XR Focus / Luxembourg: a champion of immersive production

For a number of years now, Luxembourg has been setting out its ambitions in terms of XR production. A singular approach in an emerging market, for a country with only a few hundred thousand inhabitants. Where does this interest in virtual reality come from? What is Luxembourg’s roadmap? What are the strengths and limitations of this territory within the XR value chain? All these questions bear witness to the gradual structuring of an international ecosystem.

At first glance, this might seem anecdotal: in 2024, at Venice Immersive, 5 of the 26 works presented in competition were Luxembourg (co)productions. Quite an achievement for a country with a population of some 670,000! What’s more, two of these works – ITO MEIKYU, winner of the Grand Prix, and OTO’S PLANET, winner of the Jury’s Special Prize – received some of the festival’s most prestigious awards. Yet this success is no accident, as Luxembourg has established itself over the years as a major player in immersive production on an international scale. Heir to an industrial past, the country began to turn towards film production in the 1990s.

Thanks to the Film Fund Luxembourg, an ecosystem of producers has developed, encouraging international collaboration – particularly with France, Belgium and Canada – while consolidating a local industry. Today, Luxembourg has more than 1,200 film professionals, a significant number on a national scale. At the turn of the 2010s, the first transmedia creations emerged, paving the way for artistic experimentation. As François Le Gall, a partner in the production company a_BAHN, one of the key players in the sector that has produced works such as AYAHUASCA: KOSMIK JOURNEY (by Jan Kounen) and more recently CECI EST MON COEUR (by Nicolas Blies and Stéphane Hueber-Blies, also presented at Venice in 2024), explains: ‘In 2015, VR didn’t really exist in Luxembourg. a_BAHN, which was already innovating in transmedia, web and interactive formats – like SOUNDHUNTERS by Nicolas Blies and Stéphane Hueber-Blies (ARTE) – was the pioneer in the country. As soon as we tried out a VR headset, we immediately wanted to explore this medium and, in particular, define its grammar.’

First and foremost a political will

And because these are new forms of artistic expression, financial support was essential. ‘This desire to explore the field of XR was matched by the vision of Guy Daleiden, director of the Film Fund Luxembourg, who has carried the development of VR on his shoulders,’ explains François Le Gall. With a budget of around 40 million euros under the aegis of the Ministry of Culture – itself funded to the tune of 288 million euros – the Film Fund Luxembourg has put in place an ambitious support policy for a sector that is still emerging but promising. “When Luxembourg launched its first initiatives to support the film industry professionally 30 years ago, we were lagging far behind. This time, we wanted to jump on the bandwagon and invest in this niche. I’m convinced that future viewing habits will also involve XR,” says Guy Daleiden, who has taken up a challenge that few other countries have been able to anticipate. “We have succeeded in making political decision-makers aware of the strategic interest of this sector and the synergies it could generate with other industries in the medium term. If we all move in the same direction, our ability to build a solid ecosystem will only be strengthened“, he adds.

Real financial backing

In practical terms, Luxembourg stands out for its attractive funding model, which is far more developed than in most other countries. Few places offer such advantageous envelopes for supporting VR projects. Unlike countries such as Belgium, where tax schemes such as the Tax Shelter encourage the establishment of productions, Luxembourg has opted for direct and selective mechanisms. Its funding system is based on three types of support: writing/development aid for an international co-production; writing/development aid for a Luxembourg production; production aid and international co-production. These schemes have no minimum but do have defined ceilings. Above all, unlike other models that restrict XR to projects with limited budgets, Luxembourg has included it in the same funding criteria as animated or fiction feature films. Gwenael François, director and producer at Skill Lab – the studio behind the aforementioned OTO’S PLANET – underlines this major advantage: “One of the special features of Luxembourg is the possibility of financing immersive projects via the same window as cinema. This one-stop shop really facilitates our approach as producers.” In practice, this means that VR projects benefit from the same rules and budget ceilings as traditional film productions (with a maximum of €1.5 million). While the amounts allocated do not always rival those of a feature film, this approach has nevertheless helped to structure an ecosystem of recognised production companies, including Wild Fang Films, Digital Voodooh, ZEILT productions, Bidibul Productions, Poulpe Bleu Production, Tarantula Luxembourg and of course Skill Lab or a_BAHN previously quoted.

Decoding XR: OTO’S PLANET with Skill Lab & Dpt. (Part 1 & Part 2)

Making the most of your position

While there are many players in the film industry, the XR ecosystem is still emerging, with a more limited number of producers and studios involved. This configuration facilitates access to influential co-producers. “The film industry is highly competitive and takes a long time to establish itself. Thanks to our positioning on the XR, we were quickly able to establish links with renowned studios such as Atlas V, which is recognised internationally. In the world of cinema, access to players of similar stature, such as A24, Mediawan or Pathé Films, would be much more difficult for a small structure“, shares Julien Becker, director and producer at Skill Lab. Luxembourg also enjoys a unique strategic position for co-productions, not only because of its geographical location at the crossroads of Europe, but also because of its multilingualism. Producers, both French-speaking and German-speaking, work on collaborations with France, Belgium, Quebec, Germany and the Netherlands. This linguistic and cultural diversity is an asset and provides the flexibility to forge medium-term partnerships. The widespread mastery of English further opens up the field of international collaboration, particularly around issues related to the distribution of works.

Dabbling in distribution

In Luxembourg, as elsewhere, distribution of immersive works remains the main challenge. But here, it seems even more complex to overcome: with only 80 km from north to south, the country does not have a domestic market that would allow large-scale local exploitation (although some artistic projects such as Rotondes or elektron have connections with VR works). According to Gwenael François: “Luxembourg’s current strategy focuses on the creation of works. Once they have been finalised, their distribution is entrusted to specialist external partners, such as international distributors or broadcasters like Arte. Occasional initiatives, such as collaborations with museums, offer local visibility, but the country does not yet have a structured ecosystem for VR distribution“. This approach is still marked by a very cinematographic logic, where the role of the producer stops at the production of the work, leaving distribution to other players in the market.

However, the country is showing initiative in promoting its productions. For almost ten years, the Film Fund Luxembourg, in partnership with the Luxembourg City Film Festival, has been organising its Pavillon Immersif (previously known as the VR Pavilion). This free event offers the public the opportunity to discover Luxembourg and international XR works, often unseen elsewhere. To structure this project, the Film Fund has joined forces with the Centre PHI, as Myriam Achard, Head of New Media Partnerships at the Montreal-based organisation, explains: “‘”In 2016, we introduced the PHI Centre to Film Fund officials who had come to Montreal to learn about developments in the XR sector. The Film Fund quickly expressed its desire to develop a festival dedicated to immersive works in Luxembourg, but it could not organise such an event on its own. They asked us to collaborate on an initial exhibition. The Film Fund thus became our first international client, acting as exhibition curator and producer.” The Immersive Pavilion has a dual objective: to raise public awareness of XR through a selection of around ten works and technologies that are still not widely available, and to encourage exchanges between professionals. In 2024, the professional VR Day brought together nearly 200 participants from all over the world, confirming the growth of the XR ecosystem in Luxembourg.

The next 2025 Immersive Days (formerly VR Day) will take place on 4 and 5 March at the Cercle Cité Auditorium in Luxembourg City.

Report⎪VR Day au Lux Film Festival 2024: une synthèse de l’écosystème XR

The structural challenges

But is everything rosy in the Grand Duché? No doubt not, because Luxembourg is facing a number of structural challenges. Starting with the shortage of skills adapted to VR production, which is a major issue in the country. “Luxembourg has a large number of developers, but few of them are trained to meet the specific needs of immersive works, in particular real-time game engines“, says Julien Becker. François Le Gall agrees: “For years, we were very limited in what we could produce at national level: 360° filming, 3D assets and spatialized sound essentially. We didn’t have a lead developer, or the development skills for artistic projects… The intelligence and the final project went back to our co-producers, which made it difficult to create a project from scratch.” Faced with this lack of resources, two strategies are emerging. The first is to work with co-producing countries that have the necessary expertise. The second, more complex and less accessible to small producers, is based on vertical integration. It is this latter approach that a_BAHN chose when, in 2023, it launched Velvet Flare, a Luxembourg-based XR studio founded with Damiano Picci. “We are thus able to work across the entire XR value chain, from concept to physical distribution of works. While Velvet Flare focuses primarily on a_BAHN productions, the studio is also available to other Luxembourg producers – THE TIME OF A MOMENT by Kate Voet & Victor Maes, produced by Tarantula (and Timescapes in Belgium), for example – and develops its own clients, in both the cultural and commercial fields,” explains François Le Gall.

This strategy of diversification was also adopted by La Fabrique d’Images, which co-produced LE BAL DE PARIS DE BLANCA LI, a hybrid work combining dance and VR by the Spanish choreographer. This is an important point, because hybrid VR works are harder to obtain funding for when they break with cinema standards. In Luxembourg, the Arts Council, Kultur | lx, has a much smaller budget than the Film Fund – just under €6 million in total. “The Arts Council is involved in all creative fields – except cinema – in terms of career development, promotion and circulation of Luxembourg artists and productions, but not in production. We have been able to support artists in the field of digital and hybrid arts, in particular through research and creation residencies, support for participation in festivals, for example with the programming of Laura Mannelli (UMWELTRAUM((A)) – SONICA) at Sonica, Glasgow. – SONICA) at Sonica, Glasgow, or support for the circulation of exhibitions, such as the recent first solo exhibition in France at the Octobre Numérique festival in Arles of the artist Mary-Audrey Ramirez, combining digital techniques and creatures inspired by video games,” explains Valérie Quilez, international director of Kultur | lx. “It’s a start, and we’re in close contact with the Luxembourg ecosystem of digital creation to envisage future developments in our scene and its international circulation“.

Dependent on political will?

Ultimately, Luxembourg, as a small country without a significant domestic market, relies entirely on political will to support the growth of XR. Unlike systems such as the CNC in France, which is financed largely by taxes on cinema admissions and private contributions, Luxembourg can only rely on public budgets to develop its cultural industries. This model, although robust to date and having greatly helped to structure a sector, remains vulnerable. Could a change of government or a policy direction that is less favourable to culture jeopardise the gains already made? Guy Daleiden, Director of the Film Fund Luxembourg, is immediately reassuring: “In just a few years, we have managed to build a sector with internationally renowned producers. Audiences are starting to show a real interest. I think we will still need investment to reach mature forms, particularly to define uses in other sectors such as medicine, transport or architecture. It would be a mistake to pull out and lose our strategic know-how“. Following this logic, Luxembourg should well maintain its pole position over the next few years.