Spain turns to genre, arthouse films

Also preeming at Cannes, Steven Soderbergh's Che Guevara diptych won't summon up similarities with the horror outing "Rec," a remake at Screen Gems.

Yet, in industrial terms, they're near kissing cousins.

All are Spanish: Spain's Mediapro and Antena 3 Films co-produced "Vicky"; indie Morena and Telecinco Cinema teamed with France's Wild Bunch on Soderbergh's Che films.

And, in vastly differing ways, all mark energetic reactions to a deepening film crisis in Spain.

As with much of the rest of Europe, young Spaniards are spurning DVD buys for the Internet, videogames and unauthorized P2P sharing, building a stay-at-home entertainment culture. Piracy, among the worst in Europe, is another major problem.

Admissions in Spain, 146.8 million in 2001, a modern high point, plunged to 116.9 million last year. DVD distributor revs dropped 5% to $437.3 million.

Local films face other road bumps. Since the '60s, Spain's forte has been art films, which have since seen their audience shrink.

Though up from the '90s, Spanish pic share -- 13.5% last year -- trails Germany's (18.9%), Britain's (29%), Italy's (31.7%) and France's (36.5%).

Normally, there's an 18-month lag between a market crisis and a production downturn. Total Spanish investment in movies rose 11% to x393.3 million ($628.1 million) in 2007.

But companies are looking to downscale dependence on domestic. Hence, a boom in both genre boom and international auteur pics.

The logic is the same.

"What Che and 'Orphanage' have in common is the idea of making big films out of Spain which are seen abroad," says Alvaro Augustin, head of network affiliate Telecinco Cinema, which also co-produced "Maradona" by Emir Kusturica, a Cannes Midnight item.

"In the world we're living in, thinking in purely national terms just doesn't make much sense," says Fernando Bovaira, producer of "Agora," by a Spanish international auteur, Alejandro Amenabar.

Big director pics also play off Spain's somewhat singular financing structures.

Echoing France -- but not Britain or Germany -- regulations oblige Spanish broadcasters to reinvest 5% of annual revenues in European films. That's mucho moolah. In 2007, webs plowed $190.1 million into Spanish films alone.

But movies in Spain are breaking records -- for unheard-of low ratings on TV.

"Rather like U.S. studios, Spanish broadcasters are looking for event pictures by combining foreign and Spanish talent," says Che producer Alvaro Longoria.

That's broadcaster network Antena 3 TV's idea.

"Given its subject, 'Vicky' can cross over to new auds," predicts Teddy Villalba, Antena 3 Films head.

"Co-producing an Allen film guarantees longer rights, a slice of international, and isn't much costlier than buying it for Spain," says Adolfo Blanco, Vertice's head of cinema.

Genre has lower entry levels.

And Spain's G-boom has been spectacular. "Pan's Labyrinth," "Orphanage," "REC," "Timecrimes, "The King of the Hill": All have snagged U.S. distrib deals, three remake accords. "Labyrinth" grossed $40 million in the U.S. "Orphanage," despite just $7 million Stateside, made $38.7 million in Spain, $12 million in Mexico, overperfed in Russia and is doing decent-to-good biz most elsewhere.

"French genre movies still sell on individual merits. But the market's identified Spanish horror films and broader genre pics. After Amenabar, 'Labyrinth,' 'Orphanage,' 'REC,' Spanish genre titles benefit from recognition," says Gael Nouaille at Wild Bunch, which sold "Orphanage" worldwide.

Ironically, the root cause of Spanish films' low home-turf lure -- their makers' arty, auteurish pretensions -- also gives genre pics an edge.

"The market's been flooded by genre movies focusing only on effects, gore, schlock. Spanish genre has characters, stories, emotions," Nouaille says.

Its producers concur. "Genre's a frame. Inside it, we try to tell something with depth, targeting not just young audiences," says "Orphanage" producer Joaquin Padro at Rodar y Rodar.

"Interesting directors are doing genre. They're not necessarily just shockfests or purely commercial. They've got edge," says Morena's Juan Gordon, who produced "The Appeared."

Currently, Spain boasts Europe's only large G-hub. There's a sense of a movement and esprit de corps. Many leading helmers studied together at Barcelona's ESCAC Film School. They cite common influences.

"("REC" co-director) Jaume Balaguero, Sergio Sanchez, we all grew up watching Lynch, Spielberg, Cronenberg," says another ESCAC alum, Guillem Morales.

And Spain's creep wave -- and foreign interest -- shows no subsiding:

• Rodar's prepping a shiver quiver: "Orphanage" scribe Sergio Sanchez's "Homecoming"; Morales' "Julia's Eyes" and remake "Intruder"; plus "The Eighth Sacrament."

• Spanish genre pioneer Filmax has unveiled a New Fantastic Factory featuring "REC" co-director Paco Plaza's "Circus," and two first-timers: Tinieblas Gonzalez's "Underground" and Daniel Benmayor's "Paintball."

• Post-"Timecrimes," a Magnolia pickup and Cruise-Wagner remake, Nacho Vigalondo is writing another droll rural fantasy, "The Ramp."

• Telecinco is co-producing Canary Islands' psycho-thriller "Hierro," by Gabe Ibanez.

• After debuting with Kevin Costner starrer "The New Daughter," Luiso Berdejo has English-language thriller "Jennifer Can" set up at Vertice.

• Paris-based sales company Elle Driver has taken international on psycho-thriller debut "Invisibles," from Juan Carlos Medina.

"The times are changing, hugely" Vigalondo says. "We're opening up a new path, and the most exciting thing is that we don't know where it will lead."