Admissions grow by an average 14% per year

Russia’s film industry is bouncing back from recession, according to a report commissioned by the European Audiovisual Observatory.

The report — The Film Industry in Russia — prepared by local film industry business analysts Nevafilm and with contributions from RFilms and Groteck Business Media, shows that the drop in box office returns and other financial figures in the first half of 2009 was just temporary.

Russian film and media companies cut back on spending as the financial crisis bit and advertising income fell away.

But full year figures for 2009 and data for the first half of 2010 detailed in the report, from the European Commission media analysis body, reveal signs of revival in film production investment, consolidation among major players and restructured state investment, although the TV sector remains sluggish.

Cinema admissions continue to grow around 14% a year, thanks largely to the growing number of 3D films, up from 15 in 2009 to 40 so far this year, and the steady spread of digital screens.

Box office was up 13% in local currency terms last year to 22.4 billion rubles although a devaluation prompted by the financial crisis meant the year’s dollar figure was down to $735 million from $830 million in 2008.

National market share fell back slightly from 26% to 24% in 2009, but nevertheless remained strong, although Russian films that are a hit with the home market still fail to cross international boundaries, the report states.

“European audiences prefer arthouse films (that go) on limited release or even straight to videoin the Russian market,” the report says.

Screen growth slowed significantly in 2009, as the financial crisis hit the property sector.

By the end of July Russia had 2,246 fully modernized screens — with 23% capable of digital projection.

3D remains the key motor for growth in digital facilities, with 100 new screens added in late 2009 for the launch of “Avatar” and a further 80 for “Shrek Forever After.”

It is not all good news: the report identifies the nagging problem of piracy, which continues to plague the Russian home entertainment market, with some 80% of DVD releases on the market illegal copies.

But new growth in sales of licensed DVDs in early 2010 suggests that the slump the sector experienced during 2009 now may be over.

Video on demand services that had been heralded as a significant new revenue stream for Russian producers and content providers, has not yet lived up to its promise, despite a wave of cable, IPTV and Internet-based offerings in the past three years.

Limited content and growth in illegal file-sharing across peer-to-peer networks means the market remains embryonic, the report states.

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