The recent beefing-up of the Russian Cinema Fund has seen state financing for filmmaking in the Russian Federation rise from 19 percent of the budgets of all films shot in Russia to 44 percent 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 prioritized 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. “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.” 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 centers. On July 1 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 percent 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 percent in 2011 and an estimated nine percent 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 percent 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 percent of the volume of DVD sales down from 97 percent in 2002. According to provisional information cinema admissions in Russia rose by 5.8 percent in 2012 to an estimated 169 million. The market share for Russian films is estimated to have been 15.1 percent (Observatory estimates based on information from Russian Film Business Today).