LONDON — European films performed well in their home markets in 2003 but failed to ignite international B.O. as overall ticket sales dropped 4.4%, according to the European Audiovisual Observatory.

In European Union member countries, 954 million tickets were sold last year with Euro product accounting for just 26%.

In many countries, the demand for local product grew, though it could not combat overall malaise. In many countries juggernaut trilogies “The Lord of the Rings” and “The Matrix” were derailed by small local fare. “Pahat pojat” in Finland, “Pupendo” in the Czech Republic and “Veronica Guerin” in Ireland all won their market, while French films still commanded the highest B.O. percentage for home-grown pics, 34.8%.

U.S. appeal

Report — which covers the newly expanded 25 member countries — also found that U.S. films increased their market share 1.6% on the previous year. On the list of the 20 pics that drew the highest admissions in 2003, 18 were Hollywood titles. “Finding Nemo” led the charge with 37.7 million tickets. Europe was repped by just two U.K. releases, spy spoof “Johnny English” at No. 11 (13.7 million admissions) and Christmas romancer “Love Actually” at 14.

The story improved in the area of production, with 752 films rolling out vs. 727 in 2002, but this was due to increases in just a handful of countries. Production was up in France (a record 212 films), Belgium (17) and Denmark (24), while Greece, Ireland, Portugal and Sweden returned to form after a weak 2002. Of the new member states, only the Czech Republic remained steady in productions while Poland and Hungary dropped back. But due to a combination of films’ limited appeal and a lack of proven international marketing, just six films from the 10 countries found their way into cinemas in the 15 traditional EU states. Perhaps the European enlargement will see a broader market for these films in 2004.