MADRID -- The Spanish film industry has to change, whether it wants to or not. Film attendance is at an all-time low. National funding has just been halved. Movie ticket sales are going up 13 percent. The current formula isn't working and it's time to sink or swim.
"The Spanish cinema is in danger. We have a fragile industry with a strong dependence on state support. The way of administrating the direct state funds has demonstrated not to be efficient enough to stimulate the growth of the industry," says Silvia Arribas, a Madrid-based script analyst.
The Spanish government is focused on saving the economy, but the visibly-struggling, but small Spanish film industry may be a casualty of its measures. Crisis bailout and the need to increase tax revenue, while decreasing debt, sees value-added tax at entertainment events -- including theaters, nightclubs, circuses and bullfights--rising from eight to 21 percent. This is in contrast with the European average of ten-percent VAT.
It's assumed that most of this increase will go toward taxing the consumer in increased ticket prices. With one in four Spanish unemployed, everyone's cutting back on their spending, choosing euro sandwiches over menus del dia and to stay in Spain for the August holidays. A Madrid movie ticket going from eight to ten euros may be the straw that breaks the camel's back.
There has already been a dramatic decline in Spanish moviegoers -- from 17.5 million ticket buyers in 2009 to 8.2 million in 2011. There's been another 12 percent drop so far this year. The Spanish cultural industry strongly opposes the tax hike, saying that it will directly lead to struggling movie theaters and concert halls closing their doors permanently, as soon as by the end of the year.
"Many cinemas will close and there will be more piracy. Without audience, production companies won’t be able to take on new film productions, many professionals will be fired and the brain drain (to Hollywood) in search for an opportunity to develop will rise," Arribas says. "This new measure will be damaging for everybody. The yield of film -- and of culture in general -- goes beyond the immediate box office receipts."
Audiences are more likely to spend money on a 3-D comic book blockbuster once every three months, than to go see a less broadly-appealing Spanish film in the cinema. With both piracy and unemployment at its peak in España, folks are much more likely to opt to stay home and download.
SmartPlanet has already talked about Spain being dubbed the "Download King of Europe." The Spanish affinity for descargando has helped to crush even further the Spanish film industry. Thirty percent of the Spanish population uses file-sharing websites, compared with Europe's mere 15 percent.
In the first four months of the Sinde anti-downloading law, at least 11 percent of sites have been taken down. But very little can stop eager pirates. Giving people even more excuses for their illegal downloading, DVDs, CDs, and digital books will also see from a tax increase from 18 to 21 percent. The only exception to the broad cultural tax increase is printed books, which stay at an especially-low four percent.
One of the areas the film industry must focus on is combatting piracy not just through taking down websites, but by offering better online distribution of their films. Filmgoers watch ads for Youzee, Spain's answer to Netflix, but it's not catching on. Actual Netflix is expected by year's end.
There's no doubt that production companies will have to adapt to smaller budgets.
Half the funding of the film industry comes from these public grants. In the recently-released 2012 national budget, the National Film Fund, which is by far the largest funder of Spanish film production, felt a 35-percent budget cut, being allotted 49 million euros instead of last year's 76 million. Much more dramatically, somewhere between 35 and 40 million of that 49 million is reserved for paying off 2010's debt. Spain's most important film festival in San Sabastian is also feeling a 35-percent cutback, while smaller film festivals like Valencia’s Mostra and Punto de Vista in Pamplona have decided to cancel or go biannual. Cinema is the cultural sector hardest hit by the new budget.
This cut wasn't a surprise, but still stings. In pre-emptive reaction, so far this year, only 25 films have been shot, compared with the 74 at the same time last year, and these 25 are mainly short films and documentaries, rather than last year's feature films.
Arribas sees this as a grand opportunity to refocus priorities and to make more internationally-appealing films. "We will have to make better films with fewer resources and, therefore, we need to invest a greater effort in the content. The originality, the quality of development and the inventiveness of the stories will be the key to define the competitiveness of our films among others of spectacular budgets in a globalized market."
Some says the current method of public funding leads to stale production at best or blatant corruption at worst. Since 2003, the public has invested more than 300 million euros into the film industry. Grants are given by committee approval and are based on the amount of money raised. For example, if the average production raises a million euros, they could be eligible for a 150,000-euro grant. Films shot by a new director, shot in the Catalan or Basque languages, or as a documentary have lower requirements to be met to receive funds. The maximum grant -- for a budget of more than 2.1 million -- can have 700,000 euros of national investment. In addition, production companies can take out public loans for as little as two-percent interest.
This easy funding has caused an increase in movie production that does not correlate with ticket sales. Between 1990 and 2007, the amount of Spanish films made nearly quadrupled from 49 to 172, but the number of viewers averaged the same.
Topic also matters in fund distribution. Logic follows that producers choose topics that interest the cine committee, but these often Church-centric or Spanish Civil War-focused flicks do not attract the Spanish nor international audience. If the films aren't horror/torture, animated, part of the Torrente silly police enterprise or last year's best-seller-turned-film "Tres Metros Sobre el Cielo," Spanish movies do not last more than two weeks at the box office. It begs the question, how can producers raise three hundred thousand euros to recover 33 percent of the film budget in just two weeks in the theaters? The grant amount given in the end is greatly based on ticket sales. Thus, producers can actually make more money off the government by buying lots of movie tickets, upping their box office numbers. Surely compounding this is that producers only need to declare 15 percent of their final earnings.
The industry finally appears to be taking steps toward change, starting with the recently-chosen new head of the ICAA Susana de la Sierra. Her team is working on a new patronage law that provides 18-percent tax reductions to private investors, in an attempt to commercialize and privatize the industry and to make up some of the lost funding.
"They expect to promote a mixed financial system that will combine direct state support and indirect support derived from fiscal incentives," Arribas says. "In regards to cinema, the intention doesn’t seem to me to be wrong. If we overprotect our industry with direct (public) support, we will (have) difficultly gain(ing) competitiveness."
While the law seems a welcome change that should prevent some corruption, it could risk the cultural importance of the industry, particularly in independent and documentary films.
"This new system has the great risk of resulting in only private investment in the most popular and commercial films. Four or five blockbusters per year are not enough to sustain the industry," Arribas says. "What about the independent films and those less ambitious in terms of profitability -- will they disappear?"
It is clear that there needs to be a change in the industry and fast before it drowns completely.
"Film and culture are extraordinary and fundamental vehicles for our values and idiosyncrasy on the international ground. Inside our borders, it works as a social stimulus and coheres our collective identity," Arribas says. "If the production of our culture (is) cut down on, the Spanish society and the international projection of our country will be severely weakened."
Photo: Luis Gonzalez