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The European Film Market in Berlin has become less of a specialty market than it used to be five years ago. Where once it focused tightly on films that were featured in the festival — or at least were the type that could nab a festival slot — and organizers appeared almost to want to play down commercial movies and the companies that sold them, the mart is now a much more open and general event.

Impetus for change came with the open-minded approach of Berlinale boss Dieter Kosslick, who is as welcoming of razzle-dazzle as he is of political causes, and from the golden opportunity presented to Berlin by the decampment of the American Film Market from February to November.

So it is ironic that this year’s EFM could be buffeted by some of the turbulent currents that are now washing over the commercial film marketplace much more than the arthouse segment.

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Waves now breaking over the market for completed pictures include an oversupply of generic middle-ground movies and the simultaneous shrinking of demand for international titles. Indie distribs worldwide are still recoiling from a stellar 2007 performance by Hollywood pics that left only local films able to keep their heads above water.

Still other perils lurk beneath the surface. These include the credit crunch that has slowed greenlighting of projects and the guild strikes — both actual and potential, though when these hidden terrors will come up to bite the international markets is the subject of some dispute.

“There won’t be many big, new, English-language projects bought and sold in Berlin. You need that adrenalin to drive a market,” says Alison Thompson, prexy of Focus Features Intl.

The move of the AFM to the fall and the relocation of the EFM into the Martin Gropius Bau have certainly allowed the market to expand. “2006 was a big leap. It was the participating companies that determined how the market developed. The market is broader today than four years ago,” says Karen Arikian, co-director of the EFM.

Nowadays most self-respecting U.S. sales agents willingly make the trip, even though it comes only two weeks after Sundance. What they get is the chance to meet the European buyers — some of whom rarely make the trip to L.A.

“With Berlin being the first major European festival and market of the year, virtually all the buyers attend along with a significant number of European producers,” says Edward Noeltner, prexy of Cinema Management Group.

EFM chief Beki Probst and Arikian also point to growing attendance from Latin America and Asia.

“I remember the times only a few years ago when we tried to get the Asians to come. They said they couldn’t afford to. Now they come anyway because they do business,” Probst says.

However, there may be limits to Berlin’s ability to grow further with Asian clients.

Almost all of Hong Kong’s leading production-sales combines (Media Asia, Emperor, Sundream) have opted not to attend this year, and those from mainland China, widely seen as a kind of holy grail in co-production and distribution terms, are almost completely absent.

“Too cold” is a common explanation. Problematic, too, is the EFM’s overlap with the Chinese New Year holiday.

But true, too, is the European buyers’ waning appetite for Asian movies. And now for many Asian filmmakers, the China, Japan and Korea markets represent far bigger returns than the U.S. or Europe.

“Berlin is a good place to find the East European buyers. These days, they are the growth market, they are paying good prices and are making up for the parts of Western Europe — Spain and Italy — that are dropping off. That’s why I’m prepared to give up my Chinese New Year holiday and come to Berlin,” says Golden Network topper Carrie Wong.

Caution signs

Affecting the buying and selling climate at AFM 2007 and widely expected to prevail during the Berlin market is heightened indie-sector caution. Explanations for this include a glut of product, the failure of many acquisitions to connect with auds and the shrinking space for imported films between local films on one side and rampantly successful Hollywood blockbusters on the other.

Responses to this situation are varied:

  • “Stay quiet, wait for prices to come down further until they are better aligned with value,” says Japanese indie buyer Tetsu Negami at Klockworx. “We have seen this begin to happen with some of the U.S. sellers.”

  • “It is pretty clear now what (European) buyers want from us: action or director-driven arthouse. They don’t want drama or comedy at any price,” says Tom Oh, head of international sales and acquisitions at CJ Entertainment, the biggest player in Korea. “We have become much more careful about what we greenlight, and are expecting a better Berlin than the last.”

  • “The market is overcrowded with mediocre product. Setting up ThinkFilm Intl. as a subsidiary label to Capitol Films allows us to emphasize high-quality, low-budget pictures with obvious routes to the screen,” says Will Machin, head of sales at the market newcomer. “Capitol is about the $10 million-$70 million pictures with A-list attachments and guaranteed opening weekends. Anything in between is very difficult.”

  • Package deals are out, prebuys are fewer, and greater consultation by front-line execs with their video and TV sales departments is the order of the day. Berlin, with its upscale screening facilities, may gain from being a market where buyers actually get to see more films than at most other events.

One section of troubled water that international markets have so far largely been able to ignore has been the American writers’ strike and possible walkouts by actors and directors in June. But trying to get a read on the reefs that lie beneath the surface is proving tough.

“The strike is not particularly important for Berlin buyers. It is more so for U.S. films and therefore will have a greater impact at Sundance,” says Wouter Barendrecht, co-chief of Fortissimo Films.

“The strikes have had little effect so far; if anything, Hollywood films look set for another great year in 2008,” says Yvonne Tan, head buyer for Malaysian exhib-distrib Golden Screen.

But if the vertically integrated U.S. sellers such as Weinstein Co., Summit Entertainment and Lionsgate are out in force at Berlin while they still have slates to offer, Focus’ Thompson warns that industry attention will soon turn to the future.

“Berlin is going to be a wake-up call for international,” she says. “It will be all about how distributors get through their 2009 slates. The impact could be a good or a bad thing for international, but I don’t think people will suddenly start buying more problematic international movies (to make up for missing tentpoles).”

Language lab

Certainly some benefits could flow to British and Australian productions — “We are in the process of casting films and are actively avoiding U.S. actors, where we would have had half a dozen in before,” says Machin — but there could be a growing emphasis on international for another reason, namely opportunity for industry consolidation.

“The capital markets have changed. We are looking at Europe as an opportunity,” says Ben Waisbren, prexy and CEO of Continental Entertainment Group.

CEC has already been a major backer of France’s Wild Bunch (taking an equity stake and funding its expansion moves), and it plans to open a European office imminently.

Waisbren explains that the movie market in Europe has greater upside than the U.S., and that the firms that supplied leveraged finance to private equity and hedge-fund investors have changed their game. “Before, they were looking for alternative investments; now they are looking for yield,” he says.

Whereas in the U.S., indie films have difficulty reaching the market, Europe carries lower P&A costs, audiences have different priorities and TV deals are richer.

Waisbren says financiers are looking to back the best companies building regional empires: Wild Bunch (Wild Side, Bim Distribuzione, Senator/Central and A-Film), StudioCanal (Optimum, Mars), Alliance Atlantis (Momentum, Aurum), Capco (Capitol, IM Global, ThinkFilm Intl., Image) or Entertainment One (Contender, RCV, Seville).

Together with its Citigroup parent, CE will have five execs in Berlin. Someone is going to have some happy hunting.