Cast a glance at the local multiplexes this festive season and it's hard to avoid the conclusion that the local film industry, long in the doldrums thanks to falling revenues and waning public interest, is back in business. Sold-out screenings were common during the holidays, with as many people flocking to Hong Kong blockbusters (Peter Chan Ho-sun's The Warlords made HK$12.2 million in its first week) as to Hollywood offerings such as The Golden Compass and I Am Legend. So it's understandable that commentators are much more upbeat about Hong Kong's celluloid fortunes than they were at this time last year, when year-end flashbacks focused on the lack of a genuine Chinese-language blockbuster (Fearless, starring Jet Li Lianjie, hardly set the world on fire with its HK$30 million takings) and the unrelenting closures of cinemas across town, including arthouse bulwark Cine-art and mid-sized fixtures such as New York and Silvercord. What a difference a year makes. The success of Ang Lee's Lust, Caution, which has brought in more than HK$48 million - astounding returns for a film that under-18s are not allowed to see - has generated a media frenzy so intense that it has drawn even the most reluctant movie-goers into cinemas. And Derek Yee Tung-shing's Protege got a similar welcome when it opened during the Lunar New Year holidays in February, ending up with takings of HK$26.5 million and breaking convention by exploring dark themes at one of the most festive times of the year. Hong Kong's reviving economy has contributed much to the film industry's recent good fortune, says Woody Tsung Wan-chi, chief executive of the Hong Kong, Kowloon and New Territories Motion Picture Industry Association. And the willingness of people to spend money on going to the cinema is illustrated by the public's acceptance of a move to raise ticket prices during the Christmas and New Year holidays. The launch of several multiplexes has helped to whip up public interest in film-going as a recreational activity. It began last December with the opening of AMC Pacific Place, which replaced the old UA-operated cinema. This year the city's first Imax cinema was launched in Kowloon Bay, then its biggest cinema complex, the 12-screen Grand Cinema, opened at the Elements arcade above Kowloon MTR station. Although both the Imax and the Grand have facilities to show 3D movies, a new cinema at the airport ups the ante with the promise of a 'four-dimensional' experience - the extra dimension being supplied by water sprinklers, smoke machines and other gadgets to make viewers feel what's being shown on screen. The New Territories has also benefited from the commercial zeal of local cinema operators, with the opening of UA tmtplaza, a small, four-house complex inside Tuen Mun Town Plaza, two weeks ago. 'Audiences today demand quality in the cinemas they go to,' says Tsung, pointing to the well thought out seating arrangements, huge screens and wide selection of snacks the new cinemas offer their patrons. 'A lot of people now dish out HK$100,000 or more installing a cinema at home with projectors and screens, so why would they go out to see films? You really have to make the experience attractive by providing them with the best environment possible.' That explains the emphasis on providing an experience that viewers cannot replicate at home, such as Imax and 3D screenings. And smaller operators are getting in on the act, too. Among the better ideas is the return of midnight screenings, which were a staple in the 1980s and early 90s. The first films to be screened at midnight this year were two Herman Yau Lai-to productions: the gory horror flick Gong Tau and Whispers and Moans, a gritty realist piece about the lives of local nightclub escorts. Yet for all the activity, the brisk business at cinemas seems to have benefited foreign filmmakers more than their local counterparts. The revenue generated by Spider-Man 3 and Harry Potter topped the local takings of last year's western box-office champion, Pirates of the Caribbean: Dead Man's Chest, but most Hong Kong films released this year fared considerably worse. Protege, which led the rankings of local productions, brought in less than half the revenue of the top two foreign films of the year, and overall takings were lower than last year. Simply Actors, Hooked On You and Flash Point all brought in less than HK$10 million and would not have made last year's top 10. The number of Hong Kong productions also dropped to an all-time low this year, with fewer than 50 films released in the past 12 months, including films such as The Postmodern Life of My Aunt and Anna & Anna, made by Hong Kong directors (Ann Hui On-wah and Aubrey Lam Oi-wah, respectively) but backed by mainland and Singaporean investors. Many local films had short runs, with some, such as Sweet Revenge and Fear Factor, screening for just one week at a handful of far-flung cinemas. Although several productions struggled to reconcile unsatisfactory performances with big budgets, the backers and makers of several mid-sized movies scored surprise hits. Yip Lim-sum's Love Is Not All Around, for instance, brought in HK$12.2 million during its run in April and May - an impressive figure given that the film is a hackneyed romance and a pale imitation of Marriage with a Fool, which the director made last year. Simply Actors, a comedy directed by Chan Hing-ka and Patrick Leung Pak-kin and starring Jim Chim Shui-man, also more than paid for itself, pulling in HK$9.4 million at the box office. These surprise hits vindicate the establishment this year of the HK$300 million Film Development Fund. The government's second major move in a year to revitalise Hong Kong's ailing film industry (the first being the setting up of the Film Development Council, headed by Jack So Chak-kwong), the fund is designed to encourage production of films with budgets of less than HK$12 million. Projects can be awarded funding for up to 30 per cent of their budgets - meaning a potential HK$3.6 million boost for any cash-strapped independent filmmaker. Tsung is unequivocal about the importance of the council and the fund in nurturing local directorial talents. 'It's actually a landmark,' he says. 'And if they really come in to help the industry, it will be a watershed for the development of the local film industry.'