Netflix, Amazon Among Top Investors Expanding Spain’s Entertainment Biz

In April 2018, Netflix announced that Spanish heist thriller “Money Heist” (“La Casa de Papel”) had become the U.S. streaming service’s most-watched non-English series ever.

With a Spanish series crowned as the first foreign-language blockbuster at the company that has transformed entertainment worldwide, Spain’s expansion — long nurtured by hits such as “The Red Band Society,” “Grand Hotel” and “Locked Up” — well and truly lifted off.

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Building on that success, in March 2021, Spanish prime minister Pedro Sánchez unveiled the AVS Hub Plan, which would invest €1.6 billion ($1.8 billion) into Spain’s audiovisual sector.

For a country in which the word españolada was used to write off supposed second-rate homegrown fare, the re-positioning of Spain’s film and TV industries as core drivers in its digital post-pandemic “reindustrialization” is little short of a revolution. Spain, Cannes Marché du Film’s 2023 country of honor, now accounts for seven of the 20 entries in Netflix’s most-watched non-English films and TV shows ever, more than any other country, including South Korea (which has four), France (with two) and Germany (two).

As Spain advances on the third year of the 2021-25 AVS Hub Plan, a big question is how its entertainment sector can sustain momentum.

Some of the same growth drivers of the past will continue to operate in the future.

“If you throw in Romance-language countries that basically understand the constructs of Spanish, you’re getting towards a billion people, double the size of English-language markets,” says Erik Barmack, a former VP of international originals at Netflix when it launched “Money Heist” and “Elite,” and who has just optioned his fourth novel from Spain, “Red Diamond,” to adapt as a movie.

In comparative terms, Spain has been Europe’s biggest beneficiary of global streamers’ investment, accounting in 2021 for a whopping 37% of their total investment in original European content among top 10 countries. That compares to 18% for the U.K., Italy’s 16%, 12% for France and 8% for Germany, according to a European Audio- visual Observatory analysis of Ampere Analysis data.

With Spain’s online video sub- scription revenue set to grow from $1.8 billion in 2022 to $2.8 billion in 2027, according to estimates from research film Omdia, investment doesn’t look set to suddenly stop.

New growth drivers are also now entering the mix. The budget of Spain’s ICAA national film agency will rise sharply to over €100 million ($109 million) for 2023.

In Catalonia, film-TV agency ICEC’s total allocated audiovisual funding rose from €12.6 million ($14 million) in 2019 to over €41 million ($45.5 million) this year.

Domestic box office and over- seas sales are powered by local filmmakers such as genre-at- tuned directors like Alberto Rodríguez and Rodrigo Sorogoyen, whose “The Beasts” won best foreign film at France’s 2023 Cesars. There are also the filmmakers grounding universal issues in films with a large sense of place, such as Carla Simon (2022 Berlin Golden Bear winner “Alcarrás”) and Estibaliz Urresola (“20,000 Species of Bees”).

The Beasts
The Beasts

Also creating new impetus, on Jan. 1, Spain introduced production tax breaks that are among the most competitive worldwide. Here, as in exports on Spain’s most commercial indie movie propositions, Spain may grow because of, rather than despite, the streamers’ pullback on 100% ownership and more measured investment.

“At Berlin, independent film and TV was more alive than ever,” says producer Adrián Guerra (“Through My Window”). “The space left by the platforms is being taken up by the independent sector, with more co-productions, more frequent territory pre-sales and multiple financing sources.”

“Money Heist,” “Grand Hotel,” “Velvet” and “Cable Girls” “all had outstanding production values at a tenth of U.S. budgets, creating fantastical worlds on a fixed number of soundstages,” says Barmack. “The rest of the world is going to have to be good at that, because budgets are coming down and Spain has really great technical crews.”

Government intervention is one thing. It needs to align, however, with powerful market forces and the artistic ambitions of new generations to really reshape a sector.

That looks to be happening in Spain across animation and video games.

Spain produced 25 animated features over 2018-21, according to “Who Is Who: Animation 2022,” published by ICEX Spain Trade and Investment. At a Málaga Festival press conference in March, animation association Diboos displayed 40 Spanish titles set to either hit the country’s theaters in 2023 or be in the production pipeline. One, Juan Jesús García Galocha’s “Mummies,” has already grossed $52 million worldwide.

“Spain is now far more competitive, with tax breaks for animation, which very much drive the big studios’ interest in collabo- ration. Creative Spanish talent is now highly interested in animation, mixing artisanal techniques and technologies,” says Rodrigo Blaas, writer-director and producer out of Madrid-based El Guiri Estudios, whose short “Sith,” is part of Disney+’s “Star Wars: Visions” Season 2.

Beyond online video subscription and advertising, Spain’s big- gest revenue growth driver may well be gaming. The sector has already grown, from 490 active studios in 2017 to 755 in 2021, according to analysts’ numbers. Spain’s gaming industry now looks set to grow all the more, reaching $2 billion in 2027, up from $1.4 billion in 2022, according to Omdia.

The sector has seen recent hits. Seville’s the Game Kitchen is prepping the sequel to 2019’s “Blasphemous,” a combat game that reached 1 million players by 2021, for release this year.

The sector is also highly export- driven. The U.S. ranks as the biggest market for Valencia’s Chibig, says founder Abraham Cózar.

Chibig is behind games such as Summer in Mara.

To grow more, Spanish independents need tax relief to drive private investment, allowing them to retain IP, argues Emanuele Crialese, technical secretary of trade association DEV.

Spain’s ad sector — which was behind Cannes Lions   winners in 2016, 2017, 2018 and 2021 — hit €526.5 million ($584.4 million) turnover in 2021, up from €320 ($355.2 million) in 2015.

Brands have less to spend but with YouTube and streamers, out- lets have multiplied, as have production costs, says Adriana Piquet, general director of Spain’s Advertising Production Company Assn.

Forecasts for online video advertising in Spain predict its revenues will nearly double from 2022-27 to above $2.25 billion, rep- resenting one strong potential growth driver.

Such parameters may explain the bullishness of analysts, the Spanish government and producers alike on Spain.

In all, “Spain is the E.U. country with best content growth fore- casts, with revenues set to rise 5.7% over 2021-25, off a 7.2% hike in investment over the same period,” María González Veracruz, Spain’s secretary of state for telecommunications and digital infrastructures, said at a Malaga Spain AVS Hub presentation, citing an October 2022 Spain-U.S. chamber of commerce report.

It’s a new dawn for content creation in Spain.


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