Strain in Spain: Piracy makes a dent

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MADRID -- Outside a suburban multiplex on a recent Friday night, the line to buy tickets snaked around the block. Couples and families pored over their options before approaching the ticket window, but the only available seats were in the front row.

That was for the American movies, in a lineup that included "Burn After Reading" and "Mamma Mia!" But plenty of seats were available for the handful of Spanish films.

Welcome to the harsh reality of the Spanish film industry. While domestic boxoffice share for Spanish films in 2008 has perked up to 11% after the dismal 7.5% revenue haul of the first half of 2007, it's still well below the golden age of 20% in 2001.

Part of the problem is rampant piracy: Spain is responsible for some 18% of worldwide illegal downloads, making it the global leader in film piracy.

A series of factors make Spain attractive to pirates: Lax laws and enforcement, consumers programmed to expect to see new releases instantaneously, and a widespread network of black market vendors who flourish in good weather.

Indeed, Spain clocked more than 150 million illegal downloads in 2007, worth more than 800 million euros ($1 billion) to the audiovisual sector. Street vendors added another 20 to 30 million illegal film sales in 2007, according to Spanish Producers' Rights Management entity EGEDA.

"Pirating is a huge problem, and it's causing damage for many companies," explains publicly listed content provider Vertice 360's head of film, Adolfo Blanco. "But it is the tip of the iceberg of a radical change in business model. We need to find the solution."

While finding a solution to the piracy problem remains elusive, the film industry is nevertheless forming a number of strategies to combat the domestic slump in ticket sales. First and foremost is an effort to capitalize on a vibrant new generation of Spanish film talent that could reshape the industry.

"There has been a generational changing of the guard, and there's a new crop of creative ambitions that focus on new ways of making money," says Lolafilms chief Andres Vicente Gomez. "They're not against genre films, like the auteur filmmakers of the past were."

In fact, Spanish genre films are the industry's steadiest sell internationally. Labels like Filmax's Fantastic Factory and Vertice's Amazing are traveling abroad seamlessly, and Spanish-language genre fare like Miguel Marti's "Sexykiller" and Nicolas Lopez's "Santos" generated strong buzz at the fantasy-oriented Sitges International Film Festival of Catalonia in October.

Additionally, the number of promising young directors emerging is unprecedented in Spain. A handful of production houses are looking to tap into the new wave of helmers, setting up specific labels for smaller-budget films to vet talent. Escandalo Films has even established itself as the meeting point between the talent at Barcelona's ESCAC film school and projects in production.

And the international market is responding.

Films like "The Orphanage"; screenwriter Sergio Sanchez's directorial debut, "The Homecoming"; or Kike Maillo's coming-of-age robot story "Eva," set to shoot in December, have already stirred interest. Elsewhere, Borja Cobeaga's highly anticipated feature debut "The One Who Pays for the Fanta" is in postproduction at Manga Films, while first-timer David Pinillos' romantic comedy "Bon Appetit," starring up-and-coming talents like Unax Ugalde and Nora Tschirner, is in production at Morena.

"The healthy dose of talent -- precisely the talent we're looking to take advantage of -- is the biggest news in the Spanish film industry," says Telecinco Cinema CEO Alvaro Augustin. "When the (Hollywood) studios came here a few years ago, they acted as if they were the owners of the talent. (But) then it turned to, 'I'm interested in what you are working with.' I'm not just talking about actors, but directors, scriptwriters, producers and crew."

The international community will get a chance to evaluate how well some of the other up-and-comers can travel in Alfonso Albacete and David Menkes' sex-packed "Mentiras y gordas," which groups many of Spain's most sought-after young actors in an explicit, push-the-

envelope coming-of-age story.

Additionally, both Pedro Almodovar and Alejandro Amenabar -- Spain's most internationally prominent directors -- are wrapping up their next projects. Almodovar is in postproduction on "Broken Embraces," starring Penelope Cruz, and Amenabar is finishing his ancient Egypt epic, "Agora," with Rachel Weisz and Max Minghella.

Another development generating optimism within the local film sector is how four-year-old legislation that requires broadcasters to invest 5% of their overall revenues into film production is now beginning to pay off. This is especially good news considering the legislation translates into some $60 million per year from the two biggest players, Antena 3 and Telecinco. Traditionally, the lion's share of Spain's top-grossing films have been produced by broadcasters, and the films have also traveled well abroad.

Even so, there has been no shortage of critics of the broadcasters' role as producers.

"The fact that movies are being made, (then) sold to TV stations, regardless of the marketplace and the appetite from audiences in cinemas, has altered one's perspective from making a movie with commercial appeal to just making it if you are friends with the right TV executive," declares Alquimia Cinema boss Francisco Ramos, who is prepping his first English-language production, "La Mitad," to be directed by Lucia Puenzo in 2009.

But supporters disagree, arguing that it is an attentive eye on the marketplace that makes TV-backed films perform so well.

The numbers certainly back this up: Telecinco Cinema, which is co-financing "Agora," has a strong track record with internationally successful films like "Pan's Labyrinth" and "The Orphanage." Producing about 10 films per year, Telecinco has become one of Spain's most consistent international film brands.

Over at Antena 3, a number of promising projects are in the pipeline, including the $14.7 million, English-language title "The Chinese Manuscript," a 16th century adventure co-produced with Zebra Prods.; and the $17.6 million "14," a biography of Spanish playwright Lope de Vega, starring Daniel Bruehl.

Not to be outdone, pubcaster Television Espanola has snagged top-notch Spanish producer Gustavo Ferrada from Sogecine and placed him atop the public service's newly created film arm.

Despite all this recent activity, broadcasters insist that making movies is not their core business. "If we're talking purely economically, I would doubt making films for the broadcasters is profitable," Augustin says. "If we're talking profit it terms of our image, our brand, media coverage, prizes won, authorship -- then on certain occasions it is profitable."
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