Iceland's Filmmakers Persist Despite Challenges After Country's Financial Collapse

A reimbursement of 20 percent of film costs incurred in the country and foreign productions are positives even as a weaker currency and a reduced film fund budget cause challenges for the local movie industry.

REYKJAVIK, Iceland -- Three years ago, Iceland went bankrupt amid the global financial crisis.

Today, the film industry in this Nordic nation of about 320,000 is still struggling with the fallout, but it has continued to produce movies -- and, as some industry insiders here argue, more than the outside world would expect from a country its size. 

And with its natural beauty, skilled crews and production incentives, it also continues to attract foreign productions, including from the U.S.

But the financial crisis threw some additional challenges at the movie industry here. Filmmakers say that a 35 percent decrease in the annual budget of the country's film fund, which traditionally provides the seed funding for productions, has been a particular burden.

The competition fund gets more applications than it can support, so after evaluations of content, target groups and key artistic personnel, some projects get backing, while others end up empty-handed.

In 2009, shortly after the country went bankrupt, the fund was reduced to about 450 million kronur in total, with 270 million kronur, or around $2.3 million, available for a couple of feature films, and the rest available for documentaries, shorts and TV projects.

While those may seem like small amounts for American standards, Icelandic filmmakers typically use much smaller budgets. And they use that basic Film Fund financing to then seek additional film fund support elsewhere in Europe.

"The government provides the base funding for everything in our industry here," said Kjartan Thor Thordarson, CEO of production firm Sagafilm. "We are missing that right now, and we hope that the government will realize that."

Kristinn Thordarson, executive producer at Sagafilm, added: "In the European system, this is the first money that comes in, so it takes away the money that we can get from the rest of Europe and other film funds. So, it has a domino effect and slows down production here in Iceland."

While industry folks say they understood that cutbacks were needed amid the country's financial problems, many called the size of the film fund cut excessive.

The number of Icelandic productions is down to one or two this year, but the industry may need at least five per year to sustain itself, the Thordarsons suggested.

But Laufey Gudjonsdottir, director of the Icelandic Film Centre, said that "three films is the holy number, the minimum to keep experienced film people on board."

She expressed confidence that this year's two homegrown productions, one of them a smaller one, will be followed by three films next year. "TV fiction [which started getting financial support a few years ago] is doing really well this year, but we have fewer films, so this is the difficult year," she said. "But I'm optimistic. I'm expecting three films next year." 

Some are concerned though that productions financed before the financial crisis have helped the industry stay busy until now. "I'm more worried about what happens next," said one film industry insider who didn't want to be named. "The good times before the crisis managed to continue, but the question is what happens now."

Observers said that around 30 percent of film budgets here often were covered by the film fund.

Some have reacted to its reduction by scaling back budgets. "There have been two or three films that have been done with small budgets and loans without money from the government, but obviously if you have made films for 20 years, you don't want to put up your house as a collateral for every film you make," said Kristinn Thordarson.

A minimal increase in the overall film fund, proposed by the government, is by some industry insiders seen as a symbolic gesture to filmmakers -- especially since cultural spending is set to see a single-digit decline in one of the measures that had some protesting here on Saturday.

But others say the funding increase is nowhere near enough. "We are already used to making movies on a shoestring, so any missing financing makes it even tougher," said one filmmaker.

Another challenge for the film business here has been the devalued krona, the Icelandic currency, whose value has been much lower since the financial crisis. It has meant that sealing deals with co-production partners from other countries, on which many films created here rely on, require more financial input from the Icelandic side today.

However, Icelandic film industry members also highlight some positives. For example, the  government after the crisis increased a reimbursement of production costs incurred in Iceland from 14 percent to 20 percent to support the industry.

While that only benefits projects that have already lined up the original funding that has been harder to come by, many say the financial assistance, which tends to get processed within weeks after productions wrap, is key. 

"The 20 percent reimbursement was really important for us, and it is important for all," said producer Arnar Thorisson of animation studio Caoz, which is set to release Legends of Valhalla ­Thor, the most expensive film and first-ever animation feature from Iceland, here in mid-October.

The CGI-animated adventure comedy was close to not being made when an equity financing part dropped out of its funding due to the financial crisis a few years ago. But at the last moment, venture capital and other money could add to financing from seven film funds across Europe to ensure the project could proceed.

According to official statistics, $2.6 million were paid out in production reimbursements in Iceland so far this year, showing a rebound after weaker recent years - from $1.0 million in 2008, $1.8 million in 2009 and $1.6 million last year.

One industry observer said there are clear signs that the current three-year production incentive legislation, which expires at the end of the year, will be renewed. Some even expressed hope for another increase.

Added Gudjonsdottir: "There is very strong political will to continue this, because there have been studies that show there are economic benefits several times the size of the reimbursements."

Iceland's weak currency and the production incentives have also allowed Iceland film crews to stay busy with projects from abroad, including the U.S. "That is really helping us survive during the government crisis," said Thordarson.

"This year has been a good year, one of the biggest for us actually, and I'm very optimistic about next year," said film commissioner Einar Tomasson. "There has been a lot of interest from foreign producers."

Statistics show that there have been three foreign productions in Iceland this year, compared with two last year and none in 2009.

Ridley Scott this summer shot parts of Prometheus in Iceland, and Mark Wahlberg starrer Contraband also had shoots here, for example. Industry insiders also say that Ben Stiller recently visited to scout locations for his next film, among others.

Clint Eastwood's Flags of Our Fathers, Batman Begins, Journey to the Center of the Earth and Hostel 2 are also among the films that previously came to Iceland.

"People tend to like to work here," said Tomasson. "Nature and incentives play a role, but we also have skilled crews, and it's a relaxed atmosphere, so stars can walk around without paparazzi." And locations with a varied look -- from waterfalls and geysers to rugged terrain, the seaside and city settings -- are often within an hour of one another. Plus, the weaker local currency now buys more production hours for the same amount of money.

While last year's volcano eruption caused global headlines and put a temporary damper on foreign production activity here, Tomasson said it may also help longer-term. "I think the volcano eruption -- for those who didn't know about Iceland - showed pictures of nature that you can't get anywhere," he said.

The volcano, but more so the financial collapse from a few years ago regularly come up in conversations with Icelandic film industry folks.

The financial crisis and its fallout were also themes of some films at the eighth annual Reykjavik International Film Festival that wrapped here this weekend. 

For example, Thor's Saga by Danish director Ulla Boje Rasmussen focuses on two Icelandic businessmen, one of them a billionaire banker who many here see as a key reason behind their country's 2008 bankruptcy.

While the more concerned industry folks said that Iceland's film business is in a state of emergency and some have started moving away, many film folks also point out that Icelanders in the business have dealt with the fallout from their country's financial collapse with what they say is a trademark can-do approach.

"That is the Icelandic attitude: figure it out, get it done. Nobody will help you," said Gudjonsdottir. "That's an advantage for a filmmaker."

She summarizes the state of the film business in Iceland the way others also do: "It's a struggle, but we'll survive."


Twitter: @georgszalai