If the story of 2006 was realignment, reorganisation and box-office recovery, 2007 should be about attracting new investment.
After a year of recovery at the box office, there is suddenly a feelgood factor about film again. Some of it may be exaggerated, of course, just as the 2005 slump was overstated.
But it is a tide that everyone in the business quite rightly wants to ride.
The feelgood factor is built on substance too - tangible results that look great on the balance sheet and, crucially, have turned the heads of investors.
At the top end, some studios reported record results internationally last year but, even better, they were able to confirm what would have seemed like a startling theory just 12 short months ago: the public loves going to the cinema.
Blockbusters of a certain scale have proved themselves critic proof if they are strong enough to cash in on previous movie hits or international bestsellers.
Buena Vista Pictures Distribution, for example, passed the $1bn mark for the 10th time, more often than any other studio last year, driven by the number one global theatrical release of the year - Pirates Of The Caribbean: Dead Man's Chest.
Sony took last year's highest studio market share on the back of The Da Vinci Code, a film that most of the world's critics hated. And the company got another huge boost with the biggest ever Bond, Casino Royale.
At the other end of scale, the smaller local-language films performed strongly, particularly in their home markets or places with cultural links.
That audiences still love movies may be the lesson of the year, but the story of 2007 internationally will be how that success is turned into sustainable investment.
Finance and incentives
From one angle, 2006 seemed like a year of flux.
A great deal of attention, perhaps too much, was directed at the German and UK tax breaks, which in the sale-and-leaseback years had been a mainstay of the global business.
This week, new credits come online in both countries. It may disappoint, but it cannot surprise anyone that in both cases there are no signs of a return to the same tasty breaks with mile-wide loopholes for the less scrupulous investor.
Both have been watered down by local spending restrictions and European tax laws.
Each may play a prominent role, despite what some see as a dangerously restrictive cultural test in the UK, and the Deutscher Filmfoerderfonds limit of $80m (Euros 60m) available annually over the next three years from the federal government in Germany.
There are already plenty of businesses stepping in to cashflow the credits.
But since the collapse of sale and leaseback, public film funding has steadily internationalised. The entrance of US states into the tax-break game may prove particularly significant.
The global market has over the past year done what global markets should do - offer choice. From Puerto Rica to Serbia, there is an incentives arms race heating up. The range of subsidies has certainly been a factor in the rise of the market share of local-language films in their home markets.
Such was the scale of the success last year that Switzerland's four-film boom stretched the incentive system to breaking point. Others may be similarly stretched but that is a sign of a market finding its level.
What most of the new-look incentives have done is to create an attractive and stable economic environment for what many people of the industry are hoping will be the talking point of this year - private investors.
Capital movements
One of the big stories of 2006 was a rapid growth in investment in film by individuals and hedge funds. It is easy to see why these investors are attracted to film. Potentially high-return investment opportunities in the market today are thin on the ground.
In the US, the property market has ground to a halt, the consumer boom looks to be slowing and the current phase of mergers and acquisitions that have swelled city bonuses has a shelf life.
In short, there is an enormous amount of potential funding looking for a home. As UK author and financial commentator Brian Appleyard puts it: 'Fast new money wants to consume, and there are only so many cars to be bought.'
Film has historically been one of those attractive options, particularly given the previously mentioned tax loss options in Germany and the UK that turned out to be too good to be true.
What has enhanced the interest in film investment among financial experts is a new emphasis on managing the risk. Indeed, the notion that slate funding with a mixed portfolio of products is a sound investment has become almost a business column cliche in the last few months.
The risk is also eased by the growth in new media platforms that allow some return on investment beyond theatrical success.
The customer
The industry itself should take some of the credit for a change of attitude among investors. Even among independents, there is much less sensitivity about the notion of profit, or the idea that reaching customers should be a primary goal.
A number of factors have contributed to the change: the studios have begun investing strongly in international productions; and some finance and production companies have successfully tuned into the financial markets.
Money managers are drifting into production, applying the skills they have learned in high-risk investment portfolios to the precarious business of film-making, in the hope of avoiding the mistakes of the past - among them of course
the inability to fully capitalise on box-office successes.
At the same time, production companies, forever sniffing out the next financing opportunity have recast themselves as diversified asset portfolios using language that might appeal to the new breed of private financier.
Their business plans, however, remain remarkably similar to those of old, and in many cases mimic the balanced slates for which studios strive.
Public finance and support
Another factor in this improved environment is that public funding bodies have subtly shifted the emphasis of support to distribution - in other words from supply side to demand side.
There is a logic to the change. The numbers of films being made and seeking funding has been climbing for more than a decade.
Reduced production costs and new media platforms are likely to steeply accelerate the trend. Supporting that level of production with public money is unfeasible.
Government funding has also run into international legal problems.
The European Commission has acted strongly in recent months to ensure that tax incentives are not simply about attracting overseas productions to a country - the UK's law, for example, was fundamentally altered.
Supporting the distribution and marketing to help a film find customers is a different proposition. It also means that public funding is explicitly committed to working with private investment, rather than being an alternative to it.
The break from the philosophy that governments should support film-making that could not find any funding from private sources is far from complete. But it is already clear that producers are coming to terms with the notion of pulling together funding from a variety of sources, of which the government is just one.
As the recent history of Italian, Czech and, just last week, Slovenian government schemes demonstrates, relying on government support and policies beyond the control of film-makers is a risky business.
New funding
All the evidence suggests that investors and hedge funds are casting a greedy eye over the market and like what they see.
It has been significant that at the end of the year, such funds were able to lure film executives away from relative corporate safety. Simon Fawcett, former finance manager of Pathe UK, for example, joined Aramid Capital.
The potential for cross-media exploitation has added further excitement to the market.
One of Germany's leading home entertainment companies VCL Film + Medien last week announced it was taking over the Munich-based media fund Equity Pictures Medienfonds.
Through the acquisition by its recently established subsidiary, Allied Film Management, VCL will be expanding its activities from the core operations of home entertainment to include the management of film funds. It will be looking for 'substantial synergies' for national and international acquisitions, and the distribution and administration of film rights within the VCL Group.
In a separate move, fund asset manager Entertainment Value Associates (EVA) has taken over ApolloMedia Filmmanagement and created a new company EvaApollo Media to handle the assets of ApolloMedia's 13 fund placements.
They had provided financing between 1999 and 2005 for 80 international film projects including Niki Caro's Whale Rider.
Theatrical choices
One unexpected driver of the current feelgood factor is the theatre. There was a period of around a year when it was fashionable to talk about cinemas in the past tense - as old media.
There was a commonsense component to the view, given the arrival of what looked like direct competitors in HD televisions and home entertainment systems. A classically linear media model like cinema was out of step with today's time-constrained customer, for whom instant gratification of, say, YouTube was more attractive.
Yet the statistics point in the opposite direction. Last year's box-office success looks set to continue into 2007 with five summer blockbusters that look as close to bankers as one gets in the film industry.
But the important factor is developments that will begin to make an impact this year that put theatres firmly in the expanding media space.
The digitalisation of cinemas is set to accelerate. Experiments with 3-D will also keep investors interested.
But theatre has two promising assets that should be fully exploited this year. Firstly, the supposed weakness of not being fast and at the instant control of customers is proving to be an asset. It is an escape from the realities of the world, even for the YouTube generation.
But it is also now widely acknowledged that it remains the pre-eminent marketing tool for an industry in which the ability to influence audiences is becoming the holy grail of international cinema.
After a year of recovery at the box office, there is suddenly a feelgood factor about film again. Some of it may be exaggerated, of course, just as the 2005 slump was overstated.
But it is a tide that everyone in the business quite rightly wants to ride.
The feelgood factor is built on substance too - tangible results that look great on the balance sheet and, crucially, have turned the heads of investors.
At the top end, some studios reported record results internationally last year but, even better, they were able to confirm what would have seemed like a startling theory just 12 short months ago: the public loves going to the cinema.
Blockbusters of a certain scale have proved themselves critic proof if they are strong enough to cash in on previous movie hits or international bestsellers.
Buena Vista Pictures Distribution, for example, passed the $1bn mark for the 10th time, more often than any other studio last year, driven by the number one global theatrical release of the year - Pirates Of The Caribbean: Dead Man's Chest.
Sony took last year's highest studio market share on the back of The Da Vinci Code, a film that most of the world's critics hated. And the company got another huge boost with the biggest ever Bond, Casino Royale.
At the other end of scale, the smaller local-language films performed strongly, particularly in their home markets or places with cultural links.
That audiences still love movies may be the lesson of the year, but the story of 2007 internationally will be how that success is turned into sustainable investment.
Finance and incentives
From one angle, 2006 seemed like a year of flux.
A great deal of attention, perhaps too much, was directed at the German and UK tax breaks, which in the sale-and-leaseback years had been a mainstay of the global business.
This week, new credits come online in both countries. It may disappoint, but it cannot surprise anyone that in both cases there are no signs of a return to the same tasty breaks with mile-wide loopholes for the less scrupulous investor.
Both have been watered down by local spending restrictions and European tax laws.
Each may play a prominent role, despite what some see as a dangerously restrictive cultural test in the UK, and the Deutscher Filmfoerderfonds limit of $80m (Euros 60m) available annually over the next three years from the federal government in Germany.
There are already plenty of businesses stepping in to cashflow the credits.
But since the collapse of sale and leaseback, public film funding has steadily internationalised. The entrance of US states into the tax-break game may prove particularly significant.
The global market has over the past year done what global markets should do - offer choice. From Puerto Rica to Serbia, there is an incentives arms race heating up. The range of subsidies has certainly been a factor in the rise of the market share of local-language films in their home markets.
Such was the scale of the success last year that Switzerland's four-film boom stretched the incentive system to breaking point. Others may be similarly stretched but that is a sign of a market finding its level.
What most of the new-look incentives have done is to create an attractive and stable economic environment for what many people of the industry are hoping will be the talking point of this year - private investors.
Capital movements
One of the big stories of 2006 was a rapid growth in investment in film by individuals and hedge funds. It is easy to see why these investors are attracted to film. Potentially high-return investment opportunities in the market today are thin on the ground.
In the US, the property market has ground to a halt, the consumer boom looks to be slowing and the current phase of mergers and acquisitions that have swelled city bonuses has a shelf life.
In short, there is an enormous amount of potential funding looking for a home. As UK author and financial commentator Brian Appleyard puts it: 'Fast new money wants to consume, and there are only so many cars to be bought.'
Film has historically been one of those attractive options, particularly given the previously mentioned tax loss options in Germany and the UK that turned out to be too good to be true.
What has enhanced the interest in film investment among financial experts is a new emphasis on managing the risk. Indeed, the notion that slate funding with a mixed portfolio of products is a sound investment has become almost a business column cliche in the last few months.
The risk is also eased by the growth in new media platforms that allow some return on investment beyond theatrical success.
The customer
The industry itself should take some of the credit for a change of attitude among investors. Even among independents, there is much less sensitivity about the notion of profit, or the idea that reaching customers should be a primary goal.
A number of factors have contributed to the change: the studios have begun investing strongly in international productions; and some finance and production companies have successfully tuned into the financial markets.
Money managers are drifting into production, applying the skills they have learned in high-risk investment portfolios to the precarious business of film-making, in the hope of avoiding the mistakes of the past - among them of course
the inability to fully capitalise on box-office successes.
At the same time, production companies, forever sniffing out the next financing opportunity have recast themselves as diversified asset portfolios using language that might appeal to the new breed of private financier.
Their business plans, however, remain remarkably similar to those of old, and in many cases mimic the balanced slates for which studios strive.
Public finance and support
Another factor in this improved environment is that public funding bodies have subtly shifted the emphasis of support to distribution - in other words from supply side to demand side.
There is a logic to the change. The numbers of films being made and seeking funding has been climbing for more than a decade.
Reduced production costs and new media platforms are likely to steeply accelerate the trend. Supporting that level of production with public money is unfeasible.
Government funding has also run into international legal problems.
The European Commission has acted strongly in recent months to ensure that tax incentives are not simply about attracting overseas productions to a country - the UK's law, for example, was fundamentally altered.
Supporting the distribution and marketing to help a film find customers is a different proposition. It also means that public funding is explicitly committed to working with private investment, rather than being an alternative to it.
The break from the philosophy that governments should support film-making that could not find any funding from private sources is far from complete. But it is already clear that producers are coming to terms with the notion of pulling together funding from a variety of sources, of which the government is just one.
As the recent history of Italian, Czech and, just last week, Slovenian government schemes demonstrates, relying on government support and policies beyond the control of film-makers is a risky business.
New funding
All the evidence suggests that investors and hedge funds are casting a greedy eye over the market and like what they see.
It has been significant that at the end of the year, such funds were able to lure film executives away from relative corporate safety. Simon Fawcett, former finance manager of Pathe UK, for example, joined Aramid Capital.
The potential for cross-media exploitation has added further excitement to the market.
One of Germany's leading home entertainment companies VCL Film + Medien last week announced it was taking over the Munich-based media fund Equity Pictures Medienfonds.
Through the acquisition by its recently established subsidiary, Allied Film Management, VCL will be expanding its activities from the core operations of home entertainment to include the management of film funds. It will be looking for 'substantial synergies' for national and international acquisitions, and the distribution and administration of film rights within the VCL Group.
In a separate move, fund asset manager Entertainment Value Associates (EVA) has taken over ApolloMedia Filmmanagement and created a new company EvaApollo Media to handle the assets of ApolloMedia's 13 fund placements.
They had provided financing between 1999 and 2005 for 80 international film projects including Niki Caro's Whale Rider.
Theatrical choices
One unexpected driver of the current feelgood factor is the theatre. There was a period of around a year when it was fashionable to talk about cinemas in the past tense - as old media.
There was a commonsense component to the view, given the arrival of what looked like direct competitors in HD televisions and home entertainment systems. A classically linear media model like cinema was out of step with today's time-constrained customer, for whom instant gratification of, say, YouTube was more attractive.
Yet the statistics point in the opposite direction. Last year's box-office success looks set to continue into 2007 with five summer blockbusters that look as close to bankers as one gets in the film industry.
But the important factor is developments that will begin to make an impact this year that put theatres firmly in the expanding media space.
The digitalisation of cinemas is set to accelerate. Experiments with 3-D will also keep investors interested.
But theatre has two promising assets that should be fully exploited this year. Firstly, the supposed weakness of not being fast and at the instant control of customers is proving to be an asset. It is an escape from the realities of the world, even for the YouTube generation.
But it is also now widely acknowledged that it remains the pre-eminent marketing tool for an industry in which the ability to influence audiences is becoming the holy grail of international cinema.
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