Based on provisional data available the European Audiovisual Observatory estimates that 2010 gross box office takings in the European Union increased by five percent year-on-year to around €6.45 billion the highest level on record. In contrast to 2009 box office growth was exclusively driven by an increase in average ticket prices as admissions actually decreased by 1.6 percent to 967 million tickets sold. These data seem to reflect the impact of 3D films in their second year on the market. While it can be assumed that the novelty factor of 3D had significantly contributed in driving growth in cinema attendance in 2009 3D films failed to further increase ticket sales in 2010 but kept cinema attendance at the second highest level since 2004 and caused the average ticket price to increase by an estimated 6.8 percent. A surge in 3D screens helped an increasing number of stereoscopic blockbusters to better exploit their market potential and caused market shares for 3D films to increase dramatically in major European markets like France and Germany where they took 16 percent and 17 percent of total admissions or the UK and Russia where they took 24 percent and 20 percent of total GBO. On the level of individual markets 2010 was a year of mixed results with cinema going trends varying significantly across the individual European countries. Admissions decreased in 14 and increased in 13 of EU markets while GBO increased in 18 and decreased in 8 of the EU markets for which provisional data were available. Theatrical markets which performed particularly well were Italy with admissions up 11 percent and France where GBO rose 5.6 percent. The dramatic increase in market share of primarily US 3D blockbusters over the past two years seems to have contributed to market share for European films falling to the lowest level in the past five years. After steadily rising to 28.3 percent in 2008 the market share for European films in the EU decreased to 26.8 percent in 2009 and 25.3 percent in 2010 according to provisional estimates by the European Audiovisual Observatory. Market share for US films on the other hand grew from 66.9 percent to an estimated 68.0 percent. This compares to levels ranging between 63 percent and 65 percent in the years 2006 to 2008. European films produced in Europe with incoming US investment increased their market share from 4.0 percent to 5.4 percent thanks to the success of Harry Potter and the Deathly Hallows Part 1 and Robin Hood. Led by local hit Les petits mouchoirs French films once more attracted the largest number of admissions out of all European films. Backed by strong results in their home market Italian films ranked second taking 4.1 percent followed by German productions which – thanks to Resident Evil: Afterlife - accounted for 3.1 percent of total admissions in the EU. 2010 saw EU production levels continue to grow to a new record in 2010 though at a slower pace compared to previous years. Based on the provisional data available the Observatory estimates that a total of 1 203 theatrical feature films including feature documentaries were produced within the EU member states 19 films more than 2009. Production growth would have been more pronounced but for a significant drop in German fiction productions which fell from 129 to 84 films. As a consequence overall EU growth was driven by an increase in feature documentaries (+32 films) while the number of fiction films decreased (-19) raising the share of feature documentaries to 28 percent while fiction films accounted for 72 percent of total production volume in 2010. With 203 feature films receiving official recognition in 2010 France reached a historic record high and became again the country with the highest production output in Europe followed by Spain with 186 films produced. 3D blockbuster Avatar topped last year’s European charts selling an estimated 43 million tickets in 2010 after having generated over 22 million admissions in 2009. Harry Potter and the Deathly Hallows Part 1 took a strong second place with 31.2 million admissions followed by 3D blockbusters Toy Story 3 and Alice in Wonderland. The EU charts were once more dominated by US 3D blockbusters which accounted for 10 out of the top 20 films. Leaving aside the latest Harry Potter instalment and Robin Hood both UK inward investment films financed by a US studio no European film made it into the top 20. The most successful European films without incoming US investment were French comedy Les petits mouchoirs attracting an audience of over 5.4 million people across the EU followed by German 3D horror action film Resident Evil: Afterlife which sold 5.3 million tickets. More detailed information on European as well as international theatrical markets can be found in FOCUS 2011 World Film Market Trends prepared by the European Audiovisual Observatory for the Cannes Film Market and available from mid-May onwards at www.obs.coe.int/oea_publ/market/focus.html.