State Intervention and the Historic Mexican Film Industry

State’s role: active protector, funder, producer, distributor and exhibitor. HOWEVER: this was
a reactive performance because of the clientelist, centralist, authoritarian and presidentialist
dynamics of the Mexican political system of the second half of the 20th century.

The six key components of the central role of the State in the MFI:
1. It offered support for the National Cinematographic Bank: public institution occupied
with financing production, distribution and exhibition.
2. It issued the Federal Cinematographic Industry Law: screen quota for Mexican films
at 50% (1950).
3. The price of the movie ticket was controlled by the government (included as part of
the canasta básica familiar).
4. The ownership of Pelmex (1945) and particle ownership of PelNal (1947), the most
important distribution companies.
5. Takeover of Operadora de Teatro y Cadena Oro (COTSA), two of the most important
national exhibition chains (1961).
6. It invested in Estudios América (1975).

For the PRI regime, cinema functioned as a way to control the population (in 1950, 42.6% of
the Mexican population was illiterate).

Despite government support, the history of Mexican film productions was still cyclical.

During the “golden age of Mexican cinema”, the MFI consolidated itself, particularly in the
following aspects:
- It showed issues of Mexican society and its culture through original cinema genres:
melodrama, rancheras, lucha-libre, and comedy.
- The average productions met international standards and were recognized in
international circuits.
- The actor and actress became national figures and generated a Mexican Star
System.
- The movie distributed in other Spanish-speaking countries and regions, and
Mexicans were the ones controlling distribution in their country.
- These films were a central part of Latin American public/audiences’ everyday cultural
diet, providing some counterbalance to Hollywood productions.

The relationship with Hollywood was always complicated, particularly between the 40s and
60s. During the 60s there was a decrease in production: the Star System became static and
TV became a big competitor.

During the 70s, Mexican films experienced a new wave of creativity and innovation. This
coincided with the significant increase in the number of cinema screens.

However, Hollywood was also behind this increase, not only Mexican films. Hollywood films
were mainly part of the film diet of middle and upper classes. That meant that the increase of
disposable income power was spent on Hollywood productions.
As the 80s started, Mexican commercial TV company Televisa dabbled in cinema
production. During the 80s, cultural industries also experienced other cultural, technological,
and market dynamic mutations. Mexico also experienced an economic crisis combined with
increased migration from rural areas to big cities.

During the 80s, the MFI experienced the erosion of their Statis model as the government
turned to neoliberal policies for its economic model. Films were of bad quality, and there
weren’t new actors and directors. Upper and middle classes abandoned Mexican films.
Cultural and technological changes, and also the economic crisis (the “Lost decade”) meant
even bigger losses for Mexican film production and the number of movie theaters.

This brief historical structural analysis of the MFI established how the processes, dynamics,
trajectories, policies, and agents developed the industry before the North AMerican Free
Trade Agreement (NAFTA).

Free Market Logic and Consolidation Reshape the Mexican Film Industry

The 90s have been characterized as the worst period of the MFI.
- Economic structural changes:
- Liberalization of many strategic sectors
- Privatization of state-owned companies
- Public policies reforms
- 1949 Film Law replaced in 1992: abolishment of the 50% quota for Mexican
films
- Privatization of COTSA. Closed down two years later. Ticket prices are no
longer in State control.
- Secretaria de Hacienda gave tax incentives to exhibitors and film production
foreign investors. National producers were not considered for such incentives.

NAFTA comes into force in 1994: Mexican government cancels the right to implement
cultural public policies arguing that those policies have an important impact as market
distortions. NAFTA defined “culture” as a matter of property through the inclusion of
copyright, patents, registered trademarks, etc. Since then, this is the frame and logic that
shapes the cultural sector in Mexico.

The MFI went through a process of contraction, concentration and transnationalization, and
also of elitization of its public, who privileges Hollywood films.

In response, Mexican cinema professionals organized themselves towards recovering some

ground.
- In 1998, a 10% screen quota for Mexican productions was reinstated.
- By 2000, there were two funds for domestic productions:
- Fund for Quality Cinema Production (Foprocine, art films)
- Fund for Investment and Incentive to Film (Fidecine, commercial films)

The Recovery of Mexican Film Production and Distribution?

The 21st century presented a lot of challenges, trends and doubts of the MFI:
 1. There were numerous questions about how the MFI would recover after its worst
decade
2. What would the result be of the digitalization and convergence process
3. Main challenge: how to advance past the 10% line of market share and ticket
attendance at the national level?

Conclusions

The MFI has clearly shown some signs of recovery across the three sectors (production,
distribution and exhibition). However, it has to be underlined that this general performance
has been shaped under the conditions, logic and dynamics of the Hollywood majors and free
market imperatives. Thus, this new era of the MFI should be characterized by its assimilation
by the US film industry as a significant market.

Finally, it is clear that IMCINE funds have been crucial to the industry, and the organization
has been the key actor working to recover the MFI. Nevertheless, the MFI is limited by the
competitive advantages that the Hollywood majors and the Mexican exhibition duopoly have,
both of which have stymied the possibility of implementing strong screen quotas that, among
other protection policies, could retake or at least rebalance the control of circulation.