France had a record year for production and production investment in 2008, according to figures released by France's Centre National du Cinema which warned that the industry still needs to be prudent in the current financial climate and pointed to the growing importance of online distribution.

Overall, big and small budget films saw increases in production and investment, but mid-budget movies stayed relatively flat. Local, foreign and TV channel investment were all up year on year.

Total production was up and France produced 240 films in 2008 up from 228 the year before and tying 2005's record. Majority French films made up 196 of that number against 187 produced in 2007. Co-productions remained flat with 96 films involving 28 countries.

In investment terms, French film also enjoyed a record year with $2bn (Euros 1.5bn) funnelled into production. Local investment jumped 28.6% to $1.6bn (Euros 1.2bn) in 2008 while foreign investment jumped 7% to $363.5m (Euros 266.7m).

Notably, 2008 included three big budget films of more than $54.5m (Euros 40m), two of Luc Besson's Arthur movies and Jacques Perrin's Oceans

In addition, the number of larger budget films costing more than $9.5m (Euros 7m) rose to 60 from 49 in 2007 and at the other end of the scale, films under $1.4m (Euros 1m) increased to 44 from 35 in 2007.

The average budget of French films rose in 2008. With the three big budget films included, it rose by 18.4% to $8.7m (Euros 6.4m) otherwise it still rose a respectable 10.5% to $4.6m (Euros 3.4m) from 2007.

Meanwhile, production of films in the middle ground with budgets ranging from $5.5m (Euros 4m) to $9.5m (Euros 7m), were relatively flat, increasing by only one to 28. However those films were only able to attract an 11.4% slice of the investment pie down from 16.1% in 2007.

One notable phenomenon is the increasing role that minimum guarantees (MG) are playing in financing. According to the CNC, distribution MGs and international sales MGs combined to represent 25% of the whole financing pie.

Interestingly the role of TV channels' was also record-setting with Canal Plus chipping in $286.4m (Euros 210m) for a year on year increase of 9.5% while the terrestrial channels combined contribution rose 15.5% on 2007 at $197.7m (Euros 145m).

However, funding from Soficas, France 's society for the financing of cinema and audiovisual works, dropped 5.6% year on year in 2008 with 97 films receiving total financing of $52.3m (Euros 38.34m). The average budget of a film receiving Sofica investment rose almost 30% in 2008 to $11.3M (Euros 8.3m) from 2007's $8.7m (Euros 6.4m) average.

CNC chief Veronique Cayla confirmed that moves to help tax shelters better invest their funds in mid-budget pictures by tweaking the Sofica system were being considered.

When it comes to automatic aid, 183 production companies accessed a total of $94.2m (Euros 69m) while the CNC gave $25.2m (Euros 18.45m) in selective aid. The figures given exclude Perrin's Oceans.

Cayla also referred to proposed changes in the CNC's system of automatic aid which would change the way in which returns are allotted to producers and distributors. The new methodology wouldn't be implemented until 2010 and Cayla said more information would be given later this year.

She noted that the economic crisis is likely to have an effect on global figures for 2009 and said this year's results 'are good but we have to be prudent.'

Cayla also underlined the importance of new platforms to the future French industry stating that it was 'crazy' how much the business has changed in the last few years. 'It's time to be dominant on the Internet Our predecessors ensured we would have movies in the theatres and shows on our TVs and it's our responsibility to keep that up with digital.' Cayla said.

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