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Sixth Workshop – 27 to 29 September 2016 – Warth (Switzerland)
Module 3 – Automatic schemes: more about sustaining production companies than developing quality projects?
Introduction
Funds have implemented automatic schemes to emphasize the success and/or return on investment. The money generated by the producer through those schemes can be used to finance the development and production of future projects without going through the selective process.
Or, in other words:
- Do those schemes meet the funds' expectations?
- Do they contribute to the reinforcement of production companies?
- Do they contribute to the financing of quality films?
Case Study / Danish Film Institute (DFI) – Why automatic funding sucks!
Please also see Claus Ladegaard’s presentation (PDF)
DFI’s funding philosophy:
- Selective schemes secure the best cooperation and development. In 2011, the DFI abolished its automatic funding scheme and replaced it with the selective market scheme for mainstream films.
- Public film funds cannot make films. It is directors, producers and screenwriters. However, funding bodies can easily destroy a film.
- Continuous collaboration between the funders on one side and producers, scriptwriters and directors on the other side is of highest importance.
- Development is an important part of film funding.
- The funding is driven by cultural criteria: quality, variety and volume.
The funding schemes
There are four ways of funding feature films with a budget of almost 27 million euro.
1. Commissioners’ scheme for art-house films with artistic qualities (13.2 million euro)
- There are three commissioners appointed to make funding decisions. They are individual and autonomous decision-makers, and nobody can interfere in their work. Commissioners are always recruited from the industry and are employed for five years. They are primarily Danish, but the nationality does not matter as long as they can read scripts in Danish.
- The two major characteristics of Commissioners:
- They have to be able to make decisions on the basis of their intuition and discover projects that challenge and contest
- They must have experience in film production and must know how to develop a project
- Commissioners make decisions in line with the 4-page document (available on the DFI’s website ) that clearly defines the required quality and artistic value of selected projects
- 7-10 films a year are supported through this scheme.
Example: LAND OF MINE (Zandvliet, 2015), produced by Nordisk Film.
www.youtube.com/watch?v=4Kao3t0NBMU
2. New Danish Screen (3.4 million euro)
- For low budget films that develop new talents
- It includes films of all genres made by talents engaged in new ways of filmmaking
- The scheme has two Commissioners who work closely together. They are recruited from the business for a period of 4-6 years.
- The scheme is marked by risk-taking, low-budgets and openness for innovative approaches to filmmaking
Example: BRIDGEND (Rønde, 2016)
www.youtube.com/watch?v=8MEpJShG9JI
3. Minority co-production scheme (1.6 million euro)
- Foreign films with Denmark as a minority co-producer.
- Funding criteria:
- Creative strength
- Proven co-operation with the Danish minority co-producer
- Participation of Danish talent
- Distribution deal in Denmark
- Funding decision taken collectively by the commissioners, Head of Production and Development and Head of the International Office.
- 5-9 films are supported a year. Half of them are from the other four Nordic countries.
- Even if Denmark does not require coproduction to be under an official Treaty, it has signed co-production treaties with Canada and New Zealand, but none of them is really working. The treaty with Australia has been under negotiations for 6 years. Denmark is entering the bilateral co-production treaty with China due to political pressures.
Example: RAMS (Hákonarson, 2015)
www.youtube.com/watch?v=PWVmUVAdi5Y
4) Market scheme for mainstream films with wide appeal and cultural value (8.6 million euro).
- Films with some kind of cultural value
- Market scheme films are targeted at Danish audience. They can deal with the events from recent Danish history, politics and other topics relevant to the Danes.
- Very few market scheme films have artistic quality in a traditional sense.
- Most common genre in this category is comedy, drama, crime and family films.
- An average market scheme film has 160,000 admissions.
Example: MY CANADIAN ADVENTURE (2015) – high-budget family comedy; 320,000 admissions
Transition from Automatic Scheme to Market Scheme for mainstream Films
The Automatic Scheme (60/40)
Quick facts
- Existed until 2011 when it was replaced by the market scheme.
- Semi-automatic scheme – the DFI was obliged to fund films that were expected to have more then 175,000 admissions in cinemas.
- Four anonymous readers assessed the scripts.
- Funding decisions were based on the creative teams’ past merit and audience performance predictions.
- The level of funding was decided on the basis of the point system. Point system reflected the experience of the director (track record and admissions) and quality of the script as assessed by the four anonymous readers.
Challenges of this scheme:
- There were a lot of false audience predictions.
- Low transparency because producers could never talk to the anonymous readers.
- The whole scheme was regressive because it focused too much on the past merit instead on what would be working in the future. The goal was only to fulfill quantitative requirements, not to bring anything new.
- The scheme created the risk that the DFI will not support good films that deserve to be supported due to the point system requirements.
- Example: KLOVN (2015) is the film with the highest admissions in Denmark (900.000) in the past 15 years. However, at the time of decision-making it almost ended up without any support because the producers were not experienced enough to fulfill the track record requirements of the 60/40 Scheme
The Market Scheme
What is new?
- It is selective scheme: the editorial board consisting of two members from the DFI and three part-time members from the business, appointed for a period 2-4 years, choose 7-10 popular mainstream films a year.
- Quality and audience performance are still the main selection criteria. However, past merit and point system are not considered anymore.
- Quality is defined as:
- good storytelling in the way that a large audience can understand the story
- high production value and unique position on the market
- effective distribution and strong marketing
- Flexibility: from 1% to 7% of the funding can be allocated to development phase instead of 1% under the previous scheme
Decision-making procedure
- Producers can apply when the script is ready and 60% of financing is in place
- Producers must prove that the market wants the film. They secure 60% of financing through equity, pre-sales, regional funds, public broadcaster, producer’s investment, etc.
- The editorial board invites the applicants for a pitch
- There is a written assessment of all projects as well
- The scheme is marked by flexibility. For example: the editorial board can approve changes in the crew and cast after the project has been green-lighted, the amount of money allocated per installment can be modified, the first day of shooting postponed, etc.
- Four deadlines per year.
Examples: THE DAY WILL COME (2016) – drama that would have probably never been produced either under the old automatic schemes or under the commissioners scheme. The film had 250,000 admissions.
www.youtube.com/watch?v=x8cZWRiYK24
CONSPIRACY OF FAITH (2016) – crime genre based on the popular crime books. The film had the biggest admissions in Denmark in 2016. Due to the extremely high budget for Danish standards, in the case of this film, the editorial board also considered the past merit of the creative team and the track record of the production company.
www.youtube.com/watch?v=VIGi2KA0gzI
Lessons learned and their outcomes:
- Selective funding can do more for both producers and for the box office, but it requires cooperation, coping with challenges, a realistic approach to audience and cultural value.
- The concept of cultural value must be clearly defined, which is different form artistic and commercial value
- Market share for Danish features: 25-30% / Danish films make up 12-14% of all films in the market
- The films supported by the market scheme often go to the festivals and travel internationally, which never happened with the films made under the previous scheme
- Market scheme films have a better audience performance. Average admissions increased from 257,000 per film (60/40 Scheme) to 293,000
- In the beginning, some producers were concerned that the market scheme would become yet another art-house scheme, but today nobody doubts in the scheme anymore.
DFI’s challenges in regard to the general European context
- Denmark is one of the few countries in Europe with no automatic funding system.
- Denmark is also among the few countries in Europe without tax incentives. Many European countries are moving from the cultural funding to automatic funding and tax/production incentives, which, unfortunately, makes European countries compete with one another in funding the American television through the taxpayers’ money.
Outcomes of the group discussions
Automatic funds and tax/production incentives
Pros
- Tax/production incentives also finance European co-productions and do not only attract the US productions. There are examples of two Danish-Croatian co-productions that would have never been made as European co-productions without the Croatian cash rebate.
- The majority of the budgets allocated to tax/production incentives do not affect cultural funds because they are financed by other governmental bodies (Ministry of Economy, Ministry of Finance, etc.).
- Automatic schemes do not promote quality, but they attract private money and external investments into the movie business.
- Automatic schemes and tax/production incentives create jobs and strength production companies.
- They save producers from the complicated application and selection procedures of the selective schemes
Cons
- Denmark invested almost 1 million euro into THE DANISH GIRL (2015). That amount of money would have generated a higher economic impact if it had been allocated to the cultural funding system. This amount of 1 million euro would have generated more profit had it been allocated to the DFI’s Market Scheme. The Market Scheme films, according to Claus, make a bigger box office and stronger economic impact than THE DANISH GIRL, and similar films, did.
- In Norway, they took a part of the Norwegian Film Institute’s funding budget for the purely economic tax incentive scheme.
- Paradoxically enough, automatic schemes almost never generate films for big markets.
How art-house and mainstream films are considered in other countries
- In some European countries such as France, Austria and Switzerland, the art-house films are quite separated from the mainstream films. In most European countries, the arthouse films are supported through selective schemes, while commercial films are supported through purely automatic funds that include no selection whatsoever. This leads to a dichotomy of two markets and two audiences – one elitist/arthouse and another commercial that does not care for cultural value. In Denmark, however, these two worlds overlap, the division is not that sharp.
- In Chile, mainstream films are comedies that do well in cinemas, whereas art-house films are only for festivals. Their producers never think about the audience, which often generates extremely small admissions (below 1,000)
- In Scandinavia, the border between art-house and mainstream is blurred. The Nordic film policies define quality as cultural value, which means that the public film funds can support films that have a high cultural value even though they are not art. An example for such a crossover is THE HUNT (Vinterberg, 2012) – a typical mainstream film that was developed and produced through the Commissioners’ art-house, selective support scheme.
The Development of Content: Challenges and Opportunities – Public Funds as Pawns or Players?
- Introduction – Scriptwriting and development funding landscape
- Module 1 – Evaluation of funds' portfolio
- Module 2 – Scriptwriting and Development Support: funding landscape, co-development initiatives and development strategies, successful or unsuccessful stories
- Module 3 – Automatic schemes: more about sustaining production companies than developing quality projects?
- Module 4 – VoD platforms as commissioners and distributors of original content. For good or for bad?
- Module 5 – Talent support initiatives
- Module 6 – Hybrid contents: the mix of different artistic disciplines
- Module 7 – Development – An underestimated stage in the production process?
Illustrations by Séverine Leibundgut
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