media programme with a new AgoraEU programme which will support both the audiovisual and news media sectors.

The second Outlook report warns that the EU media industry, which directly employs 1.32 million people in the EU across 245,000 businesses, faces unprecedented competition from global giants.

It says the European media market - which includes audiovisual, news media, video games and XR/VR - is “concentrated around a handful of non-EU actors, in particular from the US and China.”

These non-EU companies “capture a majority of revenue” in all media markets because of their control over distribution via platforms such as YouTube, SVODs and social media. Traditional mediums such as television remain prominent but are gradually being replaced by these digital offerings which carry less European content.

The report warns that the European industry remains fragmented, with a few large companies able to compete at global or regional level. It has been slow to develop and adopt its own technology offerings, aggravated by low levels of investment compared with the US industry.

Film focus

On the film side, the report says that feature films production rose by 3% in the EU in 2023, with an estimated 1,779 fiction and documentary films. The production value of films in Europe is also 16% higher than pre-pandemic.

However, the report notes that European theatrical films remain heavily reliant on public intervention. Direct public subsidies account for 26% of film budgets and production incentives contribute another 21%.

An increase in production spending has not led to an increased success of EU content, warns the report, as the US content continues to dominate audiences.

On SVOD platforms, the share of US titles stands at 51% of catalogues, but the view time is greater at 61%. EU works comprised 20% of catalogues in 2024 but accounted for only 16% of consumption.

In cinemas, films from the EU accounted for 29% of cinema tickets sold across the EU member states, while US titles reached a market share of 66%.

US companies grow

In the wider audiovisual market, the report found that the revenue share of US companies has increased. US companies - led by Comcast, Disney, Netflix and Google - now account for 40% of the revenues of the top 100 groups operating in Europe. The share of EU companies continued to decline to 59%, down eight percentage points since 2016. The top EU companies by revenue were Germany’s ARD, Luxembourg’s RTL Group and France’s Canal+.

Looking ahead, the report said the EU industry risks being at a disadvantage given the acceleration of tech innovations such as AI shaping the market.

The report did flag positives about the European media industry. It noted that EU companies create reputable content, are strong in areas such as high-quality films and series, high-end VR hardware, independent video games and film and trustworthy news. It also said employment in the sector has grown, despite a temporary downturn and churn, and companies have overall been profitable.

But the Outlook concluded that the current state of play “poses risks for the economic resilience and creative freedom of European media as well as for Europe’s cultural influence at large.”

Recommendations

It recommended that the European industry should increase its focus on audience-first approaches, “by tailoring content offerings to different audiences’ needs while appealing to the widest possible audience.”

For audiovisual and gaming content distribution, this could involve prioritising marketing, community engagement, viewing experience and recommendation systems for content discovery.

It also said that proprietary or EU-based technological solutions “can help European media scaleup and retain their sovereignty, noting that EU media are technologically dependent on global giants.

The report also said that harnessing artificial intelligence is vital, but noted that the European industry relies mostly on non-EU AI solutions.

It also called on media companies to invest in tech startups and scaleups to develop solutions such as AI tools, blockchain frameworks, and cloud-based services. Currently only seven of the top 800 R&D investing companies are media companies.

The report also said that European companies should look to better exploit IP brands that could stand out in a crowded market, warning that European media companies continue to struggle to retain and exploit rights.

Henna Virkkunen, the European Commission’s executive vice-president for tech sovereignty, security and democracy presented the European Media Outlook study yesterday (September 4) at the Venice Film Festival.

She had a closed door meeting with a select group of executives from European companies and associations to discuss the Audio Visual Media Services Directive (AVMSD) and the proposed AgoraEU programme.

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