An analysis of alternative methods of investment relative to the financing of film productions in Malta

Abstract

The Maltese film industry, while historically successful in luring international projects, is primarily reliant on government incentives and tax credits. However, as the global audiovisual scene transforms, it is necessary to investigate new funding mechanisms to preserve the Maltese film industry's sustainability. This study explores alternative investment methods for financing film productions in Malta, examining how crowdfunding, commercial lending, and private equity may contribute to productions’ long-term sustainability compared to government incentives and tax credits. The main objective of this study is to investigate and critically evaluate the diversification of funding avenues available to the Maltese film industry, providing insights into the viability and potential benefits of these alternatives, potentially aiding in futureproofing the local film industry. A qualitative research approach to the study was employed, enriched by the conduction of semi-structured interviews with key stakeholders within the Maltese film financing ecosystem, with the participation of representatives from entities administering public film funding in Malta, banking institutions and a crowdfunding platform. Additionally, a semi-structured survey questionnaire was distributed with Maltese filmmakers, aimed at gathering perspectives on the current funding landscape and potential alternative financing models. Data was analysed using theme analysis for qualitative data and, descriptive statistics and statistical graphs for quantifiable replies. The aim was to gather multiple perspectives, evaluate the viability of various financing options, and compare them to existing public funding schemes. A literature review complemented the empirical data, offering a comprehensive analysis of both traditional and alternative financing methods. The study revealed that, while traditional funding mechanisms such as government tax credits and cash rebates remain important to the Maltese film industry, their reimbursement structure limits their effectiveness, posing cashflow difficulties for filmmakers. Alternative funding sources, such as crowdfunding and private equity, were highlighted as underutilised but potentially important, particularly for smaller film productions. However, these options confront numerous challenges, including low financial literacy among filmmakers and scepticism towards the industry by stakeholders offering these alternative sources of funding. The study also found that stakeholders suggest a shift to hybrid financing models, that blends public incentives with private money, resulting in more financial flexibility and sustainability. The research concludes and highlights the need for a hybrid financing model - blending traditional government incentives with alternative sources namely private equity, commercial lending, and crowdfunding – to ensure long-term success in Malta’s film production sector. By integrating both traditional government support and novel private-sector investments, the local industry can better mitigate financial risks and foster sustainable growth. This study provides valuable insights for policymakers and industry stakeholders by emphasising the necessity for a hybrid financing model in Malta's film industry. It emphasises the significance of investigating alternative financing options to supplement existing government incentives and offers practical advice for achieving better financial sustainability. The findings could serve as a road map for Maltese filmmakers facing similar issues, allowing Malta to keep its competitive edge as a top film production destination.