Berlin: Russian Art House Cinema Strangled by Faltering Economy

While deals struck before Berlin's European Film Market are being restructured, other distributors no long buy for Russia.

Berlin -- Russia's appetite for expensive art house movies has been hit below the waterline by a sharp drop in the value of the ruble against the dollar and the euro and a looming recession in the fossil fuel dependent economy.

With the U.S, Britain and some other western countries just beginning to edge out of six years of stagnating markets and interest rates at an all time low, Russia -- hurt by falling world demand for oil -- is facing hard times.

That, Russian art house sales and distribution executives at Berlin's EFM say, threatens to all but kill the country's fragile market for niche titles.

"Russia's economic problems don't really affect big movies," Sam Klebanov, head of Moscow's boutique distributor Cinema Without Frontiers, told The Hollywood Reporter.

"If the market shrinks by a fifth for a $6 million grossing movie they still take $5 million. But a hit of that kind for a small art house movie can be the difference between life and death."

European and world sales agents at the EFM are still expecting Russian buyers to come with deep pockets, but that is no longer the case.

"The market for art house films is getting harder and harder. Television channels that a few years ago might have paid $15-$20,000 are now offering $4-5,000 and many no longer buy such films," Klebanov says, adding that he has had to restructure some recent deals for European and Asian movies his company has already picked up.

One solution for world sales agents still keen to see their movies play in Russia would be to shift to smaller MGs and better back end based on fully transparent reporting, similar to the model used in the international book trade, he suggests.

Raisa Fomina, of Moscow sales house Intercinema Agency, which is representing Alexander Mitta's Chagall-Malevich in Berlin among other titles, said she that after 20 years she had pulled out of distribution altogether.

World sales companies had been spoiled by a few Russian companies that tried to kill off competition by paying high prices for material but had ended up ruining the market, she said.

"Television used to be a good market and if you could not recoup in exhibition you could secure a sale for as much as $150,000 from television a few years ago," she said.

But Russian television companies now produced a lot of original material in-house and there was only one designated art house slot - for Russian films only -- on pubcaster Channel One, she added.

Fomina distributed many of Francoise Ozon's early films in the 1990s after forging good relations with sales shingle Celluloid Dreams and picked up titles that include In the Mood For Love and Dancer in the Dark but closed her distribution business last year after releasing Korean film Poetry.