Stillking Films and Pioneer Pictures have announced the launch of a new joint venture, P.S. Films, to co-produce and service feature films in Budapest.

The move indicates renewed confidence in Hungary as a location for runaway production after inward feature film production services spend dropped nearly three-quarters in 2008.

Stillking and Pioneer describe P.S. Films as the natural evolution of a longstanding relation between them and say the company has been set up to leverage each company's respective strengths.

'We have worked on various projects with Pioneer over the last 10 years and have always found their professional ethic and local knowledge to be unsurpassable in Budapest,' said Matthew Stillman, owner of Stillking Films.

'It made sense to formalise our relationship now, given the obvious attraction of Budapest and the new improved Hungarian tax-incentive laws. By combining forces with Pioneer, we hope to be able to continue to provide our producing partners with support as well as creative and financial solutions to maximise the production value on projects we are involved with.' Stillman added.

Stillking producer David Minkowski, who is based in Los Angeles, and Pioneer producer Ildiko Kemeny, who splits her time between London and Budapest, will be supervising operations on a daily basis.

Jennifer Webster, founding partner of Pioneer highlighted the advantages of having people on the ground in Los Angeles, London and Budapest:

'It enables our partners to have access to us wherever and whenever they need to. Additionally, having a mixed team of Americans, English and Hungarian film professionals means far fewer problems that can arise from cultural and language differences and much more peace of mind for our American and English partners,' said Webster.

Pioneer Pictures is an off-shoot of Pioneer Productions, a leading producer of international commercials in Hungary, and has co-produced and serviced several European productions, including Mrs. Ratcliffe's Revolution, Einstein And Eddington and is currently in production on The Debt.

A remake of Israeli director Assaf Bernstein's 2007 film of the same name, The Debt features Helen Mirren as a Mossad agent pursuing a Nazi war criminal. Tom Wilkinson and Sam Worthington also star. Director John Madden is shooting Budapest as a stand-in for Berlin, London, Tel Aviv and Ukraine.

Stillking is best known for its work in Prague as a service company, providing production support for more than 40 films, including The Bourne Identity, Casino Royale, the first two installments of The Chronicles Of Narnia franchise, and the upcoming G.I. Joe.

In addition to Prague, Stillking also has offices in Barcelona, Cape Town, London and Santiago de Chile.

Hungary's film service industry is struggling back after a disastrous 2008, when the combined effect of Hollywood strikes and uncertainty over the fate of Hungary's 20% indirect support for film production prevented producers from taking their productions to Budapest.

Inward spend on production services plummeted from HUF 17.7bn ($72.1m) in 2007 to HUF 4.8bn ($19.6m) in 2008.

Last summer, Hungary re-worked its tax break to the satisfaction of the European Commission, requiring production pass a broad cultural test in order to qualify for the incentive. Productions are starting to come back, with Atlas Entertainment's Season Of The Witch and The Debt, a Marv Films production for Miramax, shooting now.