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Financing Polarization: Are Mid-Budget Asian Films Doomed?

Funding for films in Asia has never been more accessible. However, one of the most provocative points raised at the Hong Kong Filmart's Seminar on Film Financing, entitled "New Money in Asia: Where is it Coming From? Where is it Going?" held on the morning of 20 March, was whether the funds were being channeled into two types of films-the blockbuster and the low-budget, with no room for anything else in between. An international panel of six speakers also gave their respective viewpoints on different sources to obtain funding, and what investors are hoping to get in return.

Moderator Mr Patrick Frater, the Asia Editor for entertainment trade publication Variety, introduced the seminar by noting that its purpose was not only to talk about new money, but also how it is used and whether it is being used in the right places.

The first speaker was Ms Susan Ho, the Head of Creative Industries for Standard Charted Bank (HK), one of the first banks in Asia to finance films using American and British models adapted for the local industry. Its vision is to build a center of excellence, drawing upon a group of specialists who understand financing and distribution. She sees immense opportunity and growth; nevertheless, she tempers her optimism with a healthy dose of pragmatism. "Being a bank, the money we lend is not our money," Ms Ho said. "We have a responsibility to get it back. Any project that comes to the table must have commercial appeal."

Ms Ho was followed by Mr Michael Werner, the Co-Chairman of Hong Kong based Fortissimo Films and a veteran with more than 25 years of foreign film sales and consulting experience. Mr Werner believes that making movies is a passion that constantly requires new sources of funding in order to get a better mix between commercial and low-budget films. He cautions against turning new funds into "easy or stupid money. It is a matter of intent. Easy or stupid money results in too many films being made that do not respond to the market. We want to act with integrity. Commercial films give us the space and profit to do smaller films, because the films we feel passionate about may not find commercial success."

Next to speak was Mr Jooick Lee, the CEO of Boram Entertainment, a production company and artist management agency based in Korea. He wears both hats of being an investor and a producer, and is responsible for obtaining new sources of financing in addition to spending the money he finds. Mr Lee feels that the gap between the American film industry and other countries is narrowing significantly, citing that the economic growth in recently years has allowed Korea to handle bigger projects. "We will invest and risk more money to get the quality desired from our films," he said. "We have seen budgets increasing a lot in recent years, and we have the same problem with financing for mid-budget films as Hong Kong. Sometimes we have to compromise artistic intentions with commerce."

Mr Lee was followed by Mr Yasushi Kotani, the President of Japan-based production house Entertainment Farm. Obtaining capital from a variety of investors, Entertainment Farm has produced a series of horror films that have a steady market in Japan. "The industry in Japan is a bit rigid," Mr Kotani said. "Therefore, any new channels to obtain funds would be refreshing. We are working with major telecommunications companies in Japan, using advertising as a way to raise funds. It is a strategic approach to make use of the media, and advertising can be used as a model for other Asian countries."

The fifth speaker was Mr Yu Dong, the General Manager of Chinese film distributor Beijing Polybona Film Publishing. He cited the startling numbers in the past five years within China, such as box office receipts jumping from RMB$500 million in 2003 to RMB$2 billion in 2005, and the 70 new theatres to open this year. He believes that new sources of funding will come from the DVD market, Internet downloads and advertising, as well as from the property and real estate sectors. "The market is rising quickly," Mr Dong said. "We need to make commercial films to reach out to overseas audiences. We rely on Hong Kong's experience to help Chinese filmmakers to succeed."

The last speaker was Hong Kong-based director Mr Peter Chan, Principle with Applause Pictures, a company that specializes in co-productions among different Asian countries. He feels that Hong Kong is facing the worst drought in its cinematic history right now. "Either filmmakers have to make low budget or big budget movies; there is no financing for movies in the US$1 to $10 million range. The reason is because of piracy, censorship and high ticket prices in China. If people are only watching three to five movies a year in the theatres, they will watch a big budget blockbuster." He cautions that going down this slippery slope will result in all movies turning into big period martial arts films, and all directors will be working on the same thing. "A few people are sucking up all the money. It's unhealthy."

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Content provided by Hong Kong Trade Development Council