Despite the ever increasing budgets of Russian movies, 60% of investments in them are not paying off, due to the gap between box-office receipts and production costs.

Local industry analysts believe that during the next several years the Russian movie industry will be only hoping to earn back investments from the state and philanthropists’ grants.

According to Russian business paper RB, the production of movies in Russia is becoming more expensive. According to estimates of RFilms and Neva Research, Russia’s film production analysts, last year more than $30m (9 billion rubles) was invested in the country’s movie industry, which is two times more than in 2006. Overall, for the last four years more than $95m (29 billion rubles) has been invested in the production of movies in Russia.

Such an increase can be explained by ever growing average budgets of the movies — up to $2.3m (110 million rubles) in 2009, which box office receipts are growing at the much slower rates.

Total production budget of movies in Russia in 2008 grew by 87% compared to 2006 to 8.5 billion rubles. Meanwhile, the total box-office receipts for the same period of time increased by only 67.4% - from 2.9 to 4.8 billion rubles.

The government and the Russian business remains the major sponsors of the domestic movie industry. According to the Ministry of Culture, over the past four years the government has invested nearly 5 billion rubles on the support of movie business in the country.

Mikhail Prokhorov, one of the richest Russia’s businessman, has invested nearly $3 million in the production of musical comedy Hipsters (Stilyagi); Alex Adikaev, an owner of ID Group, a well-known Russian development group, provided approximately $1 million for the production of Russian-US movie The Prophet: The Mission of the Fifth Angel; while Alexander Lebedev, another Russian tycoon, who has been in the news with his acquisition of UK media interests including The Independent has also invested $1 million in the production of such well-known movies in Russia as Yuri’s Day and Paper Soldier.

However even with such backing, Russian movies still remain largely noncompetitive even locally, not able to compete with the star power of Hollywood films.

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