A story of subsidies, survival and sudden commercial success

Critics say state support leads to a weak and self-indulgent film industry. So why are the French making films everyone wants to watch?

It is raining. A man and woman are sitting at a kitchen table in an attic in Paris (or some French provincial town). They are discussing life, death, sex, food, football and Wittgenstein, in a whisper, half- swallowing their words.

It is raining. A man and woman are sitting at a kitchen table in an attic in Paris (or some French provincial town). They are discussing life, death, sex, food, football and Wittgenstein, in a whisper, half- swallowing their words.

Cut to a street scene of a drab-looking girl on a scooter. She considers running over a cat on purpose but she decides, finally, not to. Cut back to the kitchen. It is still raining ... and these are not the first scenes of a movie. They occupy most of the first reel.

Here, with some exaggeration, is the French cinema that we have come to know, and that even the French have come to hate. But, no, cut to reality. French film is booming. More than four in every 10 cinema tickets sold in France last year were for French-made movies (a level not seen for 20 years). There were 204 films made last year, an all-time record.

Amélie, a very French film made with wit, high spirits and a happy ending, has taken €30m (£19m) worldwide. Eight Women, a musical detective film with every French actress you've ever heard of in it (including a singing Catherine Deneuve), has been sold for general release across Europe.

The second Asterix movie – much funnier than the first – is breaking box-office records in France. And a cyber-thriller called Demonlover is forecast to be one of several French successes at the Cannes film festival, which started this week.

For the first time in 20, or even 30, years, the French seem to be making films that people want to watch, in France and abroad.

This flowering appears to give the lie to those who continue to argue that the French obsession with protecting a home-grown industry was doomed to failure. While the British industry struggled over the past two decades, or became a backlot of Hollywood, the French government organised a cumbersome system of taxes and subsidies to keep its own cinema alive.

Something like half of all the money invested in movie production in France – €350m (£220m) a year – comes from publicly enforced subsidies of one kind or another. Of this, about €100m (£60m) comes from a tax on cinema tickets. The rest is supplied by public and private television companies, which are obliged to part-fund and screen new films under their licence agreement.

This funding has protected French cinema from the Hollywood steamroller. France is the only country in Europe with a fully functioning movie industry. Britain, partly with television and lottery subsidies, is trying to rebuild an independent industry, but still cannot contemplate making wholly domestic thrillers or musicals in the way that France can.

By insulating French movie-makers from Hollywood, it used to be argued, the French government also insulated them from the market – in other words, from cinema-goers. Subsidies removed the need for profit-making, or even for an audience at all. Self-indulgence thrived. Every French movie-maker, it was said, wanted to be an "auteur", like the New Wave directors of the 1960s, writing, directing and editing their own movies, frequently based on their miserable lives as students or would-be film-makers.

But this was always an exaggeration. Such movies abounded, but they were not universal. Throughout the 1990s, there were French thrillers and comedies, some of which were quite good, although few captured the imagination of movie-goers outside France. Apart from the old stars, like Deneuve and Gerard Depardieu, a generation of actors is virtually unknown outside France. Certainly no one is a seat-filler, in the way that, say, Alain Delon used to be.

All of this is beginning to change, but not to change completely. "There are still plenty of French films that only the French could love," says the Australian cinema critic and author John Baxter, who is based in Paris. "But there are also, once again, some French films that we all can love.

"Partly these things are cyclical. You now have a new generation of talented young French directors and actors. The point is that, thanks to the subsidies which kept French cinema alive, there is an industry left for them to be talented in. They can still make French films, taking some of the best ideas from Hollywood without having to accept Hollywood values and limitations."

There is no doubt that the public subsidies allowed undeserving movies to be made. But the opposite point has proved not to be true. That subsidies existed has not prevented the emergence of talent and creativity (any more than they prevented the emergence of great movies in Australia in the 1970s, or Italy in the 1950s and 1960s).

All of the successful French films listed in this article could not have been made without subsidies. That they are successful, and more accessible to a non-French and a wider French audience, has nothing to do with "market" pressures.

They have been made by a generation of French directors like Jean-Pierre Jeunet ( Amélie) or Olivier Assayas ( Demonlover), who have worked briefly in Hollywood, or taken some ideas from it, but have remained triumphantly French. They want to be successful, but not in the limited Hollywood sense of producing money-spinning films.

Of course, this has not gone down well with some French cinema critics, who accuse the directors of taking the subsidies and then, horror of horror, making popular films. Amélie was excoriated by some as being too cheerful, too positive and too pro-French. (One critic said that it was a "far-right" movie because it did not have enough black and brown faces and portrayed a "little French" world that no longer exists.)

But there is an even greater irony. Just as the French method of protecting its movie industry has proved its worth, it is threatened with collapse. "French cinema on the verge of implosion" was one headline in the newspaper Le Monde yesterday in its Cannes coverage.

Something like one-fifth of all the funding for French cinema, about €150m (£95m), comes from the cable television channel Canal Plus, which is losing money and subscribers and trying the patience of its owner, the media giant Vivendi Universal. The other television companies are also struggling to meet their commitments to buy, screen and help to fund movies. The new government is looking around for new sources of financing, possibly by placing a new tax on DVDs.

Despite this, the long war waged by Hollywood against the French protection of its industry has gone into a lull. The success of French films, far from annoying Hollywood, seems to have appeased it. (In LA, success is everything, after all.)

John Baxter is right. You can argue about subsidies vs the market and creativity for ever. The point is that the French have an independent movie industry to argue about.

The main movers

Mathieu Kassovitz

The young actor-turned-director won the Cannes best director prize for his second film, La Haine, in 1995, a bleak depiction of ghetto life in the Paris suburbs, filmed in black and white. Since then he has combined acting with directing. His most prominent acting role was in the acclaimed 2001 film Amélie.

Canal Plus

The film arm of the French pay-TV station, StudioCanal, is the major contributor to French film production, investing more than £90m each year. Equal amounts go intoFrench, European and US films. Its foreign successes include Billy Elliot. Canal Plus is part of the Vivendi Universal group, headed by Jean-Marie Messier, above.

Luc Besson

One of the few French film directors known outside his country, Besson directed the cult science fiction film The Fifth Element in 1997, after scoring a national success with the black comedy Subway, and gaining world recognition with The Big Blue, Nikita and Léon. He also produced the successful Taxi and Nil by Mouth.