World Media Economics and Management Conference 2016

So far, researchers have paid little attention to the influencing factors in film financing and the allocation of private investments and public subsidies. This article conceptualizes and examines non-content drivers of film financing in highly subsidized motion picture markets. In addition to that, the authors address substitutional effects between public funding and private investment. In doing so, they contribute to organizational and administrative theory regarding the analysis of subsidy allocation. Structural equation modeling is applied to test the model, using market data from Germany, a country with a complex and extensive film funding system. The data set consists of 2,010 locally produced or co-produced motion pictures, which were released between 2005 and 2014. The authors show that, apart from movie scripts, the non-content factors star power, producer power, and reputation potential predict the financing decisions of public funders acceptably but not those of private investors. Furthermore, the amount of private investment does not affect public funding bodies’ decisions. The anticipated public subsidization level, however, does not influence private investment substantially. The findings demonstrate that the government needs mechanisms that are more effective and that research results can help to improve current funding schemes. This article contributes theoretical insights into the decision-making rationale of public and private film financiers and advances measurement capabilities of film investment efficiency.