Germany's NRW at corner of Hollywood and Rhine

It may not be a household name, but the North Rhine-Westphalia region has quietly become a global media powerhouse

North Rhine-Westphalia is not a name that rolls off the tongue. The puzzle-shaped state in western Germany lacks the instant name recognition of Berlin, with its Cold War history and capital city status, or Munich, whose local traditions of lederhosen and Oktoberfest are world-renowned.

But while Berlin and Munich get all the press, North Rhine-Westphalia, or NRW for short, is Germany's true media capital. Just consider the facts:

-- Combined annual revenues of the media and communications industries in NRW are around €170 billion ($249 billion). That more than doubles the combined $87 billion produced by Munich and the state of Bavaria and the $17 billion Berlin churns out every year.

-- More than a third of all TV production in Germany is made in NRW, including some 39% of all fiction production.

-- NRW is home to some 28 TV channels, including RTL, Europe's largest commercial broadcaster, and WDR, Germany's largest public channel.

-- Some of the country's biggest television producers (Brainpool, Action Concept, Typhoon, Grundy Light Entertainment, Colonia Media, Network Movie) as well as the German outposts of international giants Sony Pictures, Granada, Endemol and Eyeworks are all based in NRW.

"We don't have an industry problem in NRW -- what we have is a branding problem," a leading German TV exec says. "We are European champions; it's just no one seems to notice."

Branding has always been a tricky issue for NRW. Just 30 years ago, the state was known for its aging coal mines and heavy industry, a rust belt more Allentown than Hollywood.

Dragging NRW's 19th century industry into the 21st century of electronic media was the result of an extraordinary act of political will by the state government at the time.

"The mines were closing; the factories were shutting down; they needed something else to create jobs. So they chose media," says Norbert Schneider, director of the NRW broadcasting authority LfM.

So like a film crew erecting a town in the desert, NRW built an industry, pouring money into infrastructure and education. The politicians also started wooing media companies, scoring a coup in 1988, when RTL -- then a tiny little channel based in Luxembourg -- moved across the border to NRW in Cologne. Commercial television was just taking off in Germany, and with RTL, Cologne was ideally positioned to profit from the resulting boom.

In 1991, NRW founded its state film commission, the Filmstiftung NRW, and the MMC Studios -- Europe's largest and most modern production studios -- were built. "Berlin and Munich had an 80-year lead on us when it came to film, but we started to catch up quickly," NRW's media minister Andreas Krautscheid says.

While the Filmstiftung brought in some big productions -- much of the 2001 French hit "Amelie" was shot in MMC's Cologne studios -- the film commission used its budget (the largest in Germany, at around $50 million a year) to back an extraordinarily wide range of international co-productions. It's no surprise that NRW producers tend to specialize in the multifarious arts of cross-border indie co-productions, from Tatfilm (2006's "The Last King of Scotland," next year's "Within the Whirlwind") to Pandora (2002's "Whale Rider," 2007's "O'Horten"); from Heimatfilm (2008's "Lemon Tree," 2006's "Sweet Mud") to Coin (this year's "Tokyo!" and "Love and Other Crimes").

"They had to go global because at the time there was no local film scene," explains Claudia Droste-Deselaers, deputy director of Filmstiftung NRW.

There certainly is a local scene now. When NRW's media bigwigs traveled to Los Angeles in January -- the first ever such trip -- a main goal was to get the word out about the production possibilities of the region. Besides the local talent and top-end facilities like MMC, NRW boasts arguably the best infrastructure in Germany. Cologne-Dusseldorf is an international hub for low-cost airlines, and with Frankfurt Airport just an hour away by train, every single major city worldwide is within striking distance.

NRW is also a cash-strapped producer's dream. In addition to the film commission's deep pockets, there are the $85 million in tax-break funding available from federal film fund the DFFF and an additional $36 million in soft money subsidies from federal film commission the FFA, which can be spent on NRW shoots. Producers can now also tap an annual $15 million in gap financing from the state's NRW.Bank thanks to a new program specifically targeting film production.

A quick look at some of this year's shoots in NRW -- including Stephen Daldry's "The Reader," with Kate Winslet and Ralph Fiennes; Stephen Frears' "Cheri," starring Michelle Pfeiffer; Lars von Trier's "Antichrist," with Willem Defoe and Charlotte Gainsbourg; as well as German uber-productions "Pope Joan," "The Buddenbrooks" and "Hilde" -- shows how effective NRW funding has been.

But NRW's massive media industry is not just "old school" film and TV. The state is quickly becoming a leader in the convergence business. Probably nowhere in Europe can you find a greater concentration and variety of media businesses, from print (some 40 daily newspapers in the region) to telecommunications (giants Deutsche Telekom and cable group Unitymedia call NRW home) to advertising (Dusseldorf is on par with London in terms of the size and number of its ad firms). As the lines between old and new media become increasingly irrelevant, the benefits of a region where traditional media giants such as Bertelsmann rub shoulders with the next generation of content makers are obvious.

"Berlin is hip but in terms of advertising -- of money -- Berlin is a dead pit," says Axel Schmiegelow, CEO of leading German online social platform Sevenload. "Here in NRW we are in close proximity to the leading producers of content; to the ad industry, who know how to monetize content; and to some of the best resources in terms of venture capital and technical expertise."

NRW is moving to capitalize on the new world order, where traditional media merges with Web 2.0, with a unique new funding scheme. The so-called cluster funding earmarks $33 million in backing for programs that promote cross-industry convergence. Acting like a venture capitalist, the state wants to back out-of-the-box business models that link up the on- and offline worlds, promote communication between content producers and deliverers, and encourage regional hotshots to look internationally for partners and new opportunities.

It's a bold move into new terrain, as significant in its way as the move in the '80s from coal and steel to film and TV. Like any relaunch, North Rhine-Westphalia's convergence strategy brings with it many unknowns and much risk. But if the awkwardly named region is to stay on top of Germany's media world, they are risks NRW can't afford not to take.