Small European Film Markets
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CRESCINE
From Croatia’s independence as a state in the 1990s until 2007, the Ministry of Culture was the body responsible for creating film policy, financing film production, and promoting film culture in the country. The role of the Commissioner for Film (appointed by the Minister of Culture) was crucial within that period, putting the film industry in a fragile position that was volatile to political influence. This also had an impact on the type and quality of films produced, with long-lasting consequences for the perception and prejudices of audiences towards Croatian films.

The Homeland War, mishaps with the privatization of the major film studio (Jadran film) and production infrastructure from the socialist period, low public investment in film and cinema infrastructure (based mainly on contributions from the Ministry of Culture), non-existent private investment, migration of film workers abroad, and continuous disputes regarding the ownership and authors’ rights of some of the film works from the socialist period put the audiovisual sector in Croatia in an unstable situation in that period. This contributed to networking within the AV sector on the need for a professional agency/film fund (e.g. French CNC taken as a role model) that would (independently) cater for the needs of the sector.

With the establishment of the Croatian Audiovisual Centre (HAVC) as an arms-length body in 2008 by the Law on Audiovisual Activities (2007), HAVC as an agency took responsibility for the functioning and strategic orientation of the Croatian audiovisual sector. HAVC is financed by grant-in-aid from the government and by contributions from those bodies that use audiovisual works, such as broadcasters, telecoms, Internet providers, and digital, cable and satellite operators. The new Law on Audiovisual Activities that was enacted in 2018 included video games in the remit of HAVC, while the changes in the Law on Electronic Media (2021) transposing the AVMSD to Croatian legislation resulted in the inclusion of streamers in the finance mix as well. In 2012, the production incentive was introduced as a cash rebate system; consequently, HAVC’s Filming in Croatia office was established, which was followed by the opening of five local film commissions.

The whole production ecosystem of the audiovisual sector in Croatia is small-scale. It includes not only film production and distribution companies but also non-governmental associations in film and television, freelancers, public service broadcaster Croatian Radio-Television (HRT), commercial broadcasters (Nova TV and RTL), multiplex cinemas, networks of independent cinemas (Kino mreža), film festivals, network of amateur film associations (Hrvatski filmski savez - HFS), professional associations, a film archive (Hrvatska kinoteka) and streamers. All these stakeholders create a vibrant network that is centred around Zagreb, the country’s capital, where 84% of film production companies are registered (Bajo et al., 2013; p.52).

As also noted in a recent study by the Institute for Economics in Zagreb (Barbic et al., 2022), the Croatian audiovisual industry is a small-scale industry based mainly on micro-enterprises (Bajo et al., 2013). In the film sector, micro-enterprises predominate (92.9%): in 2015, the number of enterprises totalled 364, while in 2019 it grew to 448. The 2022 study separates out the category of ‘Electronic media-TV, video and radio’. The number of enterprises in this category grew from 263 in 2015 to 343 in 2019. Micro-enterprises (92.1%) are also predominant here.

Growth is also visible in the number of employed persons in the sector: the same report (Barbic al, et al., 2022) shows that in the 2015-2021 period, the number employed in the film sector was growing until the Covid-19 pandemic: in 2015 it amounted to 1,144 employed, in 2019 it was 1,684, 1,816 in 2020, while in 2021 (last data 31st March) it was 1,814.

In Croatia, film production volume is rather low and fluctuates significantly from year to year, in the case of national and majority productions films, between five and 17 in the 2014-2022-period. Average budgets range from €880,000 to just over €1 million. To help boost production volume, HAVC introduced the category of micro-budget movies in 2022, where budgets do not exceed €200,000.

The most popular genres are comedies and movies for children, while dramas have also found a place. For example, comedies were the most watched films in 2022 with Marginalci/The Marginals (HR 2022); in 2018 with Koja je ovo država!/What a Country! (HR, RS, PL 2018) and in 2015 with Narodni heroj Ljiljan Vidić/Shooting Stars (HR, RS 2015). In 2017 and 2014, children’s movies Uzbuna na Zelenom vrhu/The Mystery of Green Hill (HR 2017) and Ljubav ili smrt/Love or Death (HR 2014) were the most popular (both part of the ‘Koko’ series), while drama was a big box office success in 2019 with General (HR 2019). In 2023 children’s movies Dnevnik Pauline P./The Diary of Paulina P. (HR 2023) and animated Cvrčak i mravica/Cricket and Antoinette (HR 2023) boosted cinema ticket sales.

The domestic market has been continuously low (see: Admissions and markets shares) but with an increase in the last couple of years. New data provided by HAVC shows that in 2023, Croatian films were seen by 278,053 viewers, which puts 2023 as the third most successful year since the founding of HAVC, behind 2013 (436,074 viewers) and 2012 (328,158 viewers). Compared to the previous year, 2022 (220,776 viewers), this shows an admissions increase of 26% for Croatian films. Notwithstanding the improvement of the situation, this is still far from the years when comedy hit, Što je muškarac bez brkova?/What is a Man without a Moustache (HR 2005), had over 150,000 admissions, or when dark comedy, Kako je počeo rat na mom otoku/How the War Started on my Island (HR 1996), reached over 350,000 viewers.

The export potential of Croatian films has not been thoroughly developed; Croatia is among the countries with the lowest ratio of international admissions. Among the total admissions of Croatian films, the largest number are in Croatia.

The Croatian Audiovisual Centre (HAVC) structures its funding scheme through two main annual public calls: first is the Public Call for the Promotion of Audiovisual Activities and Creativity, through which HAVC co-finances the production of audiovisual works (as a result of the implementation of the provisions of the new Law on Audiovisual Activities in 2018, from 2021 this included video-games), the establishment of minority co-productions, the development of film and television scripts and works, and film distribution. The second is the Public Call for the Promotion of Complementary Activities, which includes funding of festivals, workshops, educational programmes, promotional measures and various programmes of international cooperation.

The changes introduced with the new 2021 Law on Electronic Media stipulated that on-demand media service providers (‘streamers’) targeting Croatia are obliged to pay a levy of 2% of their annual gross revenue to the implementation of the national programme for audiovisual activities. Furthermore, they are to invest 2% into either production or rights acquisition of audiovisual works from Croatian independent producers. The 2021 law also introduced an obligation for operators to allocate 10% of annual gross revenue for works of Croatian independent producers. These changes were only presented in summer 2022, so it is too early to discuss their impact, although they were welcomed by the AV community.

The grant-in-aid for HAVC from the government and through mandatory contributions from those bodies that use audiovisual works is around €10 million: in 2019 it reached €11.2 million, while in 2021 €9.2 million was allocated for programme activities supported by HAVC. Croatian Radio Television (HRT) is the largest contributor to the grant-in-aid, but while it has a separate public call for independent productions, it has not yet used its role as an investor or co-producer of either films or series to an adequate level.

The important measure within the overall AV sector is the Call for independent productions from the HRT for a buyout/order of audiovisual works, which is based on Article 11 of the Law on the Croatian Radio Television (OJ 37/10., 76/12., 78/16., 46/17. and 73/17., 94/18 and 114/22). The Law stipulates that Croatian Radio Television is obliged to ‘provide at least 15% of its annual programming budget for the procurement of European works from independent producers, half of which must be allocated to works originally produced in the Croatian language’. As noted in the yearly report by HRT (2023) on the implementation of this provision, in the period from 1st January to 31st December 2022, according to the type of content acquired from European independent producers originally produced in the Croatian language, works of drama, documentary, entertainment and mixed-genre content were acquired for a total of €9.3 million. The largest sums were set aside for the acquisition of drama and documentary content, series and films (61.68% and 32.96% respectively) while 5.36% was allocated to entertainment content.

Local and regional funding (at city and county levels) for film is minimal, as is private investment.

The provisions of the Croatian cash rebate system were first introduced in 2012. It targets film and TV productions (fiction, documentary and animation) that receive support through the Croatian Audiovisual Centre production incentive programme. These productions must incur a minimum spend in Croatia, use Croatian cast and crew, and pass the cultural test as required by the “Regulations to Encourage Investment in the Production of Audiovisual Works”. The cash rebate is calculated based on the total qualifying expenditure (before VAT) and the qualified spend consists of the costs of goods and services purchased in Croatia and wages paid to Croatian tax residents (both cast and crew) for services carried out in Croatia. The production incentive programme started with 20% support, but following legislative changes in 2018 it increased to 25%, with an additional 5% for productions filming in regions with below-average development as defined by the Law on Areas of Special State Concern.

In the period between 2012 and 2022, 109 productions benefited from the incentive programme and accounted for 2,633 days of filming in Croatia. This amounted to a total of approximately €218 million in local spending and a total of circa € 41.5 million incentives paid. The productions originated from a variety of countries, including Belgium, Bosnia and Herzegovina, Czech Republic, Denmark, Finland, France, Germany, India, Ireland, Northern Macedonia, the Netherlands, Serbia, Slovenia, Sweden, Switzerland, Turkey, the US, and the UK. These productions mainly included feature films, followed by television series and television films, with a smaller number of animated films. The productions were made for international streaming platforms, public or private television or different types of production houses.

A number of these productions were big-budget and more globally known projects that caused the biggest public and media interest, such as feature films connected mainly to Hollywood as well as Bollywood productions, for example Star Wars: The Last Jedi (US 2017), Renegades (FR, DE, US 2017), Fan (IN 2016), Robin Hood (US, HK, FR 2018), Mamma Mia: Here We Go Again (UK, US, JP, CN, HR 2018), The Hitman’s Wife’s Bodyguard (UK, US, SE, BG, FR 2021), and television projects for different TV channels and streaming platforms, such as HBO and Netflix (e.g., Game of Thrones [Seasons 3–5], Dig [Season 1], The Borgias [Season 3], Crossing Lines [Season 3], Succession [Season 2], The Witcher [Season 3], Jack Ryan [Season 4]).

Together with HAVC’s (national) office Filming in Croatia, there are six local film commissions (primarily focused to giving support to the service productions), each catering to a specific town/region: Istria Film Commission, Kvarner Film Commission, Split Film Commission, Varaždin Film Commission, Zadar Film Commission, and Zagreb Film Commission. Current debates question the impact of the service productions on the availability of film crews and prices for domestic film production. Recent talks on the possibility of opening up a new film studio (as a public-private partnership) catering to foreign and domestic productions have stalled.

The distribution landscape is dominated by Blitz Film and Video distribution, which has the largest share of distribution in Croatia, followed by Editus, Discovery Film, Duplicato and 2i Film. Duplicato is a very active distributor of Croatian films. However, it must be noted that Duplicato as well as 2i Film are members of the Blitz Cinestar Group. Taking into account that Blitz Film and Video distribution is part of Blitz-Cinestar (a major exhibitor with the largest number of multiplexes) – created in 2003 by joining Blitz film and video distribution with the Croatian branch of the German chain Cinestar – this company clearly dominates the distribution and exhibition market in Croatia.

The problem of the lack of funding for distribution of domestic films and the need for more marketing was recognized by HAVC in 2020, so an additional call for funding was created to cater to that need. In 2023 within this call approximately €193,700 was allocated to support the distribution of domestic films. Duplicato and Jučer were the most active in these calls, together with Restart as the key distributor specializing in documentary films. In 2023, as part of its 15th anniversary, HAVC also developed the campaign ‘Ponosni na domaći film!/Proud of Domestic Film!’, which aimed to boost attendance at domestic film screenings.

According to the number of cinemas, in comparison to other CresCine countries, Croatia is similar to Belgium and Ireland in the middle: small cinemas with a single screen are most common in Croatia; multiplexes with several screens are also present. Starting in 2011, in cooperation with the Ministry of Culture and Media, HAVC has supported the digitalization of 52 independent cinemas. This resulted in the establishment of the Croatian Independent Cinemas Network (Kino Mreža) in 2014, including 27 cinemas from 24 cities and towns, with the aim of strengthening the position of independent cinemas.

Currently, the Network has 46 members, including 67 cinemas in 55 cities and islands, who are exchanging programmes, providing educational programmes and training for audiences and professionals. However, these efforts are not enough for true film culture to be developed and sustained as most of these cinema venues do not have continuous film programmes. Even the big cities, such as the capital of Zagreb, Split and Rijeka have few art cinemas (Zagreb has three [currently only one is functioning], while Split and Rijeka have one each), and some of the smaller cities do not have a cinema at all anymore (not even as a part of a larger cultural venue, such as the cultural centre Dom kulture/Kulturni centar). The network of miniplexes/multiplexes is still centred on several larger cities and dominated by Blitz Cinestar: Dubrovnik, Osijek, Pula, Rijeka, Slavonski brod, Split (one miniplex and one multiplex), Varaždin, Vukovar, Zadar, Zagreb (two miniplexes and three multiplexes), Šibenik) and Cineplexx miniplexes (Split and Zagreb). Publicly owned miniplexes are situated in Karlovac (Kino Edison) and Osijek (Kino Urania).

The cinema infrastructure does not fully cater to the domestic repertoire of films: Croatian films have very short theatrical runs and are sometimes screened at impractical times (such as 3pm on weekdays). The available data shows that in general, cinema attendance in Croatia is low (average 0.9 admissions per capita), and the domestic market share is among the lowest between the CresCine markets (similar to Portugal). The low admissions and cinema attendance levels can be partly attributed to the low number of cinemas/screens (only Lithuania has a lower number of screens per capita), but also to the fact that ticket prices when compared to purchasing power parities (PPP) are relatively expensive for the average Croatian citizen (it is similar to the ticket price in Portugal, where the PPP is higher). Regarding other markets, there has been a dominance of US titles in cinemas in the last three decades.

The VoD space still looks promising for the Croatian AV industry (see VoD infrastructure) although expectations are not as high as they were a few years ago. The new investment obligations for VoD providers that were introduced with the new 2021 Law on Electronic Media (both levy and investment obligation, see Funding section) have already resulted in the accessibility of more titles in catalogues, but it remains to be seen how it will impact the production dimension. According to data from the Agency for Electronic Media, there are currently 23 providers of media-services-on-demand registered in Croatia (20 commercial and three non-profits). Regarding Croatian film, the role of non-profit VoD Zagreb Film Festival must be highlighted: it has developed two platforms dedicated to Croatian film (croatian.film/en/) and Croatian and European films (kinoeuropa.hr/).