The European Commission has said that it fully supports the digitisation of European cinemas and is also encouraging them to screen more European-made films.
The report found that independent and smaller cinemas are unable to make the switch to digital equipment as the associated cost is too high. It found that the cost of purchasing one new digital projector and server is around €75,000 (£63,821) making it a large investment for small operators.
The commission hopes that through MEDIA funding —the EU support programme for the European audiovisual industry— as well as state-aid and backing from the European Regional Development Fund that European cinemas will be able to make the shift to digital.
The EU notes that although many more films are made and distributed within the EU, US-produced films still hold the majority of market share.
In 2008, 167 US-produced films were released in the EU while 726 movies produced inside the EU were distributed. Despite the higher number of home grown releases, US-produced films still claimed the lion's share of the market at around 65 percent, according to figures released by the European Audiovisual Observatory.
"The digital revolution has transformed the way the film industry produces, distributes and screens films. Digital technology can reduce distribution costs and potentially increase the number and diversity of European films being screened worldwide. I hope we will soon see the benefits of digital technology in all European cinemas, including the independent and art-house screens that characterize Europe's unique cinema network," said commissioner Androulla Vassiliou in a statement.