Faculty of History and Arts MA Cultural Economics and Cultural Entrepreneurship 2009/2010 Cultural Diversity in the German Motion Picture Industry – the Case Study of the World Cinema Fund Master’s Thesis Eva Joanna Kocula Student No. 338156 Thesis’ Supervisor: Erwin DEKKER Second Reader: Dr. Christian HANDKE Rotterdam, 31 July 2010 Eva Joanna Kocula LIST OF CONTENTS LIST OF TABLES .................................................................................................................... iv LIST OF FIGURES.................................................................................................................... v LIST OF APPENDICES ............................................................................................................ v ABSTRACT.............................................................................................................................. vi INTRODUCTION...................................................................................................................... 1 CHAPTER 1: THE DEBATE ON CULTURAL DIVERSITY................................................. 6 The Concept of Diversity.................................................................................................. 7 Economic Perspective on the Issue of Diversity .............................................................. 8 Government Intervention and the Protection of Cultural Diversity ............................... 11 Cultural Diversity as a Subject to Legal Regulation....................................................... 15 Some Conclusions from the Debate on Cultural Diversity............................................. 17 CHAPTER 2: CULTURAL DIVERSITY IN THE MOTION PICTURE INDUSTRY ......... 19 Characteristics of the Film Industry................................................................................ 20 On the Demand Side....................................................................................................... 21 Cinema Attendance ............................................................................................... 22 Prices ..................................................................................................................... 23 Quality................................................................................................................... 23 The ‘Art House’ Sector................................................................................................... 24 Film Festivals.................................................................................................................. 25 Public Regulation and Financing.................................................................................... 27 Measuring Cultural Diversity in the Film Industry ........................................................ 29 Balance .................................................................................................................. 30 Disparity ................................................................................................................ 31 Conclusion ...................................................................................................................... 31 CHAPTER 3: FILM INDUSTRY IN GERMANY ................................................................. 33 The Role of Institutions and Financing Policies............................................................. 34 European Approach and Subsidies........................................................................ 34 The National Feature Film Subsidisation in Germany.......................................... 35 Film Market in Germany ................................................................................................ 36 General Data.......................................................................................................... 36 ii Eva Joanna Kocula The ‘Art House’ Sector in Germany ..................................................................... 38 Country of Origin .................................................................................................. 39 Genre ..................................................................................................................... 40 Supply of Films from Outside Germany ............................................................... 41 Diversity within the Set of Imported Films........................................................... 45 Movie Audience in Germany.......................................................................................... 46 Regional Competition..................................................................................................... 47 The International Film Festival in Berlin ....................................................................... 48 Conclusion ...................................................................................................................... 49 CHAPTER 4: THE WORLD CINEMA FUND ...................................................................... 51 The Structure of the World Cinema Fund ...................................................................... 51 Measurement of Diversity .............................................................................................. 53 Methodology................................................................................................................... 53 The World Cinema Fund and Diversity.......................................................................... 54 Diversity within the WCF Set ............................................................................... 54 Variety................................................................................................................... 54 Balance .................................................................................................................. 55 Disparity ................................................................................................................ 55 Diversity on the Market .................................................................................................. 57 Distribution of Films and Money Allocation.................................................................. 59 Conclusion ...................................................................................................................... 59 CONCLUSION SHOULD THE WCF KEEP GOING? – THE EFFECTIVENESS OF THE WORLD CINEMA FUND IN PROMOTING CULTURAL DIVERSITY.......... 61 The Rationale for Cultural Diversity .............................................................................. 61 Film Industry in Germany............................................................................................... 62 The World Cinema Fund ................................................................................................ 63 REFERENCES......................................................................................................................... 66 APPENDICES.......................................................................................................................... 72 iii Eva Joanna Kocula LIST OF TABLES Table 1: Market share of different countries in terms of rental revenue in Germany (%), 1999–2008 ............................................................................................................... 37 Table 2: Market share of different countries in terms of the number of films and rental revenues in Germany (%) in 2008........................................................................... 37 Table 3: The German film market – Final statistics of the cinema sector (2009).................... 37 Table 4: Top 50 Art-house films in 2008 (Based on cinema attendance)................................ 38 Table 5: Top 50 Art House Films 2008 – Country of origin.................................................... 39 Table 6: Top 50 Art House Films 2008 – Genre...................................................................... 40 Table 7: The overview of the license purchases – Statistics of the incoming films (1997–2005): Number of films bought in................................................................ 42 Table 8: The share of each region in the overall number of films bought in to the German market (%) (1997–2005).......................................................................................... 42 Table 9: Costs of license purchases for films bought in to the German market (in Euros) (1997–2005)............................................................................................................. 43 Table 10: Share of films from each region in the overall amount of money allocated into purchases of license for films bough in to the German market (1997–2005) (%)... 44 Table 11: Projects selected by the WCF: Production per region and per country ................... 52 Table 12: Projects selected by the WCF: Productions per region over time............................ 56 Table 13: Projects selected by the WCF: Distribution per region and per country ................. 57 Table 14: Projects selected by the WCF: Distribution over time............................................. 58 iv Eva Joanna Kocula LIST OF FIGURES Figure 1: Efficient resource allocation in the absence of externalities .................................... 12 Figure 2: Efficient resource allocation in the presence of positive externalities ..................... 13 Figure 3: The cultivation of taste over time ............................................................................