Set in a pretty horseshoe bay lined with restaurants and cafes, San Sebastian has always been one of the most popular stop-offs on the annual festival circuit. The festival is appreciated for its laid-back approach to business dealings and as a productive breeding ground for Spanish and South American talent.

This year the festival director Mikel Olaciregui has pulled out all the stops in bolstering the line-up with international film talent. Looking down the list of names of directors is like reading a who's who of world cinema today.

World premieres from international film-makers come in the guise of Kim Ki-duk's Dream, and Christophe Honore's The Beautiful Person.

A slew of Toronto titles have their international premieres in the official selection. They include Richard Eyre's opening film, The Other Man, a drama starring Liam Neeson and Antonio Banderas, Michael Winterbottom's ghost story Genova, and Rian Johnson's The Brothers Bloom, starring Rachel Weisz and Adrien Brody.

In the Zabaltegi Pearls section, Woody Allen will line up alongside the Coen brothers and Kiyoshi Kurosawa for the TCM Audience Award, which carries $102,000 (EUR70,000) in prize money for the Spanish distributor of the winning film. In Zabaltegi Specials, San Sebastian's official jury chairman, Jonathan Demme, will present two of his own projects, the work-in-progress documentary Neil Young Trunk Show: Scenes From A Concert and Rachel Getting Married, alongside Of Time And The City, the latest work from Terence Davies, to whom San Sebastian is dedicating a retrospective this year.

A vast number of leading local and South American film-makers also have their projects spread throughout the festival, most prominently in the Made In Spain, Horizontes Latinos and Zabaltegi New Directors sections. Some also feature in competition, with the Spanish contingent represented by the world premieres of Oscar-nominated director Javier Fesser's Camino, Goya-award winning Jaime Rosales' Tiro En La Cabeza and rising director Belen Macias' El Patio De Mi Carcel. While Argentinian director Daniel Burman is presenting Empty Nest as an international premiere.

Building relationships

'Films in the Horizontes Latinos section interest me as well as the new Ibero-American films in competition,' says Peter Marai, president of Santa Monica-based Condor Media, who will be attending the festival in search of Spanish-language acquisitions. 'I look forward to seeing Empty Nest, as well as Tiro En La Cabeza and Camino.'

In total there are 29 feature world premieres in all sections, compared with 23 last year, and five in official selection, one less than last year.

'This year we are very high profile,' says festival president Mikel Olaciregui. 'Our policy is to choose films that we would like to watch. We started with Jaime Rosales and then moved onto the others.'

Tying these high-profile projects to the festival has been a massive undertaking for Olaciregui and his team over the last year. 'We have been very busy,' he admits. 'You can see the list of directors announced in official selection is impressive, but also the companies backing their films, such as Showbox, Fortissimo, HanWay Films, Wild Bunch, Match Factory, Celluloid Dreams and Miramax.

'We have had to build relations with these companies, and it is important we keep in touch with them continuously and work together to see what kind of films can work well from certain countries in the San Sebastian programme.'

Olaciregui expects about 1,600 accredited industry figures to attend and a further 1,800 members of the international press.

One of the key attractions for these industry figures is the Films In Progress section of the festival. Its purpose is to provide funding and entice backers for incomplete projects from emerging South American talent, a job at which it has become very successful.

'I come every year to San Sebastian to find pearls in the Films In Progress section,' says Alexandre Mallet-Guy, president of Memento Films, who discovered a rough cut of Mexican director Francisco Vargas' debut The Violin in Films in progress in 2005.'I met the director after the screening. We ended up handling the world sales. It was a very successful experience. The film was presented in Cannes' Un Certain Regard where it won the best actor prize and we sold it all over the world.'

Other Films In Progress success stories include Tristan Bauer's Falklands War drama Blessed By Fire, which sold to more than 20 territories, and Lina Chamie's The Milky Way, which screened in Critics Week at Cannes in 2007. Two of last year's Films In Progress award winners, Julio Hernandez Cordon's Gasolina and Federico Veiroj's Acne, are returning to this year's festival in the Horizontes Latinos section.

Among the projects being showcased in this year's section are Carlos Serrano Azcona's Mexican drama El Arbol about a man who has to turn his life around after being prevented from seeing his wife and child and then losing his job; Santiago Loza's Artico, an Argentinian drama about a man traveling through treacherous landscapes to pay his wife's kidnap ransom; Cristian Jimenez' Chilean-Portuguese-French collaboration Ilusiones Opticas, following the lives of a shopping mall guard who falls for a thief, a hard-working employee close to unemployment and a blind skier whose sight is returned; Sebastian Silva's Chilean film La Nana about a bitter and introverted maid who is forced to put up with an assistant by her mistress; Rigoberto Perezcano's Norteado, which sees a young boy make several dangerous attempts to cross the border from Mexico into the US; and finally Florence Jaugey's La Yuma, a Nicaraguan-Mexican drama about a girl in a poor and violent neighbourhood who dreams of becoming a professional boxer.

Informal business

San Sebastian does not have an official market but international buyers and sellers attend in the hope of doing some business. 'San Sebastian is very friendly and well organised, and it is easy to set up meetings,' says Bernardo Zupnik, president of Distribution Company Argentina, which picked up Carlos Saura's Fados last year, and plans to return this year to look out for 'high quality Spanish films with commercial potential in Argentina'.

Dominique Welinski, president of Pierre Grise Distribution in France, says 'Like Locarno, San Sebastian is less pressure (than Cannes or Berlin), it shows good films and you can meet the directors, producers and sales agents in a beautiful place.'

Welinski will be paying particular attention to Films In Progress and other South American films having picked up the Uruguayan film The Pope's Toilet at last year's festival. It went on to garner 80,000 admissions in France and sold widely around the world, including to Soda Pictures in the UK where it has grossed $105,000 to date.

'San Sebastian is an intimate festival where you get the chance to speak to all the Spanish film companies in one place, because not all of them go to Cannes or Berlin,' says Alexei Boltho, director of co-productions and acquisitions at the Paramount Worldwide Acquisitions group, who will be looking out for new Spanish talent at the festival.

But Olaciregui has no intention of creating a formal market at his festival. 'There is no more room for traditional markets,' he says. 'Already the calendar for festivals and markets is so big, which makes it difficult to convince the buyers and sales agents to attend the festival when they are coming from Toronto and Venice and will be attending AFM in a couple of months.

'Our structure is not very heavy, we don't have big funds, companies are not tied to the sales office, and they can come and go as they please. The shape of San Sebastian is smaller than other markets and festivals, which makes it easier for industry figures to meet.'

What Olaciregui intends to focus on is adapting the festival's screens to HD and even to 3D, and making the festival's website more interactive.

'I believe 35mm is being overtaken by HD and so this year we will improve the high-definition screenings of the festival,' says Olaciregui.

'We are also organising a panel of professionals to discuss with film students the latest developments in 3D, as well as showing extracts from 3D projects in the works. By next year we will be showing 3D films at the festival, maybe not in competition, but as the closing film or in the velodrome.'