Small European Film Markets: Portraits and Comparisons

Spain

An appealing destination for global streamers, Spain is one of the top three exporters in SVOD, along France and Germany (EAO, 2023, p. 32). In 2018, Netflix chose Spain as its European content production hub. Madrid Content City, the location of the European Netflix Hub, has grown to become the second largest production studio in Europe behind Pinewood Studios in the UK. The bulk of investment in original content production in Spain EAO data shows that Spain comes second among the leading 10 European countries in terms of investments by global streamers in original European content (€0.9 billion in 2022). Note: In the EAO report, spending is split between three categories: original content, acquired film and TV programmes, and sports rights. Some of the Spanish films distributed on global streamers have achieved international acclaim. For example, Klaus (ES, UK, US 2019), distributed by Netflix, received an Oscar nomination for Best Animated Feature and won the BAFTA Award in the same category in 2020.

Global companies’ demand of audiovisual content has created an opportunity for the Spanish audiovisual sector, particularly with ancillary or complementary activities, such as post-production, sound, lighting, wardrobe, musical composition, and film tourism. The average yearly theatrical admissions per capita is 1.2. After the impact of Covid-19, by 2022 the Spanish box office had recovered to €367.5 million, equivalent to about 61% of the 2019 box office. The recovery of the Spanish box office has been slower compared to the recovery seen in other EU countries such as Portugal (63%), Estonia (65%) and Ireland (66%) and Denmark (82%) (Marché du Film: Focus, 2023, p.19).

Statistics from the Spanish Institute of Cinematography and Audiovisual Arts (2023, p.396) regarding cultural goods indicate that Spanish films accounted for approximately 21% of the domestic box office in 2022, in contrast to US films, which comprised about 57%. Films from the European Union (excluding Spain) in 2022 made up 3% of the Spanish box office.

The Spanish government initiated the plan ‘Spain Audiovisual Hub’ (2023) to boost the audiovisual sector’s economic activity. The plan is expected to mobilise public resources estimated at €1.6 million over 2021-2025. The strategic document identifies high national and international competition, as well as the emigration of talent, as challenges. The text also identifies strengths and opportunities for addressing these challenges, including a competitive tax rebate scheme, a proven industry track record, a good communications infrastructure, and the widespread use of Spanish as a global language.

In 2021, Spanish investment in the content sector reached €1441 million (content sector includes audiovisual content, except for acquisitions, produced for SVoD, paid TV, commercial and public broadcasters). During the same period, Germany invested €3643 million, France €2569 million, and Italy €1012 million (Oliver & Ohlbaum Associates, 2022, p. 24). These three countries are Spain’s main point of comparison in studies examining opportunities for growth and international competitiveness of the Spanish film and audiovisual sectors.

The average budget of a Spanish feature film in 2022 was €3.5 million. Approximately 77.6% of feature films produced in 2022 were of Spanish origin, with one in every five productions being a co-production. The film production sector predominantly consists of SMEs, with about 86.6% dedicated to producing a single film. A smaller fraction, 12.6%, produces between two and four films, and just 0.8% produces over five films. There has been a significant increase in the creation of animated films, accompanied by a heightened engagement in international co-productions (2023). 

Spain compares its tax schemes to those in Italy, Germany, and France, offering rebate programmes covering 30% to 54% of production costs. These tax schemes are offered at a national level, and at a regional level in the regions of Navarra and Islas Canarias (2023). The limit of support provided per project is €10 million, the same as in Germany. 

At national level, there are two types of tax incentives: tax rebates for foreign films and tax rebates for Spanish productions. The tax rebate for foreign film offers 30% for the executive producer (registered in ICAA) of a foreign film or audiovisual production spending a minimum of €1 million in Spain (€200,000 for animation projects). The tax rebate for foreign films In the Canary Islands is 50%. Navarre offers 35% via tax credit (2023).

Investments in Spanish film and audiovisual productions entitle the producer to a tax relief of 20% from the first million euros of the base deduction, and 18% on the excess of this amount, with a maximum of €3 million per production.

Over the last five years, domestic cinema admissions for Spanish films decreased by 51.1%. In contrast, the number of Spanish films released increased by 49.4% over the same period. Thus, in just five years, there are twice as many domestic films while the audience has halved, denoting a very competitive landscape for domestic distribution of Spanish cinema.

There are 3,625 screens, or 7.6 screens per 100,000 inhabitants. Cataluña, Andalucía, Comunitat Valenciana, and Madrid (the regions with the largest cities in Spain) hold 55% of the cinemas. Statistics released by the Ministry of Culture on cultural goods show that the majority of distribution companies in Spain distributed only one film, whereas 14.4% distributed more than 10 films in 2022. About 40% of the distribution companies distributed only Spanish films (ICAA, 2023, p. 392).

According to the Survey on Cultural Habits and Practices in Spain by MCUD, 28% of the Spanish population analysed attended the cinema in 2022, equivalent to 59.1 million spectators. The biggest cinema audience in 2022 were 15-24-year-olds, with 49% of the population attending a screening. In 2022, 56.6% of spectators attended US film screenings, 22.1% watched Spanish cinema, 3.6% consumed EU films, and 17.7% watched cinema from other countries (ICAA, 2023, p.396).

The most popular streaming services in Spain are Netflix, Amazon Prime and Disney+, according to EAO. The most popular local streaming service, Atresplayer Premium, owned by Atresmedia (previously known as media company Grupo Antena 3), achieved a penetration rate of 2.82%. At the 2022 year-end, Netflix claimed the lead in Spain’s streaming landscape with over five million subscribers, significantly more than Amazon Prime Video’s 2.8 million, and vastly more than Atresplayer’s 431,000 subscribers (EAO Yearbook 2023, Main OTT SVoD Groups in Europe by number of subscribers, December 2022. In 2022, about 58% of films in video exploitation were Spanish.

According to the ‘Spain Audiovisual Hub’ plan, Spain is among the top five EU28 production countries for films and series broadcast on paid TV or streamed on SVoD, along with the United Kingdom, Germany, France and Italy, together accounting for about 76% of total film exports to SVoD services.

Spanish-language productions hold the promise of reaching audiences across Latin America. The US’s large Spanish-speaking population provides a strong foundation for the export potential of Spanish content (Oliver & Ohlbaum Associates, 2022). Production-distribution companies such as Mediapro Studio, Onza Entertainment, Secuoya Studios and Buendía Estudios are opening new headquarters on the American continent to take full advantage of the global demand for Spanish content and talent (Oliver & Ohlbaum Associates, 2022).

Audiovisual exports are the the top cultural export of the country, representing 0.47% of Spanish economy exports in 2017 (Spanish Chamber of Commerce, 2021, p. 5). The top consumer of Spanish audiovisual products is the EU, absorbing 60% of their exports in 2020. In the same year, the Ibero-American and US markets accounted for 2.6% and 2.3% of Spanish audiovisual sales respectively.

Between 70% and 80% of Spanish films manage their international sales through the sales conglomerate International Sellers of Audiovisual Content (VICA) (Fundación Alternativas, 2022, p. 25). In addition, the Institute of Cinematography and Audiovisual Arts (ICAA) offers international sales support, with initiatives such as ‘Spanish Screenings’ at film festivals. Other public entities, such as Basque Audiovisual, which operates in the Basque Country, also offer support in exporting films made in their region.

Public support for the film industry is provided by the Institute of Cinematography and Audiovisual Arts (ICAA), an independent body ascribed to the Secretary of State for Culture. ICAA oversees the allocation of public funds, disbursing 81 million in support during 2022 (ICAA, 2023). In the same year, Spanish productions received 272 awards at foreign film festivals and events (ICAA, 2023, p. 397). In 2021, fiction was the most supported category, with 65.22% of supported works being fiction features. Compared to 2020, support for fiction features in 2021 experienced a growth of about 28%. The share of animation films with ICAA support has doubled, from 3.13% in 2017 to 7.61% in 2021.

The ‘Spain Audiovisual Hub’ plan has set a goal of a 30% increase in audiovisual production in Spain by 2025 by acting on four axes:

  • Improvement of financial and fiscal instruments;

  • Promotion and digitalization of audiovisual activities, promotion and internationalisation and attraction of investment;

  • Availability of talent and development of human capital;

  • Regulatory reforms and the removal of administrative barriers.

The plan looks to expand the base of eligible productions for ICO financing to include projects in the field of series, animation, video games, special effects, short films, and documentaries, among others. It also proposes expanding the projects eligible for corporate financing (managed by ENISA) to cover projects in animation, video games, or visual effects based on guarantees constituted based on the exploitation of the intellectual property rights of each project. The plan also seeks to broaden the projects eligible for financing by AXIS (ICO’s venture capital manager) to include innovative or entrepreneurial projects in the audiovisual sector. Spain has bilateral agreements with Argentina, Austria, Brazil, Canada, China, Cuba, France, Germany, India, Ireland, Israel, Italy, Mexico, Morocco, New Zealand, Portugal, Puerto Rico, Russia, Tunisia, and Venezuela. In addition, the country has multilateral agreements with Latin America, Ibero-America, and Europe.

In the case of Catalonia, the Catalan Institute of Cultural Enterprises offers subsidies for the development and production of feature and short films in Catalan language, as well as financial support for the organization of film festivals, promotion of films in Catalan, technical laboratories, and audience development projects in the region of the Catalunya.

Spain has also introduced an investment obligation for streamers with revenues` above €50 million to invest 5% for financing purchase or exploitation rights for European audiovisual works or contribution to the Film Protection Fund or the Fund for the promotion of cinematography and audiovisual works in co-official languages other than Spanish. A minimum 70% must be allocated to audiovisual works by independent producers in any of