There was acollective sigh of relief in the Hong Kong film industry last week as the firstlocal release of the summer - Media Asia's drift racing drama Initial D -burnt rubber in five Asian territories, including an impressive haul of US$2.6min its first week in Hong Kong.

The results seemto vindicate the industry's recent strategy of cutting down production to focuson a smaller number of big-budget films. But while Hong Kong producers may beinspired to mount similar pan-Asian productions there's always the risk thatsmaller budget films, traditionally the incubator of new talent, will beignored.

Fortunately,however, the downturn in production has encouraged pay-TV companies to startinvesting in low-budget films. While smaller films may be failing at the boxoffice, there are several Chinese-language movie channels in Asia that requirea constant supply of product. At the same time, competition in Hong Kong'spay-TV sector is starting to increase.

Aware of thegrowing need to invest in content, Hong Kong's leading pay-TV operator i-CableCommunications and regional broadcaster Star TV both recently announced plansto finance local movies. And while their investment models are different, bothare also supporting new talent as their access to a pay-TV platform absorbssome of the risk.

Star already hasa content arm, Fortune Star, which is developing several internationalprojects, and is now complementing this through the Focus: First Cutsinitiative in partnership with Hong Kong star Andy Lau's Focus Films. Theregional scheme plans to finance a series of six HD features from up-and-comingChinese filmmakers. Star's Chinese-language movie channel - Star Chinese Movies- acquired all six projects up front.

Star hasexclusive rights to broadcast the films in Asia, excluding Japan, Korea andThailand, but according to Focus Films COO Daniel Yu, this doesn't rule out atheatrical release.

"Cable and home video are taking overa lot of the audience that no longer goes to cinemas - particularly working professionalswho don't have much time- so we can introduce new talent through theseothermediums," explains Yu. "Havingsaid that, we will strive to ensure that the films are made with cinema releasein mind so that quality will be high."

The first project,Taiwanese director Robin Lee's The Shoe Fairy, starring Vivian Hsu andDuncan, started production in mid-June in Taiwan. The other five projects,including Hong Kong director Wong Ching Po's PG and Crazy Stonefrom China's Ning Hao, are all scheduled to start shooting in the next fewmonths.

Meanwhile,i-Cable's recently launched Sundream Motion Pictures aims to pump US$38.5m intoa slate of up to 20 films, ranging from low-budget productions from first-timedirectors to pan-Asian blockbusters.

First off theblocks will be a US$2.6m (HK$20m) feature from TV director Lam Kin-loong whichis set to start shooting in China next month. Also in the works are twoUS$16-18m period dramas - Battle Of Wisdom (working title), aco-production with China's Huayi Brothers to be directed by Jacob Cheung andstar Andy Lau, and a film about Cao Cao, the ruler of Northern China around 200AD.

The company isalso developing a US$2.6m (HK$20m) cop drama to be produced by veteran JohnnieTo and another project from new talent which is set to start shooting inNovember.

Tsui says thatthe current downturn in Hong Kong production is an "opportune" time to enterthe industry - particularly as the mainland market is starting to grow. Themove also enables i-Cable - which has five movie and entertainment channels -to build a library of permanent film rights. The company currently has alibrary of about 1,800 movies of which 1,600 were acquired for a limited periodof two to five years.

"Moreover, if we produce ourselves we canensure excellent quality," says Tsui. "In future, Sundream's movies will bevaluable assets in the Cable TV film library."

Sundream is alsoaiming for theatrical release of its film productions and has teamed up withBill Kong's Edko Films for distribution in Hong Kong.

Two other popularChinese movie channels - Celestial Movies and Mei Ah TV - are both alreadyattached to film production and distribution companies. In both cases, theparent companies are continuing to invest in film production, despite the weakmarket conditions in Hong Kong, apparently buoyed by their TV and videodistribution channels.

CelestialPictures is one of the investors - alongside its parent Malaysian pay-TVoperator Astro, TVB and China's Stellar Megamedia - in Peter Ho-sun Chan'supcoming musical Perhaps Love. Meanwhile Mei Ah has a busy slate thatincludes US$6.5m action title Dragon Squad and US$1.3m comedy DragonReloaded, which was released last weekend.

But although theinflux of TV cash is welcome, it will take much more to restore Hong Kongproduction volume to the highs of the early 1990s. A few more hits are neededto inspire confidence and the industry is eagerly awaiting the rest of thelocally-produced summer films.

DragonReloaded stood up to WarOf The Worlds with a HK$4.8m gross in its first weekend, coming in thirdbehind the Tom Cruise blockbuster and Initial D. Upcoming titles include Bug MeNot (July 21), Seven Swords (July 29) and Mob Sister (August 5), followed bytwo September releases - Focus Films' All About Love, starring Andy Lau, andJackie Chan's The Myth.

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