FILM BUSINESS IN UKRAINE THIRD INTERNATIONAL CONFERENCE: UKRAINE ON THE VERGE OF A NEW ERA IN FILM MARKET DEVELOPMENT
April 23, President Hotel (Kyiv) hosted the Film Business in Ukraine Third International Conference, the only professional film forum in Ukraine. As the organizers of this event, we can safely say that the conference has become a must-attend event for all professionals of the film industry (especially Ukrainian). This is evidenced by the list of the conference participants, comprised of the representatives of all key players of Ukraine’s film market, many of which have been attending it for the third consecutive year.
A full day of intense work at the conference has resulted in a definitive list of major trends and urgent topics of today’s film market. Firstly, the industry is on the verge of structural changes connected with the development of digital film demonstration technologies. Secondly, state support was subject of an unprecedented lively discussion not only by Ukrainian participants but also foreign guest speakers (in particular from Russia. The industry is recovering from the crisis, and the new times ahead signal new demands for running the business.
Official statistics
The Third conference was attended by over 110 participants from Ukraine, Russia, and Belarus. Unfortunately, due to the transportation force majeure, caused by the Icelandic volcano eruption,a number of guests from the Old World were prevented from attending the conference. The event was covered by 23 media outlets, including Expert, Business, Kommersant, Ekonomicheskiye izvestiya, TV channels Inter, 1+1, Pervy Delovoy. Among the speakers, traditionally, were top managers of the leading international film companies.
Film market reloaded
The first part of the conference was dedicated to film distribution and releasing, as well as movie theater market problems. Dmytro Lytvynov (Planeta Inform Communication Group) said in his keynote speech that in the first quarter of 2010 the BO of Ukrainian movie theaters was UAH 266.4 million ($33.4 million), which is at 60.6% of 2009 full year total and is 54% more than the first quarter of 2009 results. According to forecasts, 2010 box office results in Ukraine will break the $100 million barrier. This growth has become possible primarily due to the development of digital technologies and the release of a number of 3D films in the Ukrainian market. According to the Film Distributor’s Bulletin, three of the five BO leaders (Avatar, Alice in Wonderland, and Clash of the Titans) are demonstrated in 3D format. At present, there are around 40 3D-ready digital screens in Ukraine, whereas prior to the Avatar release there had been only around a dozen. The box office hit of 2009 was the film 2012, pulling in $3.5 million BO. However, in terms of per-theater receipts, the Ice Age animation film became the top-grosser. In the 2009 top ten of the box office hits there are five Russian films. In total, 124 films were released in Ukraine in 2009, which is 35% of Russia’s figures.
It is obvious that digital technologies are the future of distribution. Oleg Berezin, Director General of Nevafilm Company, illustrated this with examples drawn from Russian experience. At present Russia has 412 digital screens, and the experts forecast that in 2010 their share will reach 25% of the market total. This progress presents tangible prospects for the demonstration of alternative content and makes a real rearrangement of market forces possible.
Another panel discussion was dedicated to the re-equipment of Ukrainian movie theaters for digital format. The Ukrainian market was represented by Iryna Zaria (Synergy, Liniya Kino, Oscar) and Oleksiy Nasliednykov (Kynosystema movie theaters network). The keynote speech was delivered by Yuri Prylypko, director of the Digital Cinema Ukraine Company, who has presented a project aimed at financing the roll-out of digital technologies through joint efforts by distributors. This sphere will be the first to reap the benefits from the transition to digital film copies. Interestingly, Yuri’s speech was broadcast from the United States to the monitors in the hall using Skype technology, as Yuriy was stuck there because of the volcano eruption in Iceland. The discussion made it obvious that Ukrainian movie theaters realize clearly the need to rig movie halls with new equipment and are making efforts in that direction, with the box-office success of 3D films contributing to this process. The major obstacle is, obviously, the lack of funds, and the industry is in active search for ways to solve this problem.
Undoubtedly, state support could play an important role in this process. Moreover, state involvement could come handy when it comes to increasing the number of modern film screens in the country. This subject was addressed, in part, by Michael Schlicht, Director General of Sony Pictures Entertainment Russia, who claimed that Ukraine’s population of 46 million requires at least a thousand of modern screens (at present, Ukraine has around 150). In terms of gross BO Ukraine ranks 20th in the Europe-Africa-Middle East region, between South Africa (19th) and Czech Republic (21st). “When I speak of these figures, I want them to reach everyone who is responsible for the film sector in Ukraine, primarily those forming national policy on cinema. Because without government intervention, without some kind of impetus from its side, nothing will change,” Mr. Schlicht said.
Also spoke at the conference Marc Lolo, Director General of the Central Partnership Sales House. The keynote of Mr. Lolo’s speech was the turning point in film business. New technologies are changing the market so dramatically that old practices become irrelevant. The market is in the “reload” stage and is entering a new era. In Mr. Lolo’s words, while Russia has already made one step into this new world, Ukraine is still lingering on the threshold. Our market has a lot of work to do in order to enter this new era. Mr. Lolo suggested his theory of four P’s (a variation on Philip Kotler’s Marketing Management) required for the development of film business in Ukraine:
- Production: in 2009 Ukraine had produced virtually no own projects. Considering the global trend of launching national products in movie theaters, such situation is destructive for the domestic industry;
- Distribution [Prokat in Russian]: in Mr. Lolo’s opinion, at present the distributors are occupying a passive position in film promotion. More often than not, they content themselves with booking without promotion;
- Releasing [Pokaz in Russian]: another blank spot – Ukraine has a scanty number of modern screens (150 as opposed to 2,140 in Russia and 35,000 in the United States);
- Transparent market [Prozrachny in Russian]: this means government control, transparent data on movie theaters’ receipts, and open communication between market players, rivals included.
Oleksiy Nasliednikov (Kinosystema movie theaters chain) pointed to the considerable influence of the recession on the development of movie theater networks. In Ukraine, a peculiar feature of this business is opening theaters in shopping malls. However, many malls in the last year were compelled to deny rent of space to movie theaters, since rental charges for movie theaters are usually lower than for retailers, making the working capital turnover more long-term.
Film production: prospects for the market development
Developing production is impossible without developing distribution and introducing state support. All the participants of the conference agreed with this maxim. While in our country the state support has just being formulated in the new version of the law On Cinematography as of March 18, 2010, Russia has already carried out its reform of the state support system this year.
The reform of the state support of cinema in Russia has prompted controversial feedback from the market. While earlier budget funds were distributed by the Ministry of Culture, since 2010 this responsibility is passed to the Fund for Social and Economic Support of National Cinema, in charge of distributing the major part of the funds between eight companies that have earned a solid reputation in the market. The conference participants heard about the details of the reform firsthand from Sergey Selyanov, whose STV Company was awarded the biggest amount of points on the list of state support recipients – 133, compared to mere 89 earned by its closest competitor. In Mr. Selyanov’s words, regardless of the skeptics’ opinions, the new system of financing brings more perks than disadvantages. A producer can now turn for support not only to the Ministry of Culture but to any of the eight companies receiving financial aid from the state. It’s no secret that the biggest and rarest asset at present is ideas. If a producer has a good project, any of the said companies will be happy to accept it. Thus, even an unrenowned author has an additional chance to implement his ideas and promote himself in the market.
A contradicting point of view was voiced by Sergey Livniev, head and founder of the Leopolis Group, who believes that government funding undermines fair competition. Leopolis’ slate is comprised of a number of successful comedies, in particular, joint projects with the Ukrainian Kvartal-95: Liubov v bolshom gorode [Love in Big City] 1 and 2. Sergey spoke frankly about the mistakes they have done in distributing their own films, on his decision to shut down Leopolis’ distribution department, entrusting the distribution process to professionals. In addition, Mr. Livnev announced the creation of a joint production company with Kvartal-95, funds for which have already being obtained from private investors. Mr. Livnev said that the main thing in cinema business is creativity and talent, and that he was happy to have Kvartal-95 as partners. At present, they are working together on Cherchez la Femme comedy, which was initially called Napoleon Kaput and was to be a sequel of Hitler Kaput, but the concept has changed along the way.
The day after the conference, Sergey Livnev, as scriptwriter of the cult ASSA film, was invited to lecture for the Kyiv audience at FILM.UA and Prima-Film’s Scriptwriters’ School.
Another speaker was Vlad Riashyn, Ukrainian producer whose connection with the Russian market is most tight (both theatrical features distributed by Star Media were produced in close cooperation with Russian companies). In general, the former head of the Inter TV Channel markets his company exclusively as Russian-Ukrainian. In general, the conference has demonstrated that Russian and Ukrainian markets are inseparably connected, and, reluctant as some Russian and Ukrainian filmmakers can be to admit it, the two industries can enrich each other in many ways. As Dmitry Rudovsky (Director General of Art Pictures Company, who was invited as a speaker to the conference but had to stay in Moscow for urgent professional reasons) told the organizers in a preliminary conversation, the prospects for cooperation in the cinema sphere between Ukraine and Russia can be compared to those between Canada and the United States. Such unique alliances need all possible support they can gather. Michael Schlicht, in his turn, cited an example of Ireland , which has realized in time that its film industry could survive by producting films in English for the neighboring market.
New state regulation of the cinematographyin Ukraine
March 18, 2010 established a new milestone in the development of Ukrainian cinematography. On that day the law On Amendments to Laws on Support of the National Film Production was made public. While the innovations are to make cinematographers’ lives easier, the new law contains a number of controversial and ambiguous points. Thus, the third section of the conference featured the State Regulation of the Cinema in Ukraine panel discussion. Its goal was preparing an open address to the parliament, government leaders, and state cinematographic service with a draft wording of the legislation on cinematography. Among the participants of the discussion were Kateryna Kotenko, Executive Director of the Industrial Television Committee, Serhiy Zlenko, lawyer of the Odesa Film Studio and Liniya Kino movie theaters network, Oleh Kokhan, Producer General of Sota Cinema Group, and Oleksandr Tkachenko, Director General of 1+1 TV Channel and co-founder of Odesa Film Studio. Our European guest Simona Baumann, representative of German Films organization in Eastern Europe, also took part in the discussion. The Ukrainian participants of the discussion shared their view on the legislative reform needed in order to bring about the required changes in the film sector, while Ms. Baumann talked of the experience of European film funds and organizations. Ms. Kotenko promised to collect all cinema experts’ requests and elaborate an address to legislators on their basis within the framework of the Committee on Cinematography, created as a part of the ITC.
As usual, the conference not only provided a ground for Ukrainian market players to obtain information from the leading experts in the field and benefit from their experience, but also established a much needed communication channel - virtually the only one in Ukrainian market. As many delegates testified, the market is in urgent need of discussion, and even the whole day of the conference couldn’t satisfy their need for communication completely.
We are certain that the conference with result in a practical contribution to the national film market. We will continue to follow the development of this field and contribute to this process. Hope to see you all at the Fourth Film Business in Ukraine International Conference, scheduled for spring 2011.