2006 was the most successful year for the German motion picture industry in three decades. Nevertheless, the German market remains dominated by US productions which attracted more than 75% of the audience. The steep decline of the German film industry since the 1960ies could not even be stopped, let alone be reverse by huge subsidies. Currently, the Federal Government and the state governments grant more than ？？ 240 million per year in direct subsidies alone. In addition, Germany-based media funds, exploiting generous tax breaks, invested more than ？？ 9 billion in movie productions since 1996. However, due to loopholes in the German tax code (which were closed by 2005), roughly 80 per cent of this amount was (mis)used to co-finance films made in the USA. In this paper, a critical assessment of the effectiveness and efficiency of public film funding in Germany is given.
I. Introduction 2
II. A Short History of the Film Industry and Film Funding in Germany 3
III. The Current Institutional Framework 8
1. Direct Funding by the Federal and State Governments 8
2. Indirect Funding 16
IV. Critical Appraisal 18
1. The German Motion Picture Industry: The Status Quo 18
2. Fundamental Shortcomings of the Current Film Funding System 21
V. Conclusions 24
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