2_Stryjakiewicz.indd 223Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.DOI: 10.15201/hungeobull.67.3.2 Hungarian Geographical Bulletin 67 2018 (3) 223–237. Introduction Core-periphery relations can be useful in explaining some processes taking place in creative economy. Creative industries are currently under a global shift (Flew, T. 2013). It means they spread outside the core and they play an increasingly important role es- pecially in so-called semi-peripheries. Semi- peripheral countries contribute to the pro- duction and export of a variety of goods, in- cluding cultural and creative goods (UNDP/ UNCTAD 2010; UNDP, UNESCO 2013). They are marked by above average cultural producers, as exemplified by Argentina, Chi- na, India, Brazil, Mexico, Indonesia, and Iran, but also smaller countries such as Poland, Czech Republic and other East-Central Euro- pean countries (UNDP/UNCTAD 2010). Not only semi-peripheral countries contribute to increasingly globalised creative economy, but creative industries have become substan- tial part of the local and regional develop- ment in those countries. Many studies have pointed out the role of creative industries in post-socialist transformation of Central and European countries (Švob-Đokić, N. 2005; Egedy, T. and Kovács, Z. 2009; Stryjak- iewicz, T. and Męczyński, M. 2010; Rumpel, P. et al. 2010; Slach, O. et al. 2013; Musterd, S. and Kovács, Z. 2013; Stryjakiewicz, T. et al. 2013, 2014; Chapain, C. and Stryjak- iewicz, T. 2017). Our paper tries to build on that research output and extend the existing knowledge by exploring how core-periphery relations matter for globalising creative in- dustries. We will present this role using the case of European film industry (with a focus on post-socialist countries of Central and Eastern Europe). The paper is structured as follows. First, we will indicate the role of peripheries and semi-peripheries in the global value chain of creative industries. It will serve as a de- 1 Adam Mickiewicz University, Institute of Socio-Economic Geography and Spatial Management, Krygowskiego 10, 61-680 Poznań, Poland. E-mails: krst@amu.edu.pl, tadek@amu.edu.pl The rise of film production locations and specialised film services in European semi-peripheries Krzysztof S TA C H O W I A K 1 and Tadeusz S T R Y J A K I E W I C Z 1 Abstract The research on a creative economy has been gaining momentum globally in the recent years, but the associ- ated concepts such as the cultural economy, the creative class, creative cities and so on, have typically been urban or national in orientation. There is evidence showing that many important developments in creative industries take place now in almost all parts of the globe. One of the creative industries which may serve as a vivid example of the complex interplay between the global core and the local periphery is film industry. The paper aims to discuss rise of film production locations and specialised film services in European global semi- peripheries. Globalisation of film industry involves the expansion of production away from the established and globally recognised centres, such as Hollywood or Western Europe. While some researchers refer to this development as a ‘runaway production’, this paper examines it through a broader look to core-periphery rela- tions and points out their implications and consequences from the perspective of European countries (with a focus on post-socialist countries of East Central Europe). Keywords: creative industries, film industry, film services, core-periphery, semi-periphery, Europe Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.224 parture point to show the global shift in one the most internationalised among all creative industries, notably the film industry. We will then analyse three main aspects of contem- porary global landscape in film industry: the global spread of film production infrastruc- ture, such as film studios, the rise of interna- tional collaboration in film production, and the emergence of cost-cutting incentives, or policies intended to attract international film production. The paper is an attempt of synthesis of current knowledge and existing knowledge, using some data on film industry to illustrate the main arguments. Therefore, a multimethod approach was used, mixing qualitative and quantitative data on current processes in film industry. The role of peripheries and semi-peripheries in the global value chain of creative industries The value chain in the creative economy can be divided into two main parts related to the generation and capture of values. Basi- cally, we can say that value production cor- responds to production processes, while value capture is related to distribution and consumption. Each of these stages requires various resources and competences: crea- tivity, knowledge or skills (Santagata, W. 2010). This chain is schematically presented in Figure 1. The curve on the graph shows what added value brings in the individual stage of the value chain. These approximate values were determined by the reconstruction of value chains in various creative industries, which had been analysed by many research- ers. They include, among others, publishing industry (AT Kearney 2010), film (Finney, A. 2010; Kehoe, K. and Mateer, J. 2015), music (Meisel, J.B. and Sullivan, T.S. 2002), video games (Kerr, A. 2006), performing arts (Brec- knock, R. 2004; Walmsley, B. 2011), and me- dia (Doyle, G. 2002; Falkheimer, J. and Jans- son, A. 2006). In addition, a number of value chain analyses referring to the creative sector as a whole was taken into account (Hearn, G. et al. 2007; Bakhshi, H. and McVittie, E. 2009; Santagata, W. 2010; PWC 2011; Walmsley, B. 2011; Lampel, J. and Germain, O. 2016). The process of value creation begins with (1) the conceptual phase, which starts with the idea for a creative good (such as film, song, or video game) and ends with the development of a project on how the good should look at the end. Santagata, W. (2010, 15–18) argues that the conceptual phase is preceded by the selection process of creators and that it is ac- tually the first stage of the entire value chain. When the concept is accepted, the second stage begins; it is related to (2) financial and organizational work. This stage is aimed at de- termining the profitability of a given venture, as well as financing possibilities. Not all ideas or products have a chance for commercial suc- cess. At this stage, therefore, the assessment of the possibility of marketability of a given prod- uct occurs. The knowledge is a key competence here, especially knowledge of the particular market or the specificity of the industry. The next stage is (3) pre-production, that is preparatory work. The production of crea- tive goods, especially complex ones, is often expensive (e.g. recording in a professional music studio, or making films outdoors), therefore its proper preparation is to ensure the rationalization of expenses. The business knowledge regarding the organization of cre- ative ventures as well as knowledge of legal issues are also crucial here. As this phase also includes preparation for the creative work with other people, social skills and networks are important at this stage. Proper production of a given good is the next phase (4), during which the good is created is created - song, advertisement, film, video game, theatrical performance. The produc- tion of each of these goods is different from each other, because their specificity is differ- ent. Nevertheless, the production of each of them requires a great deal of creativity, ar- tistic and literary knowledge and skills in a given field of art or other activity. Each of the creative professions (singer, painter, sculp- tor, architect, advertising specialist, fashion designer, screenwriter, etc.) has a specific 225Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. combination of competences – skills and knowledge, whose creative use leads to the creation of the original good. The next link in the value chain is (5) post- production. It occurs mainly in industries that produce complex creative goods. This is the stage in which this good must be “pieced to- gether” from the parts produced at the pro- duction stage. In the case of audio-visual in- dustries, this is the period after the end of the photos and sound recordings and lasts until the emission copies of the film are made. In the music industry, it refers to works after recording, related to sound processing and the preparation of a model version of the album. In publishing, it includes, for exam- ple, the correction or preparation of a book cover. It is a stage requiring large amounts of knowledge, skills and competence. For exam- ple, in the production of a film at this stage, special effects are created, which in high- budget films, using advanced technologies, are often the main aesthetic value of the film. Hence, in such cases it is the stage with the highest added value, which is reflected in the amount of expenditures on post-production activities (in the case of many blockbuster film post-production accounted for around 25% of the film budget). The finished good is then prepared for release on the market. This stage therefore applies to (6) promo- tional activities and advertising when the prod- uct brand is shaped, its identity is carried out and advertising campaigns are implemented. Fig. 1. Value chain in creative industries and the role of core-periphery location. – Location: C = core: developed countries, global cities, traditional centres of cultural production; SP = semi-peripheries: developed or developing countries, emerging centres of cultural production; P = peripheries: developing countries, local centres of cultural production; multi = dispersed location in multiple places. Core competencies: C = creativity (very important); c = creativity (moderately important); K = knowledge (very important); k = knowledge (moderately important); S = skills (very important); s = (moderately important). Source: Own elaboration based on Alcácer, J. (2006), Kerr, A. (2006), Hearn, G. et al. (2007), Mudambi, R. (2008), Bakhshi, H. and McVittie, E. (2009), Finney, A. (2010), Santagata, W. (2010), PWC (2011), Walmsley, B. (2011), Kehoe, K. and Mateer, J. (2015), Lampel, J. and Germain, O. (2016), Stachowiak, K. (2017) C C R&D, innovations, design, commercialisation DEVELOPMENT V CALUE REATION V CALUE APTURE FINANCING P -RE PRODUCTION PRODUCTION P -OST PRODUCTION MARKETING DISTRIBUTION EXPOSITION CONSUMPTION Production Marketing, advertising, specialised logistics, after-sales services Value added StageLocation Core competencies Creative industries Knowledge- intensive industries C K C/SP cKS SP/P CKS SP CKS C cK multi K multi K multi ks Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.226 Promotion and advertising start the process of value capture. (7) The distribution of goods ensures that they reach the largest group of consumers. Part of it is often (8) exposition, which refers to making creative goods avail- able to consumers. Due to its importance in creative activities, it is recognized as a sepa- rate link in the value chain, although it often runs parallel to consumption. A basis for the distinction of the exhibition phase is the role of the recipient’s contact with the good or its creator. The vernissage, the premiere of a film, a book or art in the theatre, but also an ordinary exhibition of paintings in the gal- lery, a film screening or a concert of music are important elements of contact between the good and the audience. In this phase, there are also contacts between creators and audiences. The examples of activities included in the exposure phase are cinema activities in the film industry and activities related to the organization of concerts in the music industry. In both cases these activities are considered as separate market segments (respectively film and music). The final link in the value chain is (9) con- sumption. Advanced forms of consumption of creative goods, in particular prosumption, interfere with creative processes, thus indi- rectly (and sometimes even directly) contrib- ute to the creation of values. Value chains of creative activities are now spatially disaggregated (cf. Mudambi, R. 2008), therefore issues related to the location of individual links in the value chain are of great importance. Along with the added value curve for creative industries, Figure 1 presents, as a reference, a similar curve developed by Mudambi, R. (2008) for high-tech industries. The value added curve is U-shaped, which results from the fact that the initial links of the value chain of such products as comput- ers, smartphones, consumer electronics, are created by research and development or engi- neering design that bring a lot of added value. The production of such goods consists in the production of components and assembly in special factories, most often performed ac- cording to a strict procedure designed in the initial stages. The added value is therefore relatively small. The places of such produc- tion are most often factories in China, Taiwan or South Korea. Then the finished product is sold, which is accompanied by advertis- ing and promotional campaigns, after-sales services and logistics, so the added value increases again. The case of creative indus- tries is somewhat different. As it can be seen in Figure 1, the stages with the highest value added in the creative industries are produc- tion and post-production. Those are also the stages requiring skills, creativity and knowl- edge. Therefore, outsourcing production in the creative industries is not necessarily re- lated to routine and low-skilled job. Many of production and post-production activities are taking place outside of the core locations. In the mid-nineties the U.S. National Research Council published a report con- vergence of computing, communications, and entertainment (NRC 1995). The report formulated a significant forecast (NRC 1995, 14): Established entertainment centres (i.e. Los Angeles, New York) are no longer secure in their hegemony. In the next few decades, they will find that the dominance associated with physi- cal concentrations of specialists, facilities, and mystique will be subject to profound change in the developing digital convergence matrix. Location independent communities, improving microprocessor-based production tools and meth- ods, and the rapid dissemination of many skills in expanding world markets, all undermine cen- trality. Just as “Detroit” is a metaphor, so it will be with “Hollywood” also. This prediction has worked fairly quickly, at least with regard to Hollywood. Employment only in the film industry in Los Angeles and its surround- ing areas fell in the period 1999–2002 from 155,000 down to 130,000, which is about 15 per cent (Scott, A.J. and Pope, N.E. 2007). The number of films produced in the Los Angeles region also fell, and in subsequent years the crisis deepened (Walls, W.D. and McKenzie, J. 2012; Christopherson, S. 2013). The film production has moved to new loca- tions in Canada, mostly to British Columbia, which was dubbed as Hollywood North 227Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. (Gasher, M. 2002). Many other locations have emerged as satellite productions for global film network. These include South Africa, New Zealand, China, South Korea, Czech Republic, Romania or Bulgaria (Elmer, G. and Gasher, M. 2005; Christopherson, S. 2006; Lukinbeal, C. 2006; Johnson-Yale, C. 2008; Wasko, J. and Erickson, M. 2008). While Hollywood is increasingly outsourc- ing of feature film and television production to foreign countries, the peripheral and semi- peripheral locations harbour “runaway pro- duction”. Lukinbeal, C. (2006) analyses such a case of American production in Romania and notes that it relates to two key issues: econom- ics and geographic realism. Where econom- ics relates to keeping the cost of production down, geographic realism plays a role in de- termining the suitability of a location for a nar- rative. All locational decisions relating to film production deal both with geographic realism and economics. Lukinbeal, C. (2006) observes that in the end economics trumps geographic realism and foreign locational choices are de- termined by attitude that “A Tree is a Tree”. Moreover, it is worth to note that the global trade in cultural products has become far more de-centred at the advent of 21st cen- tury (UNDP/UNCTAD 2010). Sinclair, J. et al. (1996) identified the importance of geo- linguistic regions and geo-cultural regions as sites of audio-visual trade. The success of Latin American telenovelas with audiences in the Spanish- and Portuguese-speaking worlds, Hong Kong produced “Canto-pop” and action or martial arts films in Chinese- speaking media markets, and Australian se- rial dramas or “soaps” in English-speaking markets, are commonly cited examples of “indigenization” or “hybridization” of global cultural forms, that have considerable appeal in regional submarkets. In his work on me- dia capitals, Curtin, M. (2003, 2007, 2015) observed that while Hollywood remains the global exemplar, very significant sites of film and television production aimed at in- ternational markets can be identified in cities as diverse as Mumbai, Hong Kong, Seoul, Cairo, Beijing, Prague, Miami and Lagos. Global shift in the film industry Due to rapid digitalisation, both production and distribution of creative goods have been altered and became globalised. This changed the dynamics of many industries, influenc- ing also the places where those activities are located and contributing to their specialisa- tion. A good example of a creative industry undergoing global shift is the film industry. It is organised around various stages in the production chain: a preparatory stage (pre- production), shooting (production) and post-production. Some researchers also add the stages of the distribution of a film and its exhibition. While traditionally almost the entire chain of film production used to be concentrated in a single place (e.g. in Hol- lywood), today a growing number of stag- es are introduced in a variety of locations (Walls, W.D. and McKenzie, J. 2012; Mir- rlees, T. 2013). In fact, the film production has recently emerged as a global production network. The term ‘global’ does not necessar- ily imply that such a network actually spans the entire world; rather, it suggests that it is geographically extensive and functionally in- tegrated across national boundaries. As such, globalisation of the film industry involves the expansion of production away from its established centres, whether to other coun- tries or to other locations within the same country. This has been reinforced by recent trends in the film industry, like cross-border film production or the rise of production net- works through international co-production initiatives, which affect established produc- tion locations (Dahlström, M. and Hermel- in, B. 2007). Some groups, notably from the US film industry, refer to this development as a “runaway production” (Elmer, G. and Gasher, M. 2005; Lukinbeal, C. 2006; Wasko, J. and Erickson, M. 2008; Johnson-Yale, C. 2008). While it is now generally agreed that the film industry is turning into a global net- work, there is a dispute among scholars on whether the nodes of this network tend to be- come less important than the linkages (Was- ko, J. and Erickson, M. 2008). Nevertheless, Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.228 the majority of film production industries is concentrated in a relatively small number of specialised places called film or media clus- ters (Karlsson, C. and Picard, R.G. 2011). This is illustrated by Figure 2, where film and media sub-sectors tend to be one of the most Fig. 2. Concentration of cultural and creative industries in Europe. Note: Due to data availability 129 regions in 17 countries are included: Austria, Belgium, Cyprus, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Luxembourg, Latvia, Lithuania, Portugal, Slovenia, Sweden, Switzerland. Source: Power, D. (2011, 28), modified. 229Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. concentrated cultural and creative industries in Europe. Coe, N.M. (2015) argues that film production has recently emerged as a global production network. A new landscape of the global film indus- try includes: (1) the global spread of film pro- duction infrastructure, such as film studios and film clusters, along with the emergence of satellite production centres, (2) the rise of international collaboration in film produc- tion, and (3) the emergence of cost-cutting incentives, or policies intended to attract in- ternational film production. The case of the film industry shows that the location pattern of creative enterprises depends in particu- lar on the branch of industry they belong, and on whether their activity is divided into stages in the production chain. We will elabo- rate on those three aspects of contemporary global film industry, focusing on Central and Eastern European countries considered as semi-peripheries. We want to show the dual nature of the processes involved: globalisa- tion has created a variety of opportunities for film industries in these countries, but on the other hand they are still struggling to fully utilise all those possibilities. Film studios as nodes of a global production network and their emergence outside the core Individual value chains or production circuits are, themselves, enmeshed in broader produc- tion networks of inter- and intra-firm relation- ships, that is relationships between and inside firms. Such networks are, in reality, extremely complex structures with intricate links – hori- zontal, vertical, diagonal – forming multidi- mensional, multi-layered frameworks of eco- nomic activity (Coe, N.M. and Yeung, H.W-C. 2015; Dicken, P. 2015). In addition, global pro- duction networks (GPNs) are not simply tech- nical–economic mechanisms through which the production, distribution and consumption of goods and services occur. They are „simultane- ously economic and political phenomena (…), organizational fields in which actors struggle over the construction of economic relation- ships, governance structures, institutional rules and norms and discursive frames (…). GPNs thus exist within the ‘transnational space’ that is constituted and structured by transnational elites, institutions, ideologies” (Levy, D.L. 2008, 944). Film studios are part of the global me- dia landscape and can be thought as nodes of global film and media production networks. The actions of, and the interactions between, the five actor-centred networks shown in Figure 3 – transnational media corporations, states and regions, creative workers, audiences, film studios – shape the changing geographical configuration of the global creative economy through their differential involvement in pro- duction circuits and networks. Film studios oriented primarily to interna- tional production are parts of a mobile, fluid, slippery international production ecology shaped by broader industrial trends, such as: (a) international production levels, (b) the relative importance of particular markets, (c) the prominence of coproduction as an indus- trial norm, (d) the tendency toward agglom- eration and the creation of multinational me- dia corporations at one end of the scale and their interaction with a growing number of small firms at the other, and (f) the adjusted role and objectives of state and national gov- ernment and of media policies (Goldsmith, B. and O’Regan, T. 2005). But the studios where much of this production takes place are also parts of a local, regional, or national production ecology or cultural sector, rooted Fig. 3. Major actor-centred networks in the global film production. Source: Adapted from Dicken, P. (2015, 58) Transnational media corporations States, regions or cities Film studios Inputs Transformation Distribution Consumption Creative workers Consumers (audiences) Audiovisual production process Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.230 or embedded in a place, featuring as employ- ers or workplaces, as physical presences or landmarks in the built environment, as well as economic drivers. While we can trace the expansion of a competitive market for inter- national production, we must acknowledge that it is always to some degree linked to the local production ecology of particular cities, regions, and countries. Studios seem to encourage the simultaneous existence of parallel and convergent dynamics. While some infrastructure developments, such as the studios built in Central and Eastern European countries, do focus to large extent on international production, understanding the contemporary studio complex as a part of film policy involves seeing it as a vehicle with the potential to bring the local and the international into a productive relationship. Indeed, there is an implicit and sometimes explicit assumption that “international pro- duction” will “cross-subsidize” domestic capacity in some way, through technologi- cal renovation, skills development, or some other mechanism (Moran, A. 1996). Late 20th century and early 21st century have witnessed a global spread of film pro- duction infrastructure, such as film studios and film clusters, along with the emergence of satellite production centres. Stachowiak, K. (2018) have mapped and analysed 275 film studios from around the world (outside the US) which are part of a newly emerged inter- national film production network. This map- ping exercise has shown that the number of new film studios has increased significantly in the last decades (Figure 4). Research carried out by Stachowiak, K. (2018) also shows, that many new establish- ments have more diversified capacity. They serve not only as production facilities, but also as post-production studios or pre-pro- duction services. In some cases, they can of- fer a coverage of almost whole value chain. Table 1 presents the number of film studios by number of services offers (corresponding to value chain stages: pre-production, pro- duction or post-production). For example, a studio with two services offered can cover two out of three stages. Results shows that over a half of film studios in Europe and South America offers at least two services (usually production and post-production), what makes the more competitive on a global market. These include new establish- ment mostly in Central and Eastern Europe: Poland, Czech Republic, Bulgaria, Moldova, Ukraine as well as in Turkey. International collaboration in European film industry Co-productions are or great importance for international feature film production. Historically, co-productions firstly rose to prominence in the 1950s and 1960s, with US studios trying to take advantage of sub- sidies in Europe through co-production Fig. 4. Number of researched film studios focusing on international production by their establishment date (n = 275). Source: Stachowiak, K. (2018). Table 1. Film studios* by number of services offered as per cent of all studios in the region, 2016 Region Number of services offered One Two Three Total Africa South America North America** Australia Asia Europe Together 53.8 50.0 55.4 66.7 59.3 42.6 54.2 30.8 41.7 21.5 16.7 31.4 41.0 31.3 15.4 8.3 20.0 16.7 8.5 9.8 12.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 *n = 275 **Excluding USA. Source: Stachowiak, K. 2018. 231Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. structures (Kanzler, M. et al. 2008). After the decline of the European film industry in the 1970s, co-productions were revived by European Union legislation in the late 1980s and entered the second period of growth at the beginning of the 1990s. According to Morawetz, N. et al. (2007) more than 30 per cent of all films in Europe have been made as co-productions, although they are significantly more expensive than single firm productions, more complicated to execute, and do not necessarily enhance a project’s potential to gain international market suc- cess. It was mainly due to the fact that, faced with the continuing decline of the European film industry, many European governments decided to revive co-productions in the late 1980s, bringing co-production agreements in line with the European Economic Com- munity’s (EEC) “open market” philosophy and allowing director, writer, cast or crew to come from any (then) EEC country. In the context of the burgeoning home video market and increased foreign sales, “co-pro- duction became a buzz-word on the tips of virtually every European independent pro- ducer’s tongue” (Finney, A. 1996, 91). Growth of co-production was further encouraged in the mid-1990s with the rati- fication of the European Convention on Cinematographic Co-production (Jäckel, A. 2003). In force since 1994, the agreement is a legal umbrella under which the 38 signa- ture members of the Council of Europe can co-produce freely with each other. The con- vention has largely rendered bi-lateral trea- ties between signatory countries in Europe obsolete. The relative ease (in comparison to previous decades) with which projects can be set up legally as co-productions under the convention has certainly contributed, at least in part, to the continuous growth of co-productions in the last decade. Another important institution that has facilitated co- productions in Europe is Eurimages, the Council of Europe’s fund for the co-produc- tion, distribution and exhibition of European cinematographic works. Set up in 1988/89, Eurimages has 37 member states (2017) and has financially supported more than 1,100 films since its inception. Although criticized for being bureaucratic and having an elitist bias, Jäckel, A. (2003) states that Eurimages has greatly expanded the range and diversity of film projects (mainly though co-produc- tions) in Europe over the past decade. The co-productions framework in Europe along with globalisation of the film indus- try became an opportunity for “cinemas in transition”, especially after 1989 (Portuges, C. and Hames, P. 2013). Despite a relatively small market potential as compared to coun- tries with established film industries (such as the UK, France, Italy, Spain), East Central European cinematographies are trying to in- crease international collaboration. Tables 2a and 2b present the number of national films produced in European countries against co- productions. For each country a ratio of co- productions (both major or minor) to nation- al films was calculated to show the relative significance of international collaboration. It can be observed that many film industries of Central and Eastern European countries, espe- cially smaller ones such as Slovakia or less de- veloped such as Bulgaria and Romania, have tried to capture the international production (Table 2a). Their co-production-to-national film ratios were higher than in established film in- dustries such as French or German (Table 2b). Geographical distribution and supporting measures for film production in Europe Geographical distribution of the film indus- try is uneven. The “Big Five” comprises most of this industry in the EU, namely France, Germany, Italy, United Kingdom (UK) and Spain. These five countries account for as much as 80 per cent of the film industry in Europe (Katsarova, I. 2014b). They enjoy more continuous film sector growth, invest- ment in film projects, movie theatre popu- larity, and foreign market interest than the rest of Europe. However, when assessing the overall situation of the EU film industry, it is necessary to distinguish between these Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.232 five giants and the rest of European countries whose film industries are much weaker in terms of competitive position and capacity. In this respect, it is convenient to divide the overall European film market using the Kan- zler’s grouping system (Kanzler, M. et al. 2008), which splits it up into four regions, the Big Five, the rest of Western Europe, Scandi- navia, and Central and Eastern Europe. The biggest film service customers in Europe are the big six American studios, Warner Bros., The Walt Disney Company, Paramount Pictures, 20th Century Fox, Universal Studios, and Sony Pictures Entertainment. American film projects that have received big six funding, on average, have budgets exceeding 85 million euro, while the EU average is 11 million EUR for UK films, 5 million EUR for Germany and France, and just 300,000 EUR for film projects in such countries as Estonia and Hungary (Katsarova, I. 2014a). Thus, with money this vast at stake, it is easier to understand why countries are competing for foreign film pro- duction. Therefore, film tax incentives can be identified as one of the key government stra- tegic tools of investment promotion, which have now become crucial for attracting film Table 2a. Number of feature films and international collaboration in film production, 2003–2016 Films A) East Central European cinematographies 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bulgaria National films Major co-production Minor co-production Co-prod. / national, % 2 1 1 1.00 3 2 3 1.67 8 2 3 0.63 9 3 3 0.67 10 3 6 0.90 4 1 2 0.75 11 0 4 0.36 6 1 3 0.67 6 2 1 0.50 5 1 2 0.60 0 4 0 – 2 1 0 0.50 10 2 5 0.70 6 5 7 2.00 Czech Republic National films Major co-production Minor co-production Co-prod. / national, % 10 4 3 0.70 19 1 1 0.11 17 4 6 0.59 28 1 6 0.25 18 5 0 0.28 18 5 4 0.50 21 8 4 0.57 16 4 5 0.56 21 4 0 0.19 23 5 4 0.39 19 8 2 0.53 21 8 6 0.67 20 7 9 0.80 24 17 7 1.00 Hungary National films Major co-production Minor co-production Co-prod. / national, % 19 1 1 0.11 19 4 3 0.37 17 1 8 0.53 37 9 0 0.24 26 1 1 0.08 25 1 4 0.20 22 1 4 0.23 26 1 9 0.38 38 2 4 0.16 26 0 1 0.04 27 2 3 0.19 11 1 3 0.36 13 2 3 0.38 15 3 1 0.27 Poland National films Major co-production Minor co-production Co-prod. / national, % 18 1 1 0.11 17 0 3 0.18 19 2 2 0.21 24 1 2 0.13 24 2 8 0.42 28 4 8 0.43 31 7 4 0.35 38 4 2 0.16 24 3 8 0.46 28 4 10 0.50 19 3 3 0.32 30 4 3 0.23 28 4 3 0.25 39 1 6 0.18 Romania National films Major co-production Minor co-production Co-prod. / national, % 4 1 13 3.50 9 2 10 1.33 9 2 9 1.22 14 2 2 0.29 11 0 3 0.27 7 6 1 1.00 11 3 2 0.45 9 6 4 1.11 9 5 5 1.11 10 8 2 1.00 16 7 3 0.63 27 3 7 0.37 27 8 1 0.33 27 7 7 0.52 Slovakia National films Major co-production Minor co-production Co-prod. / national, % 1 3 4 7.00 2 0 1 0.50 2 1 4 2.50 0 1 2 – 5 2 3 1.00 1 3 3 6.00 1 5 7 12.00 1 1 2 3.00 2 3 3 3.00 7 1 5 0.86 3 4 7 3.67 4 3 3 1.50 5 5 5 2.00 2 4 8 6.00 Source: Author’s elaboration based on World Film Market Trends 2008, 2013, 2017. 233Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. projects fleeing the USA (Olsberg, J. and Barnes, A. 2014; Meloni, G. et al. 2015). This promotion mechanism often runs parallel to state support, such as cash rebates, grants or fee-free locations (Luther, W. 2010). State support is often available only to citizens of particular country. Meanwhile, foreign operators can take advantage of cinema tax relief just by fulfilling the condition of spend- ing most of the aid received in that country. So Americans, fleeing the already very ex- pensive Hollywood and looking for space to make their film projects, happen always pay attention to three things: the geographical lo- cation required by the plot, the opportunity to assemble an experienced local team, and lower production costs. In this case, Visser, G. (2014) even claims that securing financing can be considered the heart of the film indus- try. It is therefore not surprising that since 2014 there were 15 countries in Europe alone (UK, France, Germany, Hungary, Lithuania, Ireland, Belgium, Croatia, Czech Republic, Malta, Iceland, Poland, Serbia, Romania, and Bulgaria) offering financial schemes for film projects (Olsberg, J. and Barnes, A. 2014). In the majority of EU countries there are clearly defined incentive systems and tax reliefs supporting both the development of domestic film industry and increasing the at- tractiveness of those countries for foreign film producers. In the EU since 2000, included as part of the European audio-visual strategy, these systems play an increasingly important role in shaping the development of national cinematographies and co-production. As of the end of 2014, there were 26 different types of tax incentives for audio-visual production in 15 European countries, including five in France alone. Seven of them were introduced in the last four years. In 2014, the new tax incentive systems were introduced by the Netherlands, Lithuania, Macedonia and Slovakia (Olsberg, J. and Barnes, A. 2014, 23–26). Tax incentives introduced in 2010 in the Czech Republic and recently in Croatia brought an immediate dynamic increase in film production expenditure (in the latter Table 2b. Number of feature films and international collaboration in film production, 2003–2016 Films B) Established cinematographies 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Denmark National films Major co-production Minor co-production Co-prod. / national, % 12 4 3 0.58 12 1 1 0.17 17 4 6 0.59 28 1 6 0.25 18 5 0 0.28 14 6 6 0.86 14 7 7 1.00 16 8 7 0.94 16 3 6 0.56 12 6 9 1.25 13 9 9 1.38 14 7 7 1.00 14 9 8 1.21 15 8 8 1.07 Italy National films Major co-production Minor co-production Co-prod. / national, % 97 13 7 0.21 97 18 23 0.42 70 13 15 0.40 90 12 15 0.30 93 16 14 0.32 128 18 9 0.21 101 14 18 0.32 115 14 13 0.23 132 14 9 0.17 109 19 16 0.32 114 14 7 0.18 150 14 7 0.14 126 22 5 0.21 142 23 7 0.21 Germany National films Major co-production Minor co-production Co-prod. / national, % 54 26 n/a 0.48 60 27 n/a 0.45 60 18 25 0.72 78 20 24 0.56 78 15 29 0.56 81 15 29 0.54 87 42 20 0.71 61 23 35 0.95 63 29 31 0.95 86 32 36 0.79 79 38 37 0.95 84 22 43 0.77 76 24 45 0.91 82 41 43 1.02 France National films Major co-production Minor co-production Co-prod. / national, % 105 78 29 1.02 130 37 36 0.56 126 61 53 0.90 127 37 39 0.60 133 52 43 0.71 145 51 44 0.66 137 45 48 0.68 143 60 58 0.83 152 55 65 0.79 116 55 42 0.84 122 50 38 0.72 124 44 37 0.65 126 66 47 0.90 125 55 44 0.79 Source: Author’s elaboration based on World Film Market Trends (2008, 2013, 2017). Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.234 country by almost 200 per cent a year after the introduction) (Olsberg, J. and Barnes, A. 2014, 34). Tax incentives that support film pro- duction are also in force in Belgium, Ireland, Iceland, Luxembourg, Germany, Romania, Hungary, Italy and the United Kingdom. Apart from tax incentives, EU countries use a wide range of support measures for audio- visual production. EU’s Creative Europe program financial plan assumes to allocate 800 million EUR to support EU film projects. Incidentally, the EU film subsidy is only a sup- plementary source of funding for EU mem- bers in addition to the independent national film support mechanisms. It should be noted that depending on the local film support rules and the film project category a national funding mechanism is usually limited to 50 or 75 per cent of the total budget of a film project. In total, Europe provides around 3 billion EUR annually for industry support (European Commission 2013). This funding comes from over 600 national, regional and local programmes. The money is to provide conditions for the dynamic development and consolidation of the audio-visual industry through the creation of production enterprises with a solid foundation and a sustainable re- source of human skills and experience. With this support, the EU has become one of the largest producers of films in the world. The EU cinema industry produced 1,299 feature films in 2012 compared to 817 in the US (2011), or 1,255 in India (2011). In 2012, Europe counted 933.3 million cinema admissions. Over one million people are employed in the audio-vis- ual sector in the European Union (European Commission 2013). The support measures mentioned in this paragraph help retain over 373,000 workplaces and sustain 91,000 compa- nies in the EU (Katsarova, I. 2014a). Conclusions Globalisation processes and technological change (digitalisation) have created a global film industry and accelerated global com- petition. Local film industries are forced to undertake necessary reforms if they want to compete successfully. Otherwise they will not be able to attract investment and also lose their talents. Due to historical circumstances and the relatively small local markets, the periphery and semi-periphery, such as most Eastern and Central European countries, have film industries dependent on public subsidies. They subsidise some of the pro- duction expenses of domestic producers or are used to attract foreign investment in the form of contract or location shooting. Inward subsidies and other incentives have often been discussed in connection with possible trade distortions and competition between locations that offer the highest level of incen- tives. However, financial incentives alone without the development of the complemen- tary human resources and related infrastruc- tures are not sufficient to yield local benefits except of short term ones (OECD 2008). For productions that are outsourced to more pe- ripheral locations, arguably the greatest level of economic spin-off is obtained when studio and post-production facilities can be found in these locations too. In order to keep up with structural changes in the global film industry, the semi-periph- ery has been adapted by increasing interna- tional collaboration, establishing new film studios or modernising old ones, and creat- ing incentives aiming at international inves- tors. However, the EU research reveals that the film industry in the Central and Eastern European region is not entrepreneurial enough. Solutions as co-production, encour- aged financially by European subsidies, are used to increase international collaboration. A general analysis of the region reveals that more and more countries are producing cin- ematic output within international networks. It is worth to note that many of the above- mentioned incentives are not offered by national governments. In North America, for example, both US states and Canadian provinces have considerable independ- ent tax-raising powers, and film and video producers can obtain tax incentives and other subsidies at local and regional levels 235Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. (Olsberg, J. and Barnes, A. 2014). These fis- cal incentives can generate intense competi- tion both between and within regions as well as countries. Often individual cities in the same country compete with each other to become attractive as production locations. Locally based schemes are popular and are considered in many cases to have realised returns to local economies that are well in excess of those from similar concessions granted to other types of industries. These new developments reflect the emergence of increasingly global production system in the film industry and an increasing role of pe- ripheries and semi-peripheries in the global creative economy. REFERENCES Alcácer, J. 2006. Location choices across the value chain: How activity and capability influence collocation. Management Science 52. (10): 1457–1471. Bakhshi, H. and McVittie, E. 2009. Creative supply-chain linkages and innovation: Do the creative industries stimulate business in- novation in the wider economy? Innovation: Management, Policy & Practice 11. (2): 169–189. Brecknock, R. 2004. Creative capital: Creative industries in the “creative city”. Brecknock Consulting, PLI. http://esvc000225.wic048u. server-web.com/news/articles/Creative_ Capital_Brecknock_2003.pdf Chapain, C. and Stryjakiewicz, T. eds. 2017. Creative industries in Europe: Drivers of new sectoral and spatial dynamics. Cham, Springer. Christopherson, S. 2006. Behind the scenes: How transnational firms are constructing a new international division of labor in media work. Geoforum 37. (5): 739–751. Christopherson, S. 2013. Hollywood in decline? US film and television producers beyond the era of fiscal crisis. Cambridge Journal of Regions, Economy and Society 6. (1): 141–157. Coe, N.M. 2015. Global production networks in the creative industries. In The Oxford Handbook of Creative Industries. Eds.: Jones, C., Lorenzen, M. and Sapsed, J., Oxford, Oxford University Press, 486–501. Coe, N.M. and Yeung, H.W-C. 2015. Global pro- duction networks: Theorizing economic develop- ment in an interconnected world. Oxford, Oxford University Press. Curtin, M. 2003. Media capital: Towards the study of spatial flows. International Journal of Cultural Studies 6. (2): 202–228. Curtin, M. 2007. Playing to the world’s biggest audience: The globalisation of Chinese film and TV. Berkeley, University of California Press. Curtin, M. 2015. Chinese cinema cities: From the margins to the middle kingdom. In Mediated geographies and geographies of media. Eds.: Mains, S.P., Cupples, J. and Lukinbeal, C., Dordrecht, Springer, 95–110. Dahlström, M. and Hermelin, B. 2007. Creative industries, spatiality and flexibility: The example of film production. Norsk Geografisk Tidsskrift / Norwegian Journal of Geography 61. (3): 111–121. Dicken, P. 2015. Global shift: Mapping the chang- ing contours of the world economy. 7th edition. London, Sage. Doyle, G. 2002. Understanding media economics. London, Sage. Egedy, T. and Kovács, Z. 2009. The capacity and potentials of Budapest to attract creative economy. Hungarian Geographical Bulletin 58. (4): 281–294. Elmer, G. and Gasher, M. 2005. Contracting out Hollywood: Runaway productions and foreign lo- cation shooting. Lanham, Rowman & Littlefield. European Commission 2013. Communication from the Commission on State aid for films and other audiovisual works. Official Journal of the European Union C 332/1. Falkheimer, J. and Jansson, A. eds. 2006. Geographies of communication: The spatial turn in media studies. Göteborg, Nordicom–Göteborg University. Finney, A. 1996. The state of European cinema: A new dose of reality. London, Bloomsbury Academic. Finney, A. 2010. The international film business: A market guide beyond Hollywood. London, Routledge. F l e w, T. 2 0 1 3 . Global creative in d u stries. Cambridge, Polity Press. Gasher, M. 2002. Hollywood North: The feature film industry in British Columbia. Vancouver, UBC Press. Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.236 Goldsmith, B. and O’Regan, T. 2005. The film studio: Film production in the global economy. Lanham, Rowman & Littlefield. Hearn, G., Roodhouse, S. and Blakey, J. 2007. From value chain to value creating ecology. International Journal of Cultural Policy 13. (4): 419–436. Jäckel, A. 2003. European film industries. London, British Film Institute. Johnson-Yale, C. 2008. ”So-called runaway film production”: Countering Hollywood’s outsourcing narrative in the Canadian press. Critical Studies in Media Communication 25. (2): 113–134. Kanzler, M., Newman-Baudais, S. and Lange, A. 2008. The circulation of European co-produ- tions and entirely national films in Europe 2001 to 2007. Strasbourg, European Audiovisual Observatory. Karlsson, C. and Picard, R.G. eds. 2011. Media clusters: Spatial agglomeration and content capa- bilities. Cheltenham, Edward Elgar. Katsarova, I. 2014a. An overview of Europe’s film industry. Retrieved 10.06.2018 from http:// www.europarl.europa.eu/RegData/etudes/ BRIE/2014/545705/EPRS_BRI(2014)545705_ REV1_EN.pdf Katsarova, I. 2014b. Supporting the European film industry. Retrieved 10.06.2018 from http:// www.europarl.europa.eu/EPRS/EPRS-AaG- 542181-Supporting-the-EU-film-industry- FINAL.pdf Kehoe, K. and Mateer, J. 2015. The impact of digital technology on the distribution value chain model of independent feature films in the UK. International Journal on Media Management 17. (2): 93–108. Kerr, A. 2006. The business and culture of digital games: Gamework/gameplay. London, Sage. Lampel, J. and Germain, O. 2016. Creative in- dustries as hubs of new organizational and business practices. Journal of Business Research 69. (7): 2327–2333. Levy, D.L. 2008. Political contestation in global pro- duction networks. The Academy of Management Review 33. (4): 943–963. Lukinbeal, C. 2006. Runaway Hollywood: Cold Mountain, Romania. Erdkunde 60. (4): 337–345. Luther, W. 2010. Movie production incentives: Blockbuster support for lackluster policy. Special Report No. 173. Washington, Tax Foundation. Meisel, J.B. and Sullivan, T.S. 2002. The impact of the Internet on the law and economics of the music industry. Info 4. (2): 16–22. Meloni, G., Paolini, D. and Pulina, M. 2015. The great beauty: Public subsidies in the Italian movie industry. Working Paper CRENoS, 2015/07, Centre for North South Economic Research, Cagliari, University of Cagliari and Sassari. Mirrlees, T. 2013. Global entertainment media: Between cultural imperialism and cultural glo- balisation. Oxon, Routledge. Moran, A. ed. 1996. Film policy: International, national and regional perspectives. London, Routledge. Morawetz, N., Hardy, J., Haslam, C. and Randle, K. 2007. Finance, policy and indus- trial dynamics. The rise of co-productions in the film industry. Industry and Innovation 14. (4): 421–443. Mudambi, R. 2008. Location, control and innova- tion in knowledge-intensive industries. Journal of Economic Geography 8. (5): 699–725. Musterd, S. and Kovács, Z. eds. 2013. Place- making and policies for competitive cities. Oxford, Wiley-Blackwell. NRC 1995. Keeping the U.S. computer and com- munications industry competitive: Convergence of computing, communications, and entertainment. Washington D.C., National Research Council; Computer Science and Telecommunications Board. OECD 2008. Remaking the movies: Digital content and the evolution of the film and video industries. Paris, OECD. Olsberg, J. and Barnes, A. 2014. Impact analysis of fiscal incentive schemes supporting film and audiovisual production in Europe. Strasbourg, European Audiovisual Observatory. Portuges, C. and Hames, P. eds. 2013. Cinemas in transition in Central and Eastern Europe after 1989. Philadelphia, Temple University Press. Power, D. 2011. Priority sector report: Creative and cultural industries. Luxembourg, European Commission. PWC 2011. Digital transformation of creative media industries: Opportunities for success and chal- lenges. Toronto, Pricewaterhouse Coopers. Rumpel, P., Slach, O. and Koutský, J. 2010. Creative industries in spatial perspective in the old industrial Moravian-Silesian Region. Ekonomie a Management 4. 30–46. 237Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237. Santagata, W. 2010. The culture factory: Creativity and the production of culture. Berlin– Heidelberg, Springer Verlag. Scott, A.J. and Pope, N.E. 2007. Hollywood, Vancouver, and the world: Employment relo- cation and the emergence of satellite produc- tion centers in the motion-picture industry. Environment and Planning A 39. (6): 1364–1381. Sinclair, J., Jacka, E. and Cunningham, S. 1996. Peripheral vision. In New patterns in global television: Peripheral vision. Eds.: Sinclair, J., Jacka, E. and Cunningham, S., Oxford, Oxford University Press, 1–32. Slach, O., Koutský, J., Novotný, J. and Ženka, J. 2013. Creative industries in the Czech Republic: A spatial perspective. Ekonomie a Management 16. (4): 14–29. Stachowiak, K. 2017. Gospodarka kreatywna i mechanizmy jej funkcjonowania. Perspektywa geograficzno-ekonomiczna (Creative economy and mechanisms of its functioning. An economic geography perspective). Poznań, Wydawnictwo Naukowe UAM. Stachowiak, K. 2018. Geografia ekonomiczna filmu (Economic geography of the film industry). Poznań, Bogucki Wydawnictwo Naukowe. Stryjakiewicz, T. and Męczyński, M. 2010. Creative urban processes in post-communist metropolises: The case of the Poznan met- ropolitan region. International Journal of Sustainable Development 13. (1–2): 69–83. Stryjakiewicz, T., Gritsai, O., Dainov, E. and Egedy, T. 2013. Addressing the legacy of post-socialist cities in East Central Europe. In Place-making and policies for competitive cities. Eds.: Musterd, S. and Kovács, Z., Oxford, Wiley-Blackwell, 77–94. Stryjakiewicz, T., Męczyński, M. and Stachowiak, K. 2014. Role of creative industries in the post- socialist urban transformation. Quaestiones Geographicae 33. (2): 19–35. Švob-Đokić, N. ed. 2005. The emerging creative industries in Southeastern Europe. Zagreb, Institute for International Relations. UNDP, UNESCO 2013. Creative economy report 2013. Special edition: Widening local develop- ment pathways. New York, United Nations Development Programme, UN. UNDP/UNCTAD 2010. Creative economy. Report 2010. Geneva–New York, UNDP, UNCTAD. Visser, G. 2014. The film industry and South African urban change. Urban Forum 25. (1): 13–34. Walls, W.D. and McKenzie, J. 2012. The chang- ing role of Hollywood in the global movie market. Journal of Media Economics 25. (4): 198–219. Walmsley, B. ed. 2011. Key issues in the arts and entertainment industry. Oxford, Goodfellow Publishers. Wasko, J. and Erickson, M. eds. 2008. Cross- border cultural production: Economic runaway or globalisation? Amherst, Cambria Press. World Film Market Trends 2008, 2013, 2017. European Audiovisual Observatory, Cannes, Marché du film. Stachowiak, K. and Stryjakiewicz, T. Hungarian Geographical Bulletin 67 (2018) (3) 223–237.238