Hollywood heads to hot Russian market

Majors pact with local producers for box office coin

MOSCOW — Russia is the new land of opportunity for Hollywood studios keen to increase worldwide revenues.

As a booming market where annual box office is set to reach as much as $800 million this year — and nudge a billion bucks within the next couple of years — Russia and nearby Russian-speaking territories now rank as the sixth-biggest movie market in Europe and 10th overall in the world.

Paramount Pictures Intl. became the latest U.S. entrant to the Russian market in September when it announced a strategic deal with the country’s most successful independent distribution and production shingle, Moscow’s Central Partnership.

Central will distribute Paramount product in Russia, and the deal gives Paramount the option of international distribution of Central’s own productions and the chance to co-produce Russian-language movies with the company.

The pact was announced the same week that Disney Russia revealed shooting had begun on its first local-language production, fairy-tale compilation “The Book of Masters.”

Although big-budget Russian blockbusters have given Hollywood a run for its money in recent years at the local box office here — three out of the top four all-time top-grossing films are homegrown — audiences still flock to U.S. pics, and U.S. studios have a piece of local hits.

In first place on the all-time list, Russian-made remake “Irony of Fate — The Sequel” took nearly $50 million after its December 2007 release on more than 1,000 prints across Russia and former Soviet regions.

Although it was produced by Russia’s top public television station, the First Channel, Hollywood shared in its success: Distribution was handled by 20th Century Fox CIS, the Russian affiliate of the U.S. major.

In second place, “Day Watch” — another First Channel production — took a shade under $32 million in 2006, and it was distributed by 20th Century Fox CIS as well.

But even such an intrinsically Russian production as 2008’s comedy “The Very Best Film,” which took in more than $27 million following its January release to put it at No. 3 on the all-time local B.O. list, involved Western money.

Drawing on a hugely popular television comedy show produced by Russian firm Comedy Club Prod., “The Very Best Film” was co-produced by Monumental Pictures, part of Patton Media Group, a company founded by three execs: American Paul Heth; Shari Redstone, topper of U.S. exhibition chain National Amusements; and East German-born, Moscow-based distributor Michael Schlicht.

Monumental subsequently joined forces with Sony’s Columbia Pictures’ production and distribution unit to produce local-language films in Russia; the unit, keeping the name Monumental, is due to release the first three pics of the joint venture, including a sequel to “The Very Best Film” early next year.

Heth, who runs Rising Star Media — a joint venture between his Soquel Ventures and National Amusements — is also a leading player in the exhibition market with a string of branded Kino Star cinemas across Russia.

Although all Hollywood majors now have a direct presence in Russia (with the exception of Warner Bros., which works through Russian distributor and cinema chain Karo Film) Sony’s Monumental has been the first off the block to produce and distribute local-language product.

Deborah Schindler, president of Columbia TriStar’s international motion picture production unit, says involvement in the Russian market is a tremendously rewarding opportunity.

“Even before the current terrible economic situation, the U.S. film industry was realizing that we live in a global market and that there are people out there who go to the movies who want to see films about their own communities in their own language,” Schindler says. “The incredible marketplace growth we see in Russia, China and India demonstrates how much sense it makes to be involved in local production.”

‘Musical’ lineup

Following “The Very Best Film 2” in January, Monumental has “It’s the Music,” a teen-oriented, locally scripted and scored musical co-produced by top TV entertainment network CTC. “Music” benefits from a collaboration with Bill Borden, producer of Disney’s hit “High School Musical” franchise. Black comedy “Kill the King” is due for an April release.

“Russian audiences are used to top-quality American or European productions and have certain expectations that make local-language production here a hard line to walk,” Heth says. “You need to have production values, storylines and casts to meet those expectations. Russia is a market where you have to pick your horses very wisely, particularly since revenue is almost wholly box office only.”

Although the company does not give out specific budgets, industry sources in Russia estimate its product line to be at the higher end of average local film production spends of $2 million-$5 million.

Schlicht acknowledges that making movies in Russia is challenging, but he is resolutely bullish about the future.

“The business model for Monumental is based on being profitable in the local market, where we have seen strong (annual B.O.) growth for Russian films of 25%-30% over the past three years. That is set to continue,” Schlicht says, adding that having lived through “worse crises” in Russia, he is relaxed about the current global credit crunch.

“Russian investors are very imaginative when it comes to finding sources of finance. I’m positive about Russia both financially and politically — I understand but do not share Western unease about its recent return to assertiveness. The dogs may be barking, but the caravan moves on.”

Other major U.S. players are also moving forward with production plans: Disney’s Russian division began location shooting near Minsk, Belarus, in September on the $7 million children’s adventure tale “The Book of Masters,” based on some of Russia’s most-loved fairy tales and characters. Produced in association with Moscow’s Three-T Studio (headed by director Nikita Mikhalkov), the film is slated for a fall 2009 release.

Universal’s “Wanted” might have been all Hollywood, but with a Russian director (Timur Bekmambetov) and big Russian production and special effects input, it reflects the collaborative trend.