Kiwi film industry at a crossroads

The New Zealand film sector is coming off another banner year, but rising production costs and dimishing financing could spell trouble for the future.

WELLLINGTON -- Whether it's Edmund Hillary, the beekeeper who became the first man to conquer Mount Everest, or director Peter Jackson, who went from B-movie auteur to A-list Oscar winner, Kiwis pride themselves on their underdog status. It's a sentiment that expatriate director Roger Donaldson keenly captured in 2005's "The World's Fastest Indian," the unlikely true story of how a crazy old coot from the bottom of New Zealand's South Island became world famous for breaking speed records on an Indian motorcycle almost as ancient as himself.

Donaldson's first New Zealand production in 25 years was made on a shoestring budget and almost conked out before reaching the starting line but then roared off into history as the country's highest-grossing domestic film in more than a decade -- and the second highest of all time. If the figures are adjusted for inflation, "Indian's" NZ$7 million ($4.9 million) take is second only to that of "Once Were Warriors" (released in the U.S. in 1995), which took in NZ$8.3 million ($5.8 million).

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Moreover, it capped an unprecedented winning streak for Kiwi movies domestically: Of the eight films released in the two-year period ending December 2006, four rank among the 10 most popular New Zealand films of all time (the third most popular, "Whale Rider," released in the U.S. in 2003, spearheaded the Kiwi box-office renaissance that same year).'

One of 2006's crop, "Sione's Wedding," was New Zealand's fifth top-grossing movie of the year, and two others, "Out of the Blue" (set for U.S. release through IFC Films in May) and the 2005 production "River Queen," cracked the top 35, which means each was seen by at least 100,000 people in a territory of about 4 million.

"It was a fantastic year in terms of what New Zealand films achieved," says Sony Pictures New Zealand GM Andrew Cornwell, noting that local releases accounted for 10% of earnings in the first half of the year. "All were very good films that held up the boxoffice."

According to the New Zealand Film Commission, the film industry's chief government-funding agency, more than 1.3 million New Zealanders saw local movies in 2005-06, compared with just 185,000 in 2004-05. Cornwell, who sits on the commission's board, estimates that there is a traditional core audience of about 30,000 that likes to watch local films, but he stresses that it isn't mere nationalistic fervor driving people to the boxoffice. "A film has to perform on its (own) merits," he says.

Veteran exhibitor Joe Moodabe, executive chairman of the SkyCity Cinema Advisory Board -- and former CEO of SkyCity Cinemas, which financed "Sione's Wedding" -- agrees that the bar has been raised so high for local productions that Kiwi audiences have become accustomed to world-class productions. "New Zealanders now have expectations when they go to a New Zealand movie -- that it's going to be entertaining," he says.

Observers point to a number of factors that have been contributing to the recent boom: the convergence of a more market-driven Film Commission, the rise of Peter Jackson and the legacy of his 2001-03 "The Lord of the Rings" trilogy, the emergence of a new wave of filmmakers, a film-friendly government and new funding mechanisms to leverage both bigger budgets and the honing of professional skills.

As to what's in the pipeline, there's a project about a David-and-Goliath contest between one man and the tax department -- its working title is "Be Very Afraid" -- that starts shooting next month, and director Vincent Ward ("River Queen") is completing "The Rain of Children," a feature-length docudrama that's a sequel of sorts to a docu Ward made 25 years ago about an 84-year-old Maori woman struggling to care for her handicapped son. According to Film Commission chief executive Ruth Harley, two additional films are close to the greenlight stage.

Still, despite all the causes for optimism, some within the industry are concerned that a number of emerging trends will result in a stark downturn in the momentum that has been building for years.

One problem is simply maintaining the high quality of the projects from the last few years, says Harley, who is concerned that this year's crop of films don't offer the broad appeal and diversity of 2006's releases and could suffer at the boxoffice. "(I'm) hopeful that three (releases) will find an audience," she says.

One local production that should have been before the cameras this month, "The Vintner's Luck," from "Whale Rider" director Niki Caro, has been postponed until at least 2008 because its French funding fell through in the 11th hour. Indeed, financing is becoming one of the industry's major concerns in light of new tax legislation in the U.K. that makes shooting in New Zealand less cost-effective than it was just a year ago.

"Domestic production in 2007 is going to be really tough," predicts Richard Fletcher, who left his post at the Film Commission to run the indie production outfit Liberty Films. "The bigger-budget films of recent years -- (the 2006 production) 'The Ferryman,' 'River Queen,' 'In My Father's Den' (a 2004 production set for U.S. release this year through Tartan Films) -- all had significant U.K. equity. That money's gone because of changes in tax legislation. U.K. money is now effectively predicated on filming in the U.K. It's going to be really hard to find that money elsewhere. The presale market for New Zealand films is very difficult and very conservative."

Exacerbating the situation is the steady rise of production costs combined with swelling budgets. "There has certainly been significant inflation in domestic budgets," says Fletcher, who also serves as president of the Screen Production and Development Association of New Zealand. "We need to look at the overall sustainability of the industry and the interrelation between domestic and offshore servicing production. A NZ$7 million film is roughly a (U.S.) $5 million movie, but the reality is that the current market's only prepared to pay $3 million (U.S. dollars) for it."

Since international financing has become much harder to procure, one project currently before the Film Fund has proposed a cooperative venture by which fees would be deferred for a bigger share of sales and boxoffice, according to veteran film administrator David Gascoigne.

"One approach that we're now seeing is a reduction in a project's budget, on the basis that the participants -- key cast and crew -- would take low fees upfront but get a commensurately bigger share of recoupment at the far end," he says. "This would lower the amount of money that has to be raised from investors. It's not exactly novel, but it's a way of getting a project made."

Additionally, SPADA is trying to negotiate improved producer recoupment with the Film Commission at a time when many fear the experienced producer has become an endangered species.

"Our biggest problem isn't a lack of talented writers and directors," Gascoigne says, "but producers with experience who can negotiate the complications of assembling money in complex ways from a variety of worldwide sources."

It's a warning the commission needs to heed, argues one of the country's most successful producers, South Pacific Pictures chief executive John Barnett, who has four of the 10 highest-grossing Kiwi movies to his credit, including "Whale Rider" and "Sione's Wedding." "There's not enough emphasis at the commission on experienced producers," he says. "The emphasis has been very much on the director and looking for auteurs -- when the successful films have been initiated and generated by producers."

"Producers are the ones that ultimately make films happen and build businesses," Fletcher adds. "We therefore need to encourage and incentivize them. At the moment, while they bear the majority of the risk and they may make a very successful film, they only earn a fee -- and these fees haven't risen with the corresponding inflation in budgets. Success should be rewarded. The industry in its current form is 30 years old, and essentially, the models haven't changed."

Harley counters, however, that the Film Commission's producer incentives are better than those of comparable cultural agencies. "It's a question of what is the correct balance," she says. "The Film Commission has been focusing on script development, producer development, professional development across the board, the international market and relationships with key buyers and festivals."

Yet Harley remains optimistic, if only because the Kiwi film sector -- with typical underdog spirit -- has managed to continue producing hits despite facing innumerable challenges. "Every year, it's gotten harder to fund movies," she observes. "Yet over that same period, there have been bigger films, better films and more successful films. I don't see any cause and effect. We're in the lap of the market gods."
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