Russian cinema today is being reborn. Analysts at home and abroad have observed a rise in the number of films being made, and in the money they are taking. According to data from the European Audiovisual Observatory, Russia is now firmly amongst the top ten countries of Europe in terms of cinema-goers; and in the world, according to IHS, in terms of box office receipts.
Historically, it has come about that film production in Russia relies, to a great extent, on the active participation of the state. And the state does support film-makers. But if government grants were taken out of the equation completely, it is not known if Russian cinema would survive or not. The best producers enjoy state aid. And if the money is there, ambitious projects with every chance of being profitable can result. But Russian films are watched by a very small number of people abroad. Our movies are sold in 3% of the territories yielding worldwide takings, whereas American movies, for example, are sold in over 80% of them. In actual fact, this is no reason to despair, but rather an indicator of real potential and the vector of growth for the film industry in Russia.
These days, Russian film-makers consider themselves to have an important objective: to integrate themselves into global cinematography. One route is joint production and enticing foreign investors to work with them. In the way that, for example, the French director, screenwriter, and producer Luc Besson does. He lives in France but doesn’t use only French money for his work. A lot of European businessmen and Americans invest in his films. And he carries out projects which then go on to sell everywhere. And Hollywood is successful on the whole because the finances there come from America, and Germany, and France, and Indonesia, and China…
Hence, the objective of Russian cinema is to be involved in international projects which attract foreign investment, and to make films which will be seen throughout the world. And we in Russia know exactly what is worth doing with overseas partners.
First, to shoot genre films for which there is a demand.
Secondly, to shoot them in English.
Thirdly, to shoot them with global stars in the leading roles.
And the Russian film industry is going down this road. And there have been real successes. For example, hard at work at also targeting western viewers is the Russian director, screenwriter, producer, and music video maker Timur Bekmambetov. His two most recent films deserve a mention. The first, the famous desktop thriller Unfriended, was shot by the director Leo Gabriadze; the production budget for the film was 1m USD, and on release it took over 50m. The second is the science fiction action film Hardcore. This picture sold at the Toronto International Film Festival for significantly more than it cost to make. But such stories are still few and far between.
However, investing in the Russian film industry is profitable. Not least because the dollar exchange rate has risen. Therefore filming in Russia is more convenient and not so pricey. In the Moscow region, especially, where, historically, numerous film studios sprang up and are still working. If anything, Russia is genuinely rich in resources in the film business worthy of investment.
How does it all happen? In the same way, no doubt, as in the rest of the world. I, the investor, want to put money into film. A director comes up to me and says, “Give me some money, and we’ll meet up on the red carpet in Cannes”. More often than not, it’s a question of trust.
Of course, there are different routes for those wishing to invest in film production in Russia. If it is a case of someone wanting to invest directly in the making of a film, then it is possible to produce the picture independently: here we are talking about figures in the region of one and a half, two and a half, or three million dollars (a film for distribution). If not even more.
But to those in small and medium-sized business, I would advise becoming a co-investor in a project. For this, you need to select a film production company. This could be one of the so-called majors which receive the above-mentioned money from the Russian Film Fund (professional film companies who know what they are doing), and here, the figures, in my experience, will be from several hundred thousand to several million dollars. Or it could be an independent film company which produces its own films, and again, you could be a co-investor.
How do you go about selecting a company? First of all, by the films they have already made. By how well they did financially. By the names of directors and the actors they have cast.
But, in any case, it is important to know that investing in film is by no means straightforward. It is essential to know what you are investing in, why you are doing it, and to be aware of the risks. And essential, it goes without saying, to love film.
It also needs to be said that, in itself, shooting films (a large and important job) is only part of it all. The film industry is also workshops, and laundries, and cinemas, and restaurants, and all kinds of distribution. All of this is just at the point of being built in Russia. And these are also points where potential investors can bring their force to bear.
To me personally, it seems that there is a future in the business to do with so-called film production servicing. Here I would point out the gaping hole in quality services on offer in providing vehicles (on lease) for film shoots. We are talking about trailers for the actors. When making films, I realised that there are few of them these days in Russia. Yet they are in demand from all film-makers. And the standard of those we have available is still low. Because the owners of these vehicles simply never have the time keep them in good condition: they are constantly being used. In other words, this niche in Russia is, as yet, vacant. And investing in this could be within the means of small and medium-sized business: a hundred, two hundred, four hundred thousand dollars. This could be made back fairly quickly and bring in income.
In Russia, still there are… hardly any cinemas. And where they happen to be is somewhat random. In Kazan (the capital of the republic of Tatarstan), for example, there are today more cinemas per head than in Moscow. And quite a few towns with populations of 50,000 - across the country and even in the Moscow region – don’t have even one (!). But the people there would go to the cinema if they could. This is also somewhere possible investors could use their wherewithal. By my calculations, in Moscow alone, there should be twice the number of movie theatres than there are. That’s a massive market! And one shouldn’t forget that in Russia the distribution period is a very short one. On average, it lasts for two weeks, whilst in America it’s 20–30 days. This is partly down to the lack of movie theatres. But you need to remember that in Russia you can only go into this area with big money: tens of millions of dollars. It is big business already. And it is has been heavily carved up.
What other problems and difficulties in our business do potential overseas partners need to know about? One is that in Russia the film industry has a shortage of middle-ranking staff. Also there aren’t enough capable assistant directors and props managers. Things are somewhat better with actors. Acting school here has long been very strong.
And finally, it is probably worth touching on one more aspect of the film industry in Russia: the supply of film-making equipment. This business here is, let’s just say, a little difficult. Those who work in it buy the camera and lighting equipment, and rent it out. But they buy it for foreign currency and rent it out in roubles. Given the economic crisis and exchange rates, you wouldn’t envy them at all at the moment.
But overall, we look to the future optimistically. By the way, 2016 has been declared the Year of Russian Cinema. Which means that, for investors, film production here is set to become even more attractive.