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Knights of the Vine RUSSIA


Russian Film Industry in Crisis
Text Vladimir Kozlov

The ongoing financial downturn has pummeled the Russian film and TV series industries. But since people often turn to entertainment as a diversion in times of economic difficulties, the situation may not be as bad as it seems at first sight. Thanks to the crisis, cash from random investors, who are willing to finance projects regardless of their quality, will no longer be there, which may improve the overall quality of films and television series produced, while inadequately high fees charged by talent and crew are likely to be reduced, bringing down production costs.

In the last three to four years, the Russian film industry has shown remarkable growth, surpassing even the Soviet figure of about 100 feature films produced annually, even though the quality of many domestic features left a lot to be desired. Fed by state money and cash coming from other sectors of the rapidly developing economy, the Russian movie industry has prospered. When in 2001, Yegor Konchalovsky’s action movie “Antikiller” grossed $1 million in theaters domestically, that figure looked almost fantastic, while today movies like Timur Bekmambetov’s Twilight Watch or Irony of Fate II rake in tens of millions of dollars at the box office, as if this was normal. If compared with the 1990s, when just a handful of movies were made every year, most of which were shown only at film festivals, the overall picture looked almost rosy until last year’s late summer and early fall.


Obitaemy Ostrov (Inhabited Island)

It looked even better in the television industry, where domestically made content had almost completely squeezed out Latin American soap operas that had dominated Russian TV screens for almost a decade. Major domestic TV channels, which generated huge advertising revenues, were willing to pay generously for content supplied by domestic TV series producers.

But all that began to change when it became clear that Russia was going to be drawn into the global financial and economic downturn. The first alarm came in September: amedia, one of the leading domestic TV-series producers, said it was cutting back on production and laying off personnel, citing the financial crisis as the main reason. However, at that time, some observers avoided mentioning the word: crisis, saying the company was probably only coping with internal difficulties and tougher competition.

But when in October Karen Shakhnazarov, general director of Mosfilm, the country’s largest studio complex, said that 20 out of the 89 movies in production at the studios’ facilities, have been cancelled or put on hold, it became clear to just about everyone that the domestic film industry is experiencing a tough time.

A similar, if not tougher situation, emerged for television series producers, as TV stations found themselves stripped of cash, in the light of expected declines in ad revenues, and began tightening their budgets. Russian channels are likely to lower their buying rates for TV series by 30 to 40 percent in 2009, predicted Anton Kudryashov, Chief Executive Officer of CTC Media, Russia’s leading independent media company which runs CTC and DTV television channels.

Responding to the situation, many, if not all Russian TV series and movie producers found themselves adjusting their production plans and budgets and dropping some projects.

“Production budgets will have to be cut all over the industry,” Vlad Ryashin, chairman of the board of the Star Media group of companies, told Passport. “Production costs will plummet by 30 percent, which is the optimum amount that will allows us to preserve the quality of our product.”

“We had to suspend several promising projects in early production stages, and for several more, budgets were reconsidered,” Ryashin said, adding that work on projects already launched by Star Media, such as the youth comedy “O, schaslivchik (Lucky Man)” or the biopic TV series “Kotovsky,” is going ahead as planned.

Meanwhile, if TV series producers primarily depend on TV stations, which, in turn, are highly dependent on ad revenues, the theater movie industry has been substantially supported by the state in recent years. And although there have been plans for changing the system of state support, making it more effective, it looks like state money is going to carry on flowing into the theatres, unless the state budget itself falls prey to the ongoing crisis and will have to be sequestered.

Bumazhny Soldat (Paper Soldier)

Tarif Novogodni (New Year Tariff Plan)

Last fall, the government proposed a new program for financing the domestic film industry, which would give the most commercially successful producers 12 billion rubles in state support over the next three years. At the same time, gratuitous state subsidies to producers will be cut from the current 3 billion rubles a year to just 300 million rubles. It is not yet clear now, if this program is going to be implemented in full, given that the country’s state budget could have a defi cit for the first time in ten years in 2009, and some expenditures will have to be cut. However, it is unlikely that the government would completely give up financing the film industry, which it has been actively supporting since the 1990s.

Regardless of how much state money is going to be pumped into the Russian film industry, there are also good things related to the crisis.

There is a widespread belief that tough times oft en prompt people to spend more cash on entertainment. And although theater prices in Russia are often disproportionately high, cinema is still something that many people here can afford. If this theory follows through, we should see a surge in attendance of pure-entertainment kind of movies, such as comedies within the next year or so. What is clear at this point is that Russians don’t seem to be cutting back so far on cinema-going, something which box offi ce figures of recently released films show. The New-Year themed “Tarif Novogodni (New Year Tariff Plan)” grossed almost $4 million in the fi rst couple of weeks after being released, while the melodrama/comedy “Platon” hit the $5 million mark – both being pretty good figures compared with what an average domestic feature grosses.

For sure, there are some practical ways in which the Russian film industry could benefit from the crisis. Industry insiders say that a lot of cash has been pumped into the film business by companies and private individuals coming from different backgrounds and having little understanding of the industry. As a result, there have been generously financed movies of very dubious quality. If that kind of “random” money dries up, it will be only good as there will be more room for more professional projects.

“If fewer bad films are produced here, it can only be for the best,” Olga Chirikhina, deputy general director of Monumental Pictures; the company formed by Sony Pictures and Patton Media Group to produce films for the local market, told Passport.

“The crisis obviously isn’t pleasing anyone in the industry, but the good side of it is that it has prompted the sector to eventually begin thinking about the future, also pushing large players into reconsidering their strategies, production plans and relations with partners and competitors,” Ryashin said. “In November, the key players in television and movie production decided to form the Association of television and movie producers.”

The global downturn may also be good for the industry as it is bringing down fees charged by talent and crew, which, producers complain, have been exorbitant. Some five years ago, when the domestic film industry began to experience a revival after a dry period in the 1990s, producers oft en complained that, for instance, cameramen or gaff ers, who had mostly worked shooting commercials, then migrated to cinema, started to demand exorbitant fees. Eventually, the producers had to give in, but now everyone is beginning to realize that enormously high fees are history. Reportedly, even major stars are now agreeing to work for two thirds or even one half of what they would have demanded before the crisis broke out.

According to Ryashin, one of the main policies of the newly formed producer association will be to bring down the fees of talent and crew, as well as equipment and studio rent, which he says are major items of a movie’s budget. “For instance, during 2007 alone, production costs of a film project skyrocketed by almost 60 percent,” he says.

Regardless of what the overall situation in the market is, there is always room for creativity, which doesn’t always require high budgets. Russian film-makers have traditionally done quite well in the art house domain, earning no small measure of international recognition. Last year, for instance, Anna Melikyan’s Rusalka (Mermaid) won the World Cinema Dramatic Directing Award at the 2008 Sundance Film Festival and the FIPRESCI Prize for the Panorama program at the 58th Berlin International Film Festival, while Alexei German Jr.’s Bumazhny Soldat (Paper Soldier) picked up the best director’s Silver Lion at the Venice International Film Festival. When it comes to art house, it is good directing and actors’ performances that matter more than lavish sets and expensive visual effects. And in that respect, the effect of the crisis is not going to be that significant.

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