Patricia Koza and Anca Paduraru -

A rash of new construction is promising to fundamentally transform the movie business in Central and Eastern Europe as local studios maneuver to attract big-ticket Hollywood productions as well as inspire domestic filmmaking.

The region's film sector nearly collapsed in the early 1990s after communist-era state funding abruptly ended, leaving domestic film productions scrambling for alternative financing. The lack of capital in turn impacted local studios, which had relied primarily on domestic fare.

The future seemed dim, until the Czech Republic's Barrandov Studios came up with a solution: rent out facilities and experienced staff to Western producers at prices considerably below those in the West. Together with massive layoffs and cancellations of more than 20 money-losing productions, it was saved from bankruptcy by its new strategy of offering its services to the West. It worked hard to develop an experienced, English-speaking staff and has poured money into updated facilities such the €7m, 4,000-square-foot soundstage nicknamed "Max," where the €80m "Chronicles of Narnia: Prince Caspian" is now shooting. Other shoots at Barrandov have included "Casino Royale," "Mission Impossible" and "Oliver Twist."

For Western production companies that decide to take their business east, the reward can be substantial savings. Castel Films' "Cold Mountain," which was shot in Romania, is said to have saved $30m for the producers.

However, after enjoying more than a decade of having the market for big-ticket Western co-productions to itself, Barrandov now faces intense competition. Other studios, big and small, have climbed on the bandwagon. By some estimates, there are more than 1,000 studios catering to the film industry in CEE, some of them state of the art.

Hollywoods of the east

In April, Hungary's €93m purpose-built Korda Studios outside Budapest opened its doors, months ahead of schedule, to shoot "Hellboy 2," the largest production yet in Hungary, with a crew of 350 who will spend about six months at the studios and on location.

Financed primarily by real estate magnate Sandor Demjan, Korda boasts six soundstages, one a 60,000-square-foot "superstage" that can be used for underwater scenes. And more expansion is planned. "I hope in time we are going to see Oscar-winning films made in Hungary by Hungarians," Demjan said recently.

Korda's opening was a warning shot across the bow of Barrandov, where the original "Hellboy" was filmed in 2004.

"There is much more competition now, so we've changed our shape a bit," admits Barrandov CEO Vladimir Kuba. "We concentrate on the first-rate producers from the USA and Germany" through increased deal-making at the annual Cannes Film Festival, working through international trade papers and more advertising.

The strategy has paid off. The first five months of 2007 produced €1.5m in profit on €11m in revenues, so far one of the best years in Barrandov's history.

"I'm off to Budapest"

In Southeast Europe, the state-of-the-art PFI Studios has just opened outside of Belgrade, offering 452,000 square feet of space with five stages and a 30-acre back lot. Further expansion is planned next year.

Existing facilities in the region are being upgraded as well. Formerly state-owned Boyana Studios in Sofia, which operated well below capacity for years, was acquired last year in a complicated privatization process by Nu Image of Beverly Hills, a producer of B-movies.

Boyana is being fitted with new sets and soundstages to prepare it for a new role in a few years' time, according to Nu Image Bulgaria CEO David Varod, as the "Hollywood of the East."

Elsewhere in Southeast Europe, the Romanian-based MediaPro Studios is attracting international co-productions with their 18 soundstages, the largest of which is 24,000 square feet, as well as their studio lake and four water tanks. David Cunningham's "The Dark is Rising" just entered post-production and is the first co-operation of a major US studio – in this case 20th Century Fox – with a Romanian one, says spokesperson Roxana Crisan. Also just ended filming this year was Joel Schumacher's "Town Creek."

MediaPro was the sole producer for the film taking this year's Cannes prize in the "Un certain regard" competition. Cristian Nemescu's "California Dreamin'", starring Armand Assante, almost didn't make it into the competition because the film was not fully edited when its director died in a car crash last year.

Castel Films, following its success with "Cold Mountain," continues to attract big-name productions. Filming this year has included "Adam Resurrected," with Jeff Goldblum and Willem Dafoe, and "Mirrors," with Kiefer Sutherland. Such productions helped Castel - set up in 1992 as a green-field investment of Romanian businessman Vlad Paunescu and which now boasts 10 sound studios, one of which is 40,000 square feet - turn in an undisclosed profit in 2006 on reported revenues of €7.1m. "But that was our bad year," says spokesperson Bogdan Moncea.

But Romania and the other countries have a massive new contender for the title of "Hollywood of the East." On the banks of the Pilica River about 80 kilometres south of Warsaw, a new studio complex is set to rise that will dwarf the other facilities in CEE.

Pollywood

Polish Prime Minister Jaroslaw Kaczynski presided over a signing ceremony with the film industry on June 13 to create a €100m studio complex on a 573-hectare former military base that is destined to be the largest in Europe. The final contracts will be signed later this year, with completion in 2009.

The complex is called Cinema City, but pundits have already dubbed it Pollywood. Most of it will be financed by EU structural funds, while Poland's Defence Ministry donated the land and the state is chipping in €20m in seed money. It will have 300 regular employees – half again as large as Barrandov – rising to as many as 3,000 during a shoot.

Aside from competing against its regional counterparts, Cinema City is comparing itself to the UK's Pinewood Studios Group and with Germany's venerable Babelsberg Studios near Berlin, the oldest in Europe dating from 1912. Plans call for 10 production halls, the largest of them 23,000 square feet. Industry officials believe Poland could attract at least €110m worth of spending annually on film production if conditions were improved for foreign producers.

"Thanks to the construction of Cinema City, we'll be able to implement international co-productions which were bypassing Poland," says Jacek Bromski, president of the 1,200-member Association of Polish Filmmakers. He called it "a paradox of history" that scenes of Old Warsaw for the international hit "The Pianist" had to be shot at Babelsberg.

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