Spanish cinema is stuck in a "vicious circle" of debility and dependence, the Spanish Cinema Academy suggested in its annual report on the local film sector, presented on Thursday in Madrid.

The so-called "Crisis" of Spanish film production - the title of last year's report - is far from resolved, the authors said, despite word in December that extra government funds would begin paying off outstanding subsidy debt - an issue causing cash-flow problems across the sector - immediately.

Spanish cinema continues to suffer the same "classic chronic illnesses," aggravated further in 2003 by TV acquisitions cutbacks, the subsidy debt, a saturated theatrical market and a drop in overall cinema attendance in Spain from 140.7m spectators in 2002 to an estimated 129.5m in 2003.

A slightly raised market share for Spanish cinema last year masks the fact that more releases shared about the same receipts. What's more, 77% of ticket sales on all Spanish films in 2003 went to just 10 films, while the report suggests that 80% of all Spanish films lose money.

The gap has not closed between the 81.5% of "trial and error" producers scraping by on one film a year, and the 4% making more than four films a year, led by Tornasol Films (8 films in 2003), Lolafilms (7 films), Alquimia and Filmax (6 films each).

Almost two-thirds of all Spanish films last year were made for less than the average Euros 2.2m budget, compounding the p&a underspend problem on smaller Spanish releases trying to compete in a marketplace which welcomes an annual 500-plus releases. The top 10 distributors - all majors or indies handling much US product, except for Alta Films - shared 92.1% of the market.

Fiscal incentives to foment private investment and more national co-productions are two tactics cited to potentially help pluck producers out of the vicious cycle, consolidate more companies, raise budgets and decrease risks before films ever get the greenlight.