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Russian Film Industry - Nevafilm

Growing state support for filmmaking in Russia highlighted by new report

Author: Nevafilm Research

Published: 28/11/2012

The recent beefing-up of the Russian Cinema Fund has seen state financing for filmmaking in the Russian Federation rise from 19% of the budgets of all films shot in Russia to 44%, according to a new report just published by the European Audiovisual Observatory and written by Nevafilm Research of Saint Petersburg.

This increased support responds to a recent fall in the share of the box office taken by Russian films and reflects state commitment to the importance of cinematic culture. The Russian government has prioritised films that examine what it sees as the pressing issues facing the country: military, patriotic and historical subjects, films for children and adolescents, vivid genre productions popular with audiences and debuts by talented creative artists.

The most successful Russian films in recent years at the Russian box office have been The Irony of Fate. The Sequel (2008, dir. Timur Bekmambetov, RUB 1238 million) and Vysotsky. Thank you for living (2011, dir. Pyotr Buslov, RUB 843 million). The most successful Russian film in recent years on foreign markets has been Mongol: The Rise of Genghis Khan (2007, dir. Sergey Bodrov) which took USD 20 million in Russian and international distribution.

In addition to improved state support, other aspects of the Russian film industry highlighted by the report included the following:

  • Nearly two-thirds of Russia's 3,000 screens are now digital.
  • The exhibition sector has grown rapidly with the upgrading of old cinemas and building of new multiplexes in shopping centres. On 1 July 2012, Russia had 994 ‘modern' cinemas and 2,894 ‘modern' screens. It is expected that there will be 40 IMAX theatres by the end of 2013. Almost 60% of ‘modern' screens are digital, with most of these being 3D-capable.
  • For the past two years, the Russian video market has been in decline, by 10% in 2011 and 9% (est) in 2012.
  • Market players are increasingly concerned that the demise of the DVD industry is imminent, due to the mass transfer to non-physical distribution. Nevertheless, in late 2011, 70% of Russian TV households owned DVD players and Blu-ray players were beginning to be purchased.
  • Piracy has been, and is, a major problem for film distribution in Russia, with pirate DVDs being manufactured on a large scale. To compete with pirate copies it was necessary for film distributors to take anti-piracy measures, reduce their prices, shorten the theatrical window and encourage the sale of DVDs at hypermarkets such as Auchan, Metro, Real, Lenta and O'kei. It is estimated that pirate DVDs by 2011 accounted for 50% of the volume of DVD sales, down from 97% in 2002.
  • Internet piracy is a major problem, leading to the development of a private commercial copyright protection industry, with leading players including Web Control, Web Sherrif, Russian Shield, Internet Copyright Management and the Association of DVD Publishers. Major companies have their own anti-piracy departments, aimed particularly at denying pirate internet access to their products during the first month after theatrical release.
  • Consumers have shifted from downloads to streaming with the social networking site Vkontakte estimated to account for 90% of illegal viewing online. Some steps have been taken by ISPs, search engines, social media sites and official agencies to reduce the spread of pirated material, but the fight against piracy still depends largely on private efforts.
  • The first phase in the establishment of the video-on-demand market in Russia took place from 2005–2010. In that period, there was a sharp increase in the number of users of these services. 2011–2012 was characterized by an increase in the number of services and the size of their catalogues, thanks to major investments in this sphere. The third phase, which may begin as early as 2013, will mark the entry of major international video-on-demand players into the Russian market (in December 2012, the iTunes Store and Google Play were officially launched).

In mid-2012 there were around 60 VoD service providers in Russia, with the main modes of delivery being Internet and Cable. Broadband access averaged 50% across the country, with more than 70% accessing the Internet in Moscow and St Petersburg. The industry used a range of business models, with online advertising and pay-per-view being the top revenue methods.

  • Pay-TV provides another means of viewing film. In 2011, 28.6 million Russian households (52% of total households) had access to Pay TV services, with cable being the most common form of access (63%), followed by satellite (32%) and IPTV (5%).
  • According to provisional information, cinema admissions in Russia rose by 5.8% in 2012 to an estimated 169 million. The market share for Russian films is estimated to have been 15.1% (Observatory estimates based on information from Russian Film Business Today).

"We are delighted to present the third edition of this report," said Wolfgang Closs, the Observatory's Director. "It reflects Russia's membership of the Council of Europe, Eurimages and the European Audiovisual Observatory, the size of the Russian Federation and the rapid growth of its film industry, including production, cinematic exhibition and new forms of distribution involving the Internet and video-on-demand.""This edition also includes a description of the institutional framework within which the Russian film industry operates, as well as an overview of the major sectors of the industry (film production, film production services, exhibition, distribution, DVD distribution, and video-on-demand). There is also a new chapter on international cooperation involving Russian filmmakers."

"Researching the Russian film industry is a challenge," said Xenia Leontyeva of Nevafilm Research, the report's Chief Editor. "Official data are often hard to get, but the distribution sector is more open and many film producers have assisted us. The fact that we have been able to provide such a comprehensive analysis shows a welcome appetite among industry players for more systematic knowledge of their sector."

Note: In January 2013, RUB 100 million = USD 3.0 million.

This new report can be downloaded free of charge in English here and in Russian here.


Nevafilm Research

The Nevafilm company was founded in 1992 and has a wide range of experience in the film industry. The group has modern sound and dubbing studios in Moscow, St. Petersburg and Kiev (Nevafilm Studios); is a leader on the Russian market in cinema design, film and digital cinema equipment supply and installation (Nevafilm Cinemas); became Russia's first digital cinema laboratory for digital mastering and comprehensive DCP creation (Nevafilm Digital); distributes alternative content for digital screens (Nevafilm Emotion); has undertaken independent monitoring of the Russian cinema market in the cinema exhibition domain since 2003, and is a regular partner of international research organizations providing data on the development of the Russian cinema market (Nevafilm Research).

Nevafilm Research
33-2B Korablestroiteley Street, St. Petersburg, 199397, Russia
Phone.: +7 812 449 70 70, Fax: +7 812 352 69 69
"Tsvetnoy, 30" Business Center, office 307, bld.1 30, Tsvetnoy Boulevard, 127051, Moscow, Russia
Phone / fax: +7 495 694 2615
E-mail: research@nevafilm.ru
Web: http://www.nevafilm.ru - http://www.digitalcinema.ru

Study carried out by:
Oleg Berezin, Igor Kallistov, Eleonora Kolyenen-Ivanova, Xenia Leontyeva, Svetlana Mudrova.

Chief Editor: Xenia Leontyeva (Nevafilm Research).

Supervising Editor: André Lange (European Audiovisual Observatory).