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Harry Potter Casts Spell Over French Film Industry

On Tuesday, July 12, around 10,000 Harry Potter fans rallied towards the Parisian concert hall of Bercy to celebrate the premiere of the last episode of the adventures of the world’s most famous sorcerer. But while fans were parading with their magic wands, sorcerer's hats and flying brooms, the French film industry has been up in arms.

Harry Potter and the Half-Blood Prince

Indeed, movie theatres in France are subject to a specific 10.78 percent tax on the price of a ticket. The revenue generated goes to a special fund aimed at financing the production and distribution of French movies. Stadiums and concert halls, such as Bercy, are not subject to this tax.

"It is a quite inclusive—and quite smart—system that allows French cinema to survive thanks to American blockbusters such as Avatar," Florence Gastaud, chief executive of the Societe Civile des Auteurs-Realisateurs-Producteur (ARP), told CNBC.

The ARP is a movie-makers' organization created more than 20 years agoto think about how the sector can be regulated and what needs to be done to help it survive technical and cultural changes. It gathers such famous names as Claude Lelouch, Costa Gavras and Coline Serreau.

With up to 10,000 tickets sold for at least 25 euros (US$35) a piece, it is 25,000 euros that will not end up in French directors' pockets.

"It's not even these 25,000 euros that make a problem," Gastaud said. What really bothers her is that it may create a precedent that would fragilize the 50-year old system and have even stronger consequences, she explained.

Gastaud also explained that going all digital had been a huge investment for movie theatres, and she is afraid such investments will turn out to be useless if theatres have to compete with stadiums and concert halls. Moreover, she said, these 10,000 spectators will be 10,000 less tickets sold by Parisian theatres.

With 260 movies released in 2010, the French film industry is doing well. France's neighbor, Italy, whose cinema industry produced up to 300 movies a year in the 1980's, released only 30 in 2010.

"The entire French film industry runs with about one million euros a year," Gastaud said. Professionals legally have to reinvest part of their profits into the industry as part of an elaborate auto-financing system, in which the TSA represents up to 200 million euros.

Warner Bros , the distributor of Harry Potter and the Deathly Hallows, was not reachable on Tuesday.

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