As mainstream French films continue to lose market share to Hollywood pics at home, Pathe, one of Gaul's biggest film production and distribution institutions, has laid off nine people and is planning to drastically reduce its lineup.

The pinkslips hit the distribution department at the Paris office. The international sales division and U.K. office were not affected by the layoffs.

Pathe will have released 20 movies by the end of the year and, according to French trade Le Film Francais, the studio is looking to reduce its distribution slate to 10 pics going forward and be more selective in its choice of French films.

While Pathe remains France's No. 1 distributor in 2013, it was severely hit by the poor B.O. performance of higher-profile local pics such as Fabien Onteniente's "Turf," Daniele Thompson's dramedy "It Happened in Saint-Tropez" and Daniel Auteuil's "Marius" and "Jeannette," adapted from Marcel Pagnol's classic novels and, recently, Nicolas Bary's "The Scapegoat."

"Turf," budgeted at $31.7 million, grossed $3.3 million, while "Saint Tropez," tagged at $23.4 million, took $1.3 million in France. Both films were packed with French stars, and the helmers had strong track records at the box office.

Other blue-chip Franco pics that have failed at the box office -- despite large spends on marketing -- include Dany Boon starrer "The Volcano," released by Mars Distribution; Jean-Pierre Jeunet's "The Young and Prodigious T.S. Spivet" (pictured above), distributed by Gaumont; and Gilles Lellouche starrer "Gibraltar," distribbed by SND. Studiocanal is also headed for a disappointment with "Fonzy," the French remake of "Starbuck." And EuropaCorp's $30 million "The Family" grossed only a little under $4 million during its first week.

Although Pathe has managed to produce highly profitable films like Boon's "Welcome to the Sticks" and his follow-up "Nothing to Declare," as well as "What's in the Name" and "Cycling With Moliere," the shingle's economic model seems to have reached its limit. Indeed, the company has been called out for working with budgets considered disproportionally high in light of the volatile domestic and international markets.

But the Gallic biz is grabbing far less overall: Over the past 12 months the box office has fallen 9.2% to an estimated $1.38 billion. Over the first nine months of 2013, the market share of homegrown films has dropped to 31.5% vs. 39.6% in 2012, while the share for U.S. movies has surged to 58.6% from 46.1% last year.

French comedies and thrillers with upscale production value and high-profile casts still snatch up the biggest pre-buy investments from French commercial nets TF1 and M6, but they're no longer luring large local auds unless they boast a strong script and/or concept, and manage to get a positive word of mouth. Yet, the recent example of "Spivet" shows that even well-reviewed films can miss their targets when the marketing isn't well cued.

The underwhelming results of many mainstream French pics could be a sign of audiences' changing tastes and the need to watch out for skyrocketing budgets. And it also validates the prevailing wisdom that Gaul produces too many films, leading to a cluttered theatrical landscape.

Wild Bunch co-founder Vincent Maraval sparked an uproar within France's film community when, in an opinion piece published in Le Monde last December, he denounced the rise of Gallic film budgets -- partly driven by a handful of big stars' paychecks -- and the effect of France's subsidized financing system, in particular the role played by French TV channels that concentrate their investment on big French comedies.

And a year later, no one can deny the fact that Maraval's words were near-prophetical.

The news of Pathe's layoffs comes at a critical time for the French industry. Orange Studio, the film arm of telco group Orange, has just announced it will be freezing investments in 2015, while OCS, Orange's pay TV group, is also looking to reduce its films acquisitions, and Canal Plus, the leading French paybox, is increasingly selective.

But all is not lost for French films. A handful of reasonably budgeted movies with strong subjects and/or concepts like Albert Dupontel's "Neuf mois ferme" and Abdellatif Kechiche's "Blue Is the Warmest Color," both released by Wild Bunch, have performed well on the home front. Gaumont, meanwhile, will likely end the year on a high note with the Nov. 20 release of Guillaume Gallienne's gender-crisis comedy "Me, Myself and Mum," which has been garnering upbeat word of mouth since its unspooling at Cannes' Directors' Fortnight and Angouleme fest.

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