Take two in Serbia

By bne IntelliNews October 18, 2012

Nicholas Watson in Belgrade -

Emerging Europe's luring of film and television productions away from traditional US or European locations has been one of the region's surprise success stories over the last two decades, and with one of the region's newest film studios Serbia is now competing head to head with the Czech Republic, Hungary and Romania. But industry players say it needs help from the government in the form of incentives if it wants to attract more big foreign features.

The film industry in Serbia, like most aspects of the country, was decimated by the wars during the break-up of Yugoslavia in the 1990s and the subsequent decade of isolation and sanctions that followed. Prior to then, Serbia had a thriving film industry centred on the now-bankrupt Avala Film studios, whose last major production was the 1989 television minis-series "Around the World in 80 days", starring Pierce Brosnan.

The previous government made some noises about reviving Avala, but the private sector has already stepped in with the opening in 2010 of PFI Studios, part of the Pink Media Group owned by Serbian tycoon Zeljko Mitrovic. So far, PFI Studios, located near Belgrade airport, has gone some way to putting Serbian back on the map for film and TV executives scouting in the region. "It always used to be Prague, Budapest, then Romania or Bulgaria that people visited, but now we're in the loop over the last two years and people are pleasantly surprised when they come here," says Barbara Sandic Stetic, executive director of PFI Studios.

According to Ana Ilic of Film in Serbia, the country's film commission, the total number of projects shot in the past three years is 13 films and five television series and films, which has resulted in local budgets for Serbia of about €30m, of which 8-10% is spent on local permits - valuable revenue for a financially strapped government. Notable examples include the French science fiction action film "Lockout" starring Guy Pearce, Ralph Fiennes' "Coriolanus", and "The Raven" starring John Cusack.

What attracts foreign productions to Serbia is of course the relative cheapness, especially since the dinar fell to historic lows against the euro, coupled with the high-quality facilities and well-trained, English-speaking crews, not to mention the unspoilt locations. "Budgets that care about every penny tend to come to us, because we are 15-20% cheaper without incentives than either Prague and Budapest," says Angie Vlaisavljevic, a former US film producer who returned to Serbia and now owns the country's largest film production outfit Work in Progress.

Those financial incentives are the controversial tax breaks that European countries began offering over the last decade in what the European Commission sniffs are little more than "subsidy races" that European countries use "to compete among themselves for prestigious Hollywood projects." The Commission claims these distort competition among European production locations, something that's perfectly illustrated by the example of Hungary, which had no film industry to speak of but with the introduction of 20% tax breaks managed to decimate the Czech film industry in a few years. By 2008, the money spent by foreign film producers in the Czech Republic had dropped 85% from the $270m recorded in the peak year of 2003.

The Commission earlier this year proposed caps on how much public subsidy money can be used to tempt foreign film production to the region, which some worry could see many productions stay at home in the US, where incentives of up to 30% are still possible in some states. However, since Serbia is not part of the EU that shouldn't pose a problem - rather, the problem is the country's internal politics.


In 2011, the previous government passed a law offering financial incentives specifically targeted to foreign productions filming in Serbia, but the law was never implemented and now there is a new coalition in power since July. "We really hope the new government will implement this law by the end of the year, it will make all the difference to next year and gives credibility to the Serbian firm industry since as it shows the government is fully behind it," says Ilic.

The industry could do with a boost. PFI's Sandic Stetic says that after a "fantastic" 2010, the following year was slow, not helped by the lack of the promised tax incentives, though with PFI Studios being part of the Pink Media Group, one of the largest media corporations in Southeast Europe, the space can always be filled up with sister company productions. "2011 was a big disappointment with no international feature film productions, though we're never empty due to our facilities being filled by our sister companies' productions, and we had a lot of TV and foreign commercials from Greece, Austria, Russia, Spain and Scandinavia," she says.

Indeed, Serbia is becoming a centre for foreign television commercial shoots, especially since the country in 2008 joined the Commercial Film Producers of Europe (CFP Europe), an industry group, which helped to dispel much of negative image of the country. "You need to understand how bad the image was here - you're having a good chat with some ad executives and then suddenly they ask, 'what about Mladic?'" says Vuk Marjanovic, producer for Cyber: Few Good Men, referring to the alleged war criminal on trial in The Hague. "By joining CFP Europe, we established Serbia as somewhere credible to do business and business really started coming in 2010."

Serbia's advantages are the same as those for film production, namely value for money at a time when budgets are tight. But Milos Djukelic, founder of Red Production, notes another that has enabled his outfit to double its revenues each year and reach the point where it can handle 70 commissions a year. "The former Yugoslavia may be many countries now, but culturally we're still one territory," says Djukelic, who now has opened offices in Croatia, Montenegro, Greece and, surprising given his Serb nationality, Albania.

Together with Russia and Greece, which also both have strong cultural and business ties to Serbia, Belgrade is proving to be the centre of television commercial production, where western companies like Nokia, Ikea, Proctor & Gamble, and Santander choose to shoot commercials that can be rolled out over the region, according to Marjanovic.

In addition, there is also a budding post-production industry developing in Belgrade, which is growing on the back of knowledge from the industry on how to organise such projects to fit in with foreign feature film producers. "We're really comfortable with the work flow of western companies," says Petar Jovovic, founder of Crater Studio, which over the past two years has worked on films such as "Shark Night 3D", "One Fall" and "The Other Guys".

Jovovic adds that again Serbia's cost advantage is key for attracting work, something that would only be enhanced by the introduction of those tax incentives. "Serbia is priced very competitively - it's a good cost for the client but also it's a good cost for here."

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