How to build the Dream Factory in Poland

Important changes in Polish cinematography are behind us. We have the new director of the Polish Film Institute (Karolina Rozwód), the new head of the Polish Filmmakers Association (Grzegorz ?oszewski) and the new head of FINA (Tomasz Kolankiewicz). This is a chance for a new beginning.

Filmmaking is a team sport. To an outside observer, it may seem that a film is the work of a director who, like a painter, with just his brush create image before our eyes. Meanwhile, it is a process rather reminiscent of conducting an orchestra, in which the conductor's vision can be realized only thanks to the musicians holding the instruments.

Money alone is not an answer. Movies should be shoot by well-collaborating and experienced teams, in whose hands the director's vision takes on the right shine.

How to achieve this? To build a Polish Dream Factory, you need to shoot a lot and learn from the best. How are we doing? Not great.

Oh, if only Budapest in Warsaw...

According to the latest Central Statistical Office report "Cinematography 2022", 71 full-length cinema and 41 television films were made in Poland that year. For comparison, in Hungary this number exceeded 300 items.

The budget to support film production in Poland amounted to PLN 900 million. In Hungary - 680 million, but USD. Such hits as "Poor Creatures", "Dune", "Blade Runner 2049" and "Black Widow" were recently shot in Budapest studios. There are very little prestigious productions happening in Poland; Jonathan Glazer's "Zone of Interest" is the exception rather than the rule.

However the explosion of film productions in Hungary does not translate into the position of Hungarian cinema. The market is simply too small to finance local productions. If the same situation took place in Poland, it could easily create critical mass that would take Polish cinema to the next level.

Let's take a look at how it is possible that a country three times smaller than Poland has a film industry three times larger.

FIRST: MONEY

Films are made mainly from government grants and money from private investors.

However, in every cinematographically important country there is also so-called incentives system. Incentives guarantee the Producer a refund of 20 to 40 percent costs incurred in a given country during the production of the film.

The idea is simple. The money spent by the state on the film is returned from taxes and investments made during production. Each film employs from several dozen to several hundred people and at least a dozen companies providing equipment and services, and all of them pay taxes. Moreover, the more you shoot, the more cameras, lamps, transport and even catering equipment you need to buy. According to calculations by KPMG, in the last 4 years of incentives in Poland, the state contributed on average PLN 2.3 million to the film and obtained an average of PLN 26 million in added value. This would mean a 10 x return on investment.

In some EU countries, the incentive program is unlimited (subsidy payment is guaranteed regardless of the number and volume of production applying in a given year) or limited (the fund itself and the maximum subsidy for one production are limited). In our region, Hungary and Slovakia have unlimited systems, while Poland and the Czech Republic have limited ones.

However, the Czech Republic has only changed its approach in recent years, due to the inability to handle the productions crowding Prague. After protests from residents, a rule was introduced that if a film was being shot on a particular street, the next crew could only enter that palce a month later.

What is PLN 45 million?

The incentive limit applicable in Poland means that an international production can spend no more than 20-25 shooting days here. According to Hollywood standards, a budget of approximately PLN 45 million ($10M) will only finance so much. More expensive productions would go quickly over the limit. So this budget is sufficient for a maximum of one third of a large film production or two episodes of a series. This is the main answer to the question why most prestigious productions end up in Hungary.

Someone will say, fine, but 45 million is enough for Polish production. Unfortunately, there's a catch here too. The total amount of Incentive Fund is also caped. At the beginning there was enough for all the submitted projects, now for less than half. And the principle is first come, first served. To get on the main list, not the waiting one this year, you had to submit your application no later than one minute after midnight on January 1. I am convinced that if nothing changes, the order of applications on January 1 next year will be decided by milliseconds.

Local producer, for whom an incentive of 30% offered in Poland is an absolutely key element of financing, must wait for the result of the New Year's lottery before greenlighting production.

What needs to be done? Firstly, the Ministry of Finance should define its attitude towards the profitability of the incentive program. If it actually provides a tenfold return on investment, then the cap on both the fund itself and per production limits should be immediately removed.

Cinema, but at home

But this is not the only barrier that causes less production in Poland than the market potential indicates.

Film financing has changed dramatically in recent years. Until recently, viewers went to the cinema as a place of regular entertainment. The pandemic has made us accustomed to watching movies at home. The exclusive window of cinema releases on VOD has shortened dramatically, so many of us prefer to wait until the film is available for streaming. And we go to the cinema only to see something that we consider an event.

Producers' revenues from cinema viewings have therefore dropped significantly. Investors who received significant profits from films before the pandemic lost not only their profits, but often also the capital. Raising money on the free market is now many times more difficult than it was a few years ago.

Banks don't like risk

However, not everything has changed for the worse. VOD services, which are eating away at cinema revenues also compete with each other. So they have started to buy rights to films that have not yet been made. A well-prepared commercial project, presented by a reliable production team, may receive from 20 to even 40 percent. budget from Netflix, Prime Video or Max in exchange for the right to broadcast immediately after the cinema window.

Taking into account that the incentive is 30%. budget, only from these two sources you can obtain from 50 to 70 % funds for the film.

It sounds great, but there is also a problem. Both the money from incentives and from licenses for VOD services flows to producers very late, sometimes several weeks after the end of filming. In the case of incentives, paid invoices must be collected and submitted for inspection. In the case of a license, you must show the broadcaster a preliminary edit of the film.

But how to cash flow the production? A bank loan seems to be a natural solution. Unfortunately, banks in Poland avoid film productions because they still perceive them as risky. It doesn't happen often, but in recent years there have been a lot of stories about productions that were interrupted due to conflict between the creators and the producer, poor financial planning of the production or due to mess and poor planning of the shooting.

Since the Producer usually does not have buildings, machines or other resources that are that are suitable as collateral, some projects fail, even though on paper they have financing secured.

How do they deal with this in developed film markets? The insurer acts as an intermediary between the manufacturer and the bank, which offers completion bond insurance for an appropriate part of the budget (usually 3-5%).

Such a specialized insurer has full insight into production documents and the right to make changes to the team in the event of a gross violation of the schedule or budget. In justified cases, he may even fire the director and replace him with a person who will finish the endangered film.

That way, the bank receives a guarantee that the film will be completed on time and within budget, and if it is not completed, the full amount of the loan will be paid.

Why does someone undertake such a task? Because film production, despite its apparent complexity, is not quantum physics. An experienced production manager can quickly determine whether the plan has been properly prepared and whether the team has the appropriate experience.

However, this is specialized knowledge and requires the employment of people whose number on the market is limited. This means high remuneration and the need to provide such specialists with a large number of projects. In a market that is still developing and such a service is not well known, this means a significant business risk.

However, if a support program were implemented for insurers who would prepare such a product, an incredible financial leverage could be created for the entire film market for a relatively small amount of money. And it is leverage that guarantees the proper use of funds. It would be another accelerator of the film sector in Poland.

Promotion, stupid!

And one more financial aspect. In Poland, the following are subsidized: the development of projects and their production, film festivals, digitization of cinemas, and even the promotion of Polish films abroad. Meanwhile, the success of a Polish film is proven by the number of Polish viewers in Polish cinemas. And there are no subsidies for film promotion in the country!

During the pandemic, distributors cut their budgets because ticket revenues did not even cover marketing expenses. And even today, viewers do not get up from the couch if they do not feel that the film is an event. This requires advertising. Therefore, only projects based on already known titles make it - either adaptations, remakes or pre- and sequels.

Therefore, if the Polish Film Institute and other institutions decide to subsidize the production of a film with millions of zlotys, subsidizing its promotion should be a natural consequence of such a choice.

There is another aspect to this problem. Theoretically, a subsidy from the Polish Film Institute should be refunded if the film earns more than all the money spent on its creation. In practice, this happens (as was the case with the film "Gods"), but very rarely. If the profitability of subsidized productions were increased, more money would return to PISF. And it would be another development impulse for our cinematography.

SECOND, INFRASTRUCTURE

The Achilles heel of the Polish film industry is the studio facilities. There are studios in Poland, but they are generally adapted to the needs of television production.

What is the difference between a film studio and a television studio? First of all, the size of the halls. To enter the game of top-tier Hollywood productions, you need halls measuring 3-4,000 ?square meters or even larger.

It is also important to have several halls of different sizes in one location, which allows you to work and prepare the next film set at the same time.

The biggest obstacle, however, is that practically no studio in Poland has the so-called backlot - an area adjacent to the studio on which you can build outdoor decorations: a wooden town, fragments of a castle or an imitation of a New York street. Both Prague's Barrandov and Hungarian Korda Studios have such infrastructure.

Own, but too tight

Can we afford such an investment? There is a place in Warsaw that was supposed to be such a production hub. At Che?mska street is home to the Documentary and Feature Film Studio.

Unfortunately, designed in the communist times, it is a collections of ?containers, single-story pavilions and office buildings from the 1970s. I know that generations of Polish filmmakers have sentimental attachments to it, but WFDiF is like a too-tight skin on a snake that must shed it in order to grow.

We are talking about over 8 hectares of land in the very center of Mokotów. The market value of this area may be close to PLN 1 billion. For this sum, purchasing an area of 30 to 50 ha, which would allow the construction of a film town somewhere outside the city center, seems realistic.

Of course, political will would be needed - WFDiF is an institution subordinated to the Ministry of Culture. It would also make sense to involve the Warsaw authorities in this plan, for which such a facility could become a tourist attraction or an impulse for the development of another district. Anyone who has been to Hollywood studios knows that complexes are built by marking out quarters, and then modern office buildings are built on both sides of the traffic route, the facades of which imitate a Parisian or New York street or a fragment of pre-war Warsaw, and the interiors of such quarters is being built with filming halls. In this way, a workplace is created for companies related to the film industry, which is also a film set and an attraction for visitors.

Consolidating all Warsaw film institutions in such a place, as well as offering attractive conditions for production companies and actor’s agencies, would create a critical mass of talent and relationships, which would become another accelerator of film projects.

THIRD, RULES

If we are talking about reaching out for public money to kick-start the Polish Film Industry, we need to take a good look at the principles and processes used to spend this money.

When establishing the Polish Film Institute, emphasis was placed on the participation of filmmakers in the process of distributing money. It's a good idea, but some of the solutions have survived the test of time. And some are even dangerous.

The first stage of applying for a grant is the presentation of the project to an expert committee appointed by the Director of the Polish Film Institute from among experienced directors, screenwriters, producers and film critics recommended by the industry. The problem is that these are professionally active people who also carry out their own projects. Thus, a producer may be assessed by a screenwriter whose project he just rejected or by a director whom he just offered attractive employment conditions in another film.

Such a violation of standards is extremely rare, although the press described individual cases of experts mutually assessing their projects in committees under the rule of former director Rados?aw ?migulski. Leaving this state of affairs may turn public opinion against the film community in the event of a high-profile scandal involving the spending of state money.

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Eliminate the conflict of interest

I am not saying that we should throw the baby out with the bathwater and remove industry experts from the committees. The conflict of interest simply needs to be eliminated. One solution could be to propose to the committee leaders (currently ten people) to resign from their profession and take a full-time job at the Polish Film Institute. The prospect of spending 2-3 years during which you can still work on your projects, take part in festivals and workshops, and get paid for judging other projects may be a wise investment for many creators. Provided that they would keep the results of their work in drawers until they leave the institution. The remaining experts would evaluate anonymous projects without knowing who was behind them.

The committee leaders could also constitute the PISF Council, which would collectively consider, for example, appeals. This would protect the Polish Film Institute from attempts to exclude "inconvenient" creators for political reasons, as has been the case in the last few years. Of course, provided that such a council would include people recommended by the film community and not politicians.

Cake tactics

To build the Polish Dream Factory on the Vistula River, you do not have to reach to a tight public budget and risk public money for an uncertain result.

What should happen is followin:

- scale the success of incentives and attract large international budgets to Poland

- transform existing resources, such as WFDiF, into modern film facilities

- eliminate film financing barriers with small but wise interventions like support for completion bond

- increase the chance of commercial success of subsidized films through their marketing support

- review the rules for spending money in terms of their transparency to eliminate potential threats to the entire process.

Filmmakers and film critics may look at this text as a technocratic concept that will not raise the artistic level of Polish cinema at all. Nothing could be further from the truth. The chance to participate in international productions not only improves the qualifications of film crews, but also gives them greater financial stability, which allows them to pursue their own artistic ambitions.

On the other hand, a larger number of local productions with better profitability thanks to advertising means that more money returns to the PISF budget, which can be used to finance ambitious cinema.

This way we can build a multi-story cake, on top of which, I hope, there will be Oscar figurines.

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Maciej Sojka

former journalist of "Wiadomo?ci" and "Fakty", first head of TVN24, former head of the "N" satellite platform, former head of YouTube for Central Europe, the Middle East and Africa. Producer and co-producer of films and series (including "Rojst", "Kler", "Kryptonim Polska", "Mr. Samochodzik and the Templars")