By 1962 West German production had declined to sixty-three features ranking the county fifth in world production. The majority of these films were of poor quality with no possibility of competing in the export market dominated by the U.S. The German film industry was in dire need of a jumpstart. It seemed as though the industy might soon decline beyond revival. In 1962, during the German Festival for Short Films, a group of twenty-six young German directors wrote and signed the Oberhausen Manifesto which boldy declared the old German cinema dead: "Papas Kino ist tod (Papa's movies are dead)." The signers of the manifesto emphasized the importance of short films as a tool to educate rather than entertain. These young Germans were seeking expression using a fresh film language. Their short, unstructured films, produced on very low budgets, reflected their philosophy that the German film should concern itself with contemporary German problems; the materialism of postwar society, the morality of the bourgeoisie, the alienation of youth, and the moral disaster of the Nazi legacy. Some of the filmmakers made autobiographical films in the belief that one's personal problem was also the world's problem.
Many of the young German filmmakers were strongly political. Disdainful of "artisty" and "entertainment", they believed that the film should serve as a forum for the dissemination of ideas and philosophies which challenged the established order. This early movement was rejected by the great majority of German filmgoers and was a financial disaster.
This attempt at a new, meaningful film culture, although not economically successful, did eventually evolve into a strong industry that was receiving international acclaim by the late 60s and on into the 70s. Wim Wenders, Rainer Werner Fassbinder, Werner Herzog and Volker Schlöndorff stood in the forefront of this Neu Welle, the German "New Wave". Younger German directors have been inclined to study the works of Francis Ford Coppola, Hal Ashby, Martin Scorsese, Steven Spielberg and Peter Bogdanovich, represenatives of the new American cinema who have demonstrated that the personal film can also be entertaining and commercially successful. An interesting note considering the U.S's past in Germany, is that many of the Neu Welle directors were strongly influenced by Classic American films of the 30s and 40s. Wim Wenders, one of the more famous of the Neu Welle directors stated "All my films have as their underlying current the Americanization of Germany. I see my own films as American". As the international popularity of these German dirctors increased, motion picture attendance in West Germany continued to decline. These films challenged tradition and were often critical of bourgeois society and irreverent in their treatment of German history. These films were seen by relatively small audiences. Wenders explained in 77, "You have to remember that for years Germany had no film tradition. Now it's beginning to come back."
Without commercial success, West German film production had to be supported once again by subsidy. By 1977, 80% of the funding of a typical German feature was accomplished through a subsidy of one kind or another. The subsidy sytem has proved a mixed blessing. While the subsidy has no doubt encouraged the production of noteworthy films, which most probably would not have reached the screen in a free market, subsidies also allowed the production of some of the most bizarre and undisciplined films in the history of German cinema. This statement by Niklaus Schilling, who left Switzerland to make films in Germany, was typical of the attitude of many directors, "I never think about the audience when I write a script. I only write for myself."
It is difficult to define the "New German Cinema" because all the directors have their own uniquie styles which are specific to their films. The fact that there is an association between artist and product does, however, say something as to how people feel a sense of connection and/or loyalty to a particular director. Werner Herzog's remake of Murnau's 1922 Nesferatu. Herzog, because of his refusal to recognize the achievements of German filmmakers in the period 1933-1945, looks to the creators of the silent era for inspiration and artistic guidance.