Spanish cinema currently exists in something of a paradox.

While the territory is living through the biggest economic crisis since the 1970s, Spanish cinema is showing more international appeal, more dynamism and more creativity than ever in its history.

Government funding cuts may have hit production hard but Spanish films grossed $143m at home in 2012 - the best performance ever - to close the year with a market share of 17.9%. Meanwhile Spanish films and talent travel widely.

Hits included JA Bayona’s The Impossible, a Spanish production that took more than $50m at home to become the biggest local film of all time, while also taking more than $100m worldwide and garnering an Oscar nomination for Naomi Watts; Fernando Gonzalez Molina’s teenage drama I Want You, a sequel to hit Three Steps Above Heaven which earned $15m in Spain and was a success in territories such as Russia, where it took $6m; and family animation Tad, The Lost Explorer, which drew more than $22m in Spain and is rolling out around the world.

‘We are consolidating and growing our international potential’

Pedro Perez, FAPAE

This year has also started brightly with Andres Muschietti’s horror Mama, released in the US on January 18 to sit at the top of the box office with a $32m opening weekend. A Spain-Canada co-production between Barcelona-based Toma 78 and Canada’s De Milo Productions, with backing from Antena 3 and Televisio de Catalunya, Mama stars white-hot US actress Jessica Chastain and was executive produced by Guillermo Del Toro.

“There is a lag partly because the production of those successful films began in some cases four years ago,” says Pedro Perez, president of Spanish producers’ association FAPAE.

“Last year has been the best in decades and we are optimistic. We are consolidating and growing our international potential and also seeing that the Spanish audience is more attracted to our films every day.”

Perez points to the four nominees for best picture at this year’s Goya awards on February 17 as emblematic of the current range of production in Spain: disaster drama The Impossible, police thriller Unit 7 and two auteur-driven titles in Fernando Trueba’s The Artist And The Model and Pablo Berger’s Blancanieves. “The good news is they all found their audience,” Perez says.

A failing support system

The bad news is that Spanish cinema has always been very dependent on public subsidies and those have been cut by more than 30%.

Meanwhile, VAT for cinema tickets has increased by 13% and admissions have dropped significantly - down from 150 million some 10 years ago to fewer than 100 million admissions in 2012.

In addition, Spain’s chronic piracy problem has not improved and the DVD market is almost dead. To further complicate matters, the government is in the process of changing the cinema law that rules production funding, causing uncertainty in the territory (see financing, below).

Production has fallen more than 20% in two years to 163 shoots in 2012 and is expected to drop even more this year.

Eva Cebrian, head of the film division of public broadcaster RTVE, says: “We have seen the crisis in the fact that before we used to receive around 300 projects annually and now it’s almost half. Making a film was brave then and it’s even braver today.”

‘We share a common ground that is a global culture’

JA Bayona, director

But Spanish producers are adapting to the new realities. Gonzalo Salazar-Simpson, producer of No Rest For The Wicked and director of Spain’s national film school ECAM, says: “The model is changing and we are changing with it. We are creating a cinema closer to the audience and the sector is more professional and has a better capacity to work on an international level.”

Internationalisation is the key word for every producer: “It’s not only about hiring US actors and making English-language films, but opening our films to more global concepts,” says Salazar-Simpson. “We are lucky to have a generation of film-makers who master an audiovisual language that can have an impact in all audiences.”

Talent is a definite bright spot. After the success of The Orphanage and The Impossible, Bayona is the most popular face of a new generation of Spanish directors that are conquering the world with their mastery of genre films: “I think we share a common ground that is a global culture,” Bayona says.

“I feel a part of Spanish culture but at the same time I think we all have very mixed influences. The goal is to make films that can achieve a great audience without losing creative control.”

Apaches Entertainment’s Belen Atienza, producer of The Impossible, says the quality of the movie has “opened a new path for Spanish films”.

Atienza continues: “We have proved we can do films of the highest quality with a Spanish director and technicians that is state-of-the-art work. But I don’t think the only way of attracting international players is with such an expensive and complicated film. What counts is the philosophy of working with the highest levels in every project.”

I Want You director Molina does not think that copying Hollywood models is the answer: “I feel comfortable with the idea of trying to reach the broadest audience possible with every film but we are doing it in our own way. We share that feeling of wanting to tell stories and not putting ourselves above the film but I really feel like a European director.”

‘I really feel like a European director’

Fernando Gonzalez Molina, director

Another bright spot for producers is Spain’s system of broadcaster funding. Obliged by law to invest 3% of their total income in cinema (or 6% in the case of RTVE), Spain’s broadcasters have been a game-changer in the last few years.

“Broadcasters must have a big importance in cinema,” says Jose Antonio Felez, producer of Unit 7 and hits such as Dark Blue Almost Black. “Sometimes it can get more complicated than it should be. TV is the biggest window we have and they have great ratings with our product.”

TV companies may have complained about the law in the past but Joaquin Padro, producer of The Orphanage, Julia’s Eyes and The Body, says they are beginning to see that backing Spanish films can be good business.

“Sometimes they just get too tough with the conditions. They are beginning to understand they can make business with cinema and there is a change of mentality.”

Indeed this new mentality - high production values, the willingness to reach audiences at home and overseas and a more professional and modern approach - is visible across the industry. And it is creating a stronger Spanish cinema for the immediate future.

Spanish production, 2008-12

• 2008 - 173 productions
• 2009 - 186 productions
• 2010 - 201 productions
• 2011 - 199 productions
• 2012 - 163 productions

Source - ICAA

FINANCING

‘We need a solid ground’

Uncertainty around the future of public funding is a big concern for Spanish film-makers. Juan Sarda reports.

Public subsidies have always been a key element in Spanish cinema. The government used to spend around $140m on cinema annually - but that has fallen by more than 30% due to the territory’s economic crisis. Another major problem for local producers is that a significant portion of the ‘recoveries’ - public funds granted to producers as bonus payments based on a film’s box-office performance - owed to titles released two and three years ago remain unpaid.

After taking power in 2011, Spain’s new right-wing government quickly announced its intention to change the film funding legislation and negotiations with the industry are ongoing. El Deseo’s Agustin Almodovar, who is part of the commission that is working on the new legislation, says this “uncertainty has weakened production because it’s hard to play a game if rules are changed at the middle of it. We need a solid ground.”

Susana de la Sierra, director of Spanish cinema body ICAA, which currently distributes the public funding including recoveries, understands producers’ worries but says there is no need to panic: “We are not changing the law; we are just making some improvements because the audiovisual world has changed a lot in the last five years.

“At this point, we are still working with the system we had and it will be that way until congress passes the new law. We will have a first draft in May.”

Producers’ association FAPAE has proposed a similar system to France in which the taxes taken from cinema ticket sales go towards funding film production.

De la Sierra says this measure is being studied but the core of the new system will be fiscal incentives to attract private investment to cinema, which is yet to be fixed.

Producers fear incentives will not bring in enough money and that a sudden overhaul of the traditional system will leave cinema without economic resources, leading to the closure of many already struggling companies.

“If funds disappear, Spanish cinema will too,” says producer Jose Antonio Felez.

De la Sierra asks for calm: “The state will keep funding cinema, there is a European agreement and law at this point that we support. There is no need to fear.”

Top 10 spanish productions at local box office, 2012

Top 10 films at Spanish box office, 2012

Source - Rentrak, based on figures from 6/1/12 to 3/1/13

* Still on release, 2012 figures only