The Future of Slovenian Cinema The Role of the State in Creating Sustainable Film Business 15 th Festival of Slovenian

1. The Future of Slovenian CinemaThe Role of the State in Creating Sustainable Film Business15th Festival of Slovenian Film29th September 2012 Olsberg•SPI

2. Contents • Introduction • Why and how states intervene in the film environment • The range of ensuing benefits • Success factors of state intervention

3. Contents • Introduction • Why and how states intervene in the film environment • The range of ensuing benefits • Success factors of state intervention

4. Why states intervene • Other than the countries where the size of the industry renders such support unnecessary – predominantly the US and India – most countries with film industries provide some form of public support • These governments (national and regional) recognise the importance of the film industry to the nation as a whole, not just culturally, but also from economic and social standpoints • Where there is consistent and reliable support, operating at a suitable level to really make a difference, this intervention should help provide the long-term strategic certainty which will allow the sector to prosper and the state to obtain the wide range of benefits that will undoubtedly follow

5. How governments intervene (I) • The development of Fiscal Incentives (more later in the seminar) is one of the major trends of the last few years, with dual aims of stimulating domestic output and to attract portable productions • It is in the area of Fiscal Incentives where new film territories have looked to start a film industry – or at least catalyse the growth of what domestic and inward investment production exists – including in recent years countries as far afield as Mauritius, Malaysia, and Abu Dhabi • However, in more established markets, traditionally, support has been on a project-by-project basis, but there are now a small number of schemes also focusing on company development • This recognises that the role of the state is not only to support individual productions but also to help individual film businesses grow and become ‘investment ready’ so they can attract private capital and possibly lessen the financial burden on the state

6. How governments intervene (II) • Direct funding is not the only mechanism used to intervene, as governments also commonly use public service broadcasters to support the film sector by mandating investment in film production, and enforcing local-content quotas • Levies on the consumption of film at the Box Office are used in many countries to support future production, though the diversification of means of consumption leads to the need to capture revenues from other forms of delivery • In some countries, screen quotas also ensure local content gets shown, either by limiting the number of foreign films allowed, or mandating screen time for local films

7. How governments intervene (III) • Ideally, a country or region would create a holistic support system, aimed at all points along the value chain, including, for example: • Development funding for new projects • Production funding • Support for distributors and – where relevant – sales companies • Assistance for independent exhibitors and new forms of ‘distribution’ • Audience development initiatives • Training, both for new entrants and to help develop more established professionals • Whatever the method or methods used, it is increasingly important for these interventions to combine well with those employed in other countries – film-funding and film-making are international businesses, and a purely parochial system places severe limits on the level of growth any production sector might be able to achieve

8. Contents • Introduction • Why and how states intervene in the film environment • The range of ensuing benefits • Success factors of state intervention

9. The range of ensuing benefits (I) • A key benefit of an active film sector is the multiplier effect on spending – ranging from 2 to 3 globally, SPI’s data suggests an average of 2.34 • Film-making will generate significant employment, in addition supporting one further job for each employee through indirect or induced effects • The talent which works in film has growing opportunities at home and abroad, is highly skilled, and possesses significant opportunities for skills and talent development • Direct investment returns are generated for private film investments, if not always for government • Significant foreign exchange earnings are also generated – in the UK, for example, 50-70% of a film’s net revenues are generated abroad

10. The range of ensuing benefits (II) • Film has been shown to have a positive impact on tourism – both internally and externally – as a result of enhancing or challenging pre-conceived perceptions, and developing cultural affinityin the mind of the viewer • The same effect can help to build a national brand on a broader scale, helping to influence business decisions, build broader export markets, and draw inward investment • Finally, film is also unique in helping to drive almost all other sectors of the creative economy, from architecture (set design), to publishing (writing), and software

11. Contents • Introduction • Why and how states intervene in the film environment • The range of ensuing benefits • Success factors of state intervention

12. Success factors of state intervention (I) • SPI have identified from its global research, 5 key success factors that we commonly see in countries where state intervention is working effectively • These are: • A holistic range of incentives with consistent levels of support • Project-based support which motivates by rewarding success • Systems where broadcasters are mandated to invest in film • Where levies and quotas are involved • Compatibility of the system with those in other countries, particularly with co-productions

13. Success factors of state intervention (II) • Project funding should help incentivise both domestic production and inward investment, as the two industries should be mutually supportive • Automatic investments – a trend in mature markets – rewarding success • Funding for cultural or diversity-related content, however, is critical as it helps ensure a range of voices exist within the sector, which is important for a healthy film ecology • Where recoupment exists, it would be useful if this runs alongside, if not behind, producers’ recoupment – the position of the producer at the back of the recoupment chain is a major obstacle to true sustainability • A development of this is the consideration of a public investment as producers’ equity, seen in Ireland (at 50%), and in the UK (at a blended rate of 37.5%, with changes recently proposed to increase this)

14. Success factors of state intervention (III) • Slate funding is another way of helping to develop companies rather than just projects, though is perceived by some to increase the risk for the funding body • As previously noted, an emerging but crucial success factor is the ability to combine well with other international fiscal incentive systems • Systems where broadcasters are required to participate in independent film production – i.e. through license fees and equity participation – work well in many countries

15. Success factors of state intervention (IV) • Levies on exhibition, and quotas on screen time or imports of films can help to develop and protect a vulnerable market, but both are threatened by new technologies, and can be market distorting if not used sensibly • Co-production treaties, memoranda of understanding, and other engagement with other countries’ systems help to facilitate business partnerships and funding access, as well as access to a greater range of markets

16. Thank You