Piracy Warning For Russian Cinemas as Legal Streaming Revenues Skyrocket

With almost no legal access to popular Western movies, Russian cinemas have been selling tickets to short local movies to disguise the unlicensed screening of major Hollywood movies shown during the same sitting. Depending on the direction of the wind, Moscow turns a blind eye or warns of a crackdown on pre-screening piracy, including one expected anytime now. In parallel, legal streaming platforms are enjoying huge growth as business booms.

cinemaWith war still raging in Ukraine, writing about the collateral damage to Russia’s cinema industry seems vanishingly unimportant.

When Disney, Warner Bros., Sony Pictures, Paramount, and Universal left the Russian market, some celebrated their exit as a positive for local cinema. Opportunities for local filmmakers would appear in greater numbers than ever before, some assured, and the entire ecosystem would only thrive without unwanted Western influence.

Market Forces Unite, Demand Hollywood Movies

Having given the cinema and film industries few reasons for optimism in a post-covid and now wartime environment, official advice included increased collaboration with counterparts in ‘friendly’ countries. Full potential could be realized relatively soon; perhaps in as little as five years, but probably not much longer than a decade.

By the end of 2022, amid a lack of Hollywood premieres, the revenues of the largest Russian cinema chains had fallen by almost half, with losses quickly reaching several billion rubles. Fortunately, collaborating with colleagues in neighboring countries turned out to be great advice. Working with friendly entrepreneurs in Kazakhstan and other CIS countries, Hollywood movies destined for those regions also premiered on big screens in Russia, in all their unlicensed glory.

With a nod and a wink, a few cinemas had previously been offering private screenings of pirated movies. In July 2022, an estimated 16 cinemas took part; a week later it was 128.

A later refinement involved ‘pre-screening’ services; people who bought a ticket to watch a short local movie found that a Hollywood movie, unavailable to watch legally in Russia, was included in the price. Avatar: The Way of Water, Top Gun: Maverick, and Dune: Part Two performed so well in Russia they appeared in box office rankings.

By the end of 2023, analysts claimed that Hollywood movies made available via ‘shadow distribution’ accounted for 20% of all box office revenues; others believed it could’ve been as much as a third.

Pirated Content Blamed For Undermining Legal Market

Over the last two years, various politicians have sought to link movie piracy to the war in Ukraine. Former Russian President Dimitry Medvedev was more blunt than most when proclaiming that after a change in the law, all intellectual property owned by U.S. companies should be considered fair game.

Screening unlicensed or pirated movies without rightsholders’ permission is illegal in Russia. It’s also illegal to distribute movies that have not received state certification. Hollywood movies are no exception; no certificate from the Ministry of Culture, no distribution allowed.

During a strategic session on the development of domestic cinema, held early October by Prime Minister Mikhail, the activities of regional cinema chains were discussed. Specifically, cinemas that screen uncertified Hollywood films in the ‘pre-screening’ format.

Whether promises will provoke any physical action is unclear, but according to an RBC source, the next stage will see authorities carrying out “intensified checks” at cinemas “in the near future.”

Exactly how far in the future is unknown but arguably anytime now might be a good fit.

Box Office Results for H1 2024 – Depressing and Catastrophic

• Total cinema tickets sold in Russia H1 2024: 73.1 million (4.2 million screenings)

• Total cinema tickets sold in Russia H1 2019: 113.1 million (5.0+ million screenings)

Quoted by VC.ru, Pavel Ponikarovsky, board member at the Association of Cinema Owners (ACO), described the first six months of 2024 as “depressing” and the lack of quality content, “catastrophic.”

Olga Zinyakova, head of the Karo cinema chain, bemoaned the lack of quality content before inadvertently confirming that whether pirated or not, Russians will pay money to watch American films, even at the expense of legal Russian content.

“Pirate screenings take viewers away from official distribution, and until this issue is resolved, legal content will lose at the box office,” Zinyakova said.

unic-big-screen-report-2024For comparison, the bloc to the west of Russia has a thriving cinema industry. It not only pays the going rate for movies but also demonstrates impressive growth while doing so.

According to the Innovation and the Big Screen report 2024 (pdf) published in April by the International Union of Cinemas, box office revenues increased 25% in 2023.

Legal Streaming Platforms Surge in First Half of 2024

At the same meeting in early October, further discussion concerned the need to strengthen the fight against piracy of Russian films and TV series, such as those currently available from Russia’s legal streaming services.

Unlike their bricks and mortar equivalent, Russia’s online streaming platforms showed impressive gains in the first half of 2024. According to data published by TelecomDaily, earnings were reportedly up by more than 42% when compared to the same period last year.

Market leaders Kinopoisk, Ivi, Wink, Okko, Kion, Start, and Premier, account for more than 97% of the market in monetary terms. However, what really catches the eye are the revenue increases when compared to the first half of 2023.

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Additional growth during the next few years doesn’t seem unlikely, but the bigger question relates to Hollywood movies. When they eventually return to Russia, whether that takes 5, 10, or 15 years, it will be interesting to see the effect on the online cinema market. In theory the theatrical market too, but it could already be too late.