> Injecting more money into the film industry would just lead it to the same people at the top of it where they'll produce the same mediocre output as they have for ages

Not necessarily, if you apply discipline and intentionality.

Canada famously created “CanCon” (Canadian Content) by law. They forced media in the country to be X% local, and that built out the industry by sheer necessity. The reputation was poor in the early years, but now a talent pipeline, local services, and industrial knowledge has built up and they have a thriving entertainment industry.

Germany has the disadvantage against Canada which could benefit from speaking English and cross selling to the US and UK. But it can become a source of local pride and distinction. The French are very proud of their language, even though it’s also not heavily spoken internationally.

The building blocks exist to successfully build cultural capital if it’s a priority.

Well, we sold our most prestigious film making location to the US fairly recently, a few years ago (Filmstudio Babelsberg). Not much good has happened to it since then. Admittedly, it was already not going too well before, but we can expect further decay at the hands of US investors.

German culture is imho stuck in a permanent subsidy slop problem. Basically every German film is written to appeal to the subsidy committee, not any greater audience. And it shows.