The five Academy Award nominations for France's Amelie were the icing on the cake for a glorious year of French cinema - a year that has seen French films score highly at the box office and now receive Oscar kudos - in addition to the four Silver Berlin Bears awarded to French films over the weekend.

Behind the scenes, many credit France's unique system of aid and quotas as an important reason for the current boom, which has seen films like Asterix & Obelix: Mission Cleopatre outgun US fare. At least Euros 366m (ffr2.4bn) was ploughed into the film industry in 2000, thanks to funding from national film support body the CNC and government legislation requiring broadcasters to spend a proportion of their revenue on film.

Many, including CNC director David Kessler, say that without the support, "the industry would collapse". He adds, however, that the success of French films is not solely to do with state aid.

"Success isn't explained by the support system," opines Kessler. "In other years we didn't have the same success. It's more a system of maintenance - by continuing to make films it pays off."

The way in which the CNC funds films helps to give first timers a leg up; it also allows anyone who has made a film to benefit from their own previous work. The aid is handed out in a number of ways.

The CNC's selective aid programme sees films given up to Euros 473,000 up front towards their budget. In 2000, the CNC dished out a total of Euros 18.1m of selective aid. 347 films asked for help; 33 received funds. The cash is allocated by a committee within the CNC which reaches decisions after reading a project's script. (The committee is replaced every two years so as to avoid creating bad habits.) Just under half the projects chosen tend to be by first-time directors.Kessler explains that lending a hand to new talent "allows film-makers to mature". Even if a first film is a no-show at the box office, the thinking goes, the director will have learned something and perhaps make a better film the second time around. That was the case with Dominik Moll. His first film Intimacy sunk without trace, while his second, Harry, He's Here To Help, went on to sleeper success and scored US distribution via Miramax.

The other main source of CNC aid - Euros 50m (ffr328m) in 2000 - comes from the compte de soutien, a fund fed by a percentage of every ticket sold at the French box office. For each French cinema ticket sold - at an average of Euros 5.3 - the CNC fund will take Euros 0.73. This pot is then distributed among French producers whose films have already screened at the box office when they are looking for funding for new projects.

This is a unique method that is hailed by local film-makers but often controversial for Hollywood, which complains that its films are funding French product. US film-makers only have access to the aid if they are making a qualified French film. One studio which has proved canny at leveraging this is Warner Bros, which dipped into CNC coffers to back 2001's hit comedy La Verite Si Je Mens 2.

However, the key support - a staggering Euros 290m in 2000 - for the French film industry comes from the broadcasting industry. Government regulations demand that pay-TV behemoth Canal Plus invest 20% of its revenues in the film industry, while free-to-air channels are charged with investing 3.2% of their revenues.

In theory this is a good thing. But some producers and distributors complain that too many films - 145 in 2000 - are being made, causing a distribution glut.

However, one of the major fears within the industry is what Canal Plus will do when its contract with the film industry is renegotiated in 2004.

In a now infamous statement, Vivendi Universal chief Jean-Marie Messier recently declared the French cultural exception dead - calling instead for cultural diversity. Kessler says: "If Canal diminished [its investments] it would be catastrophic.

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