Following some of our previous articles about the situation of independent film distribution in countries such as Iceland, UK and Portugal, we will now take a look at the landscape of a very particular tandem of states: Russia and Lithuania. We have interviewed the members of Europa Distribution based in these countries in order to get a better insight of the current state of affairs. What are the main problems affecting independent distributors in these territories? What are the particularities of their markets? Can we find common motivations and concerns between two countries with such a different scale?
A matter of size
The Russian Federation is the biggest country in the world, spanning over 17,000,000 km2 and with an estimated population of 144 millions. These numbers alone make it an extremely difficult territory to cover, especially for a small company. This gets even more complicated when looking at the diverse audience trends and tastes that can be found in different parts of the country. “We have to remember that Russia is huge. The spectator in Moscow and St. Petersburg is not the same as the one in Vladivostok. These are different mentalities, so you never know if a specific film would work the same way in both places”, affirms Christina Ayrapetyan, responsible of International Affairs at A-One Films. Founded ten years ago and based in St. Petersburg, A-One Films was launched with the purpose of distributing European and American art-house films (among their latest releases we can find Yorgos Lanthimos’ The Killing of a Sacred Deer or Sean Baker’s The Florida Project). On the other hand, Lithuania’s size and geographical position also implies some particularities which affect the distribution sector. Greta Akcijonaitė, director of the newly founded Greta Garbo Films, explains: “It is important to clarify that when it comes to distribution and sales Lithuania is mostly regarded as part of the Baltic States”. Because of this factor, collaboration between countries is a must when it comes to buying films for distribution in Estonia, Latvia or Lithuania. “This has been the case for many years now, so we are used to it. We have learned how to cooperate”, adds Andrė Balžekienė, head of Kino Pasaka. However, Lithuania is an autonomous and quite distinctive territory in terms of language and mentality, which requires separate actions and different approaches. “There are a lot of local particularities that you have to keep in mind” (Akcijonaitė).
Lack of screens
In 2016 and 2017 there were 79 screens in the whole of Lithuania, which meant a noticeable decrease compared to previous years -up to 95 screens in 2014 and 2015-. This can be seen in the annual report carried out by Baltic Films (Facts & Figures 2018), indicating a worrying tendency for an already limited market. In addition, the pan-Scandinavian Forum Cinemas owns the largest chain of movie theaters and multiplexes in the country (with more than 75% of the market share). “We have a monopoly”, as simply stated by Balžekienė, “meanwhile the independent sector and art-house cinemas focused on European titles don’t have enough screens”. This concern is shared by most of the independent distributors in the country, some of them claiming for a public financing scheme that would help to break the monopoly. “Public financing has to be invested into the reopening of cinemas all over Lithuania”, claims Jurga Liutvinskienė, Managing Director of Kaunas International Film Festival. While pointing out the increasing number of distributors and strong film festivals in Lithuania, Greta Akcijonaitė also acknowledges that when it comes to exhibition the market is not balanced at all. “We really feel the lack of screens, and this is due in part to the digitization stage. We didn’t have any national program or policy to support the digitization of screens. It was left up to cinemas to do it on their own and that is how we ended up with no screens”. Although in recent years some municipalities have used European money to restore some old screens, Akcijonaitė explains that the problem is that they didn’t consider the content, so these screens are now showing commercial production, either national or Hollywood blockbusters. According to the Lithuanian Film Center, the current number of screens is insufficient to provide access to films in smaller cities, which makes this one of the biggest challenges for distributors in Lithuania. The situation is not that different for A-One Films, a company which is currently releasing 8 to 10 projects every year with a baseline of 100 screens in Russia. Christina Ayrapetyan believes that when working with good content there is always a chance to find a spot, but even though the situation is slowly improving in the country the Russian distribution market is also not balanced: “Majors are still holding the top”.
Theatrical still runs the show
When it comes to windows for distribution and its flexibility the situation remains pretty much the same all over Europe: “Cinema is still the number 1 place to watch films” (Balžekienė). After launching the first Lithuanian VOD platform in 2016, the head of Kino Pasaka clarifies that its numbers aren’t significant yet. “I would say that the share between theatrical and VOD for us is still around 90%-10%”. Even with the arrival of the big international platforms, like Amazon and Netflix, Lithuanian distributors claim that the content is not always accessible nor adapted for the local audiences (sometimes there are not even Lithuanian subtitles available). “Theatrical is still the first and biggest window for distribution. Even with TV we have very small chances to distribute European titles. I would say only 1 out of 5 make it. And of course nobody does DVD anymore. The chances are very limited” (Akcijonaitė). Day-to-day releases have worked for Kaunas Film Festival, according to Liutvinskienė, but she also admits that the main income for distribution is still coming from cinema screenings, while VOD platforms have a long way ahead.
In this regard the future looks very different for the Russian distribution sector. Although theatrical is also the primary window in the country, the OTT market has experienced a substantial growth in the last few years. As published by Broad in a recent article, the value of the online movie market in Russia grew by 50% last year up to 7.2R billion (102€ million). For the first time the revenues coming from paid-for services have exceeded ad-funded ones, which marks a notable change in the market. Russia is one of the countries with the highest amount of VOD platforms (more than 40 available at the end of 2015), but this option doesn’t seem established enough for some distributors. Ayrapetyan recognizes that at A-One Films the intention is always to open VOD as soon as possible, but the problems come when dealing with other countries and their regulations. “If we could open the VOD earlier that would mean a lot for us, but it depends on the contract, conditions, a lot of things… The income we get from them is not that big”. Nevertheless, the tendencies are clear and these services are becoming more and more popular in the country. As observed in another report by the European Audiovisual Observatory, VOD is still growing in Russia, at a faster pace than other segments of the industry, as it is the number of viewers willing to pay for subscription content: over 2/3 of Russian TV households subscribed to pay-TV since 2014.
Local and US share the cake
In a landscape dominated by Hollywood blockbusters, one of the main particularities of the Lithuanian market is how good the national commercial production is holding up against US titles. “It is the most growing tendency in our market at the moment” (Balžekienė). In 2016 the market share for Lithuanian films reached the 19.5% of the total admissions, with 3 domestic titles on the Top 5 of the Box office: Between Us, Boys by Kęstutis Gudavičius, What’s Your Emergency? and What’s Your Emergency? 3, both by Tadas Vidmantas. These impressive numbers were actually surpassed by last year’s production, which amounted to an incredible 21,47% of the share. As reported by Baltic Films, the 13 Lithuanian productions released in 2017 made a total of 4,527,528€ in admissions, drawing more than 860.000 people to the theaters and placing two national titles at the top of the box office: Three Million Euros, also by Vidmantas, and Zero 3 by Emilis Vėlyvis. “I think the biggest competitor for European cinema, apart from American titles, is national cinema”, as expressed by Kino Pasaka’s director. Of course US titles performed really good in Lithuania, securing 64% of the market, but the European non-domestic production had to settle with a modest 13,16% (though increasing its numbers compared to 2016). It is important to note that until last year only national films got incentive schemes for distribution from the Lithuanian Council for Culture, but thanks to the efforts of local distributors projects supported in MEDIA Selective scheme can now also apply for co-funding at the national institution. As explained by Akcijonaitė, “it is a kind of automatic support scheme for all projects funded by MEDIA sub-programme (except Automatic Distribution support). Same goes for Creative Europe Culture sub-programme projects”. Nevertheless, Akcijonaitė clarifies that even with these achievements, the general increase in admissions and the growing tendency for Lithuanian production, the situation is still very difficult for small art-house films. Also from the exhibitors’ point of view, Balžekienė stresses the importance of looking for “more creative ways to offer independent films to the audience, so they will not only choose the national and American production but also the international and preferably European one”. As for Russia, where most of the screens at multiplexes are blatantly taken by American movies, Christina Ayrapetyan reveals an interesting initiative by the Ministry of Culture: “They are discussing a law project in order to make it impossible to give more than 35% of screens to any title per day”. Sometimes Russian independent distributors have to deal with a situation in which a major movie comes out and books most of the screens, making it almost impossible for them to find a place to release their titles. “It is crazy when one movie takes everything. I think it should be controlled and made more equal for everyone”.
Piracy is always a concern
As we discussed in one of our recent articles, piracy is always a huge concern for distributors all over Europe. Only in 2016 there were 57 billion acts of piracy related to films, which according to FAPAV costed the industry more than 686€ millions (mostly affecting the home video market). It has been constantly showing up in our ‘country focuses’ as one of the main problems affecting Europa Distribution members throughout Europe, and the case with Russia and Lithuania is no different. “It is a significant problem because there is no real regulation, but also because there is no proper education on the matter”. Greta Akcijonaitė admits that piracy is massive in Lithuania, as well as easily accessible, and points out that the main reason behind it is ignorance: “People don’t understand the problem. They don’t realize that it is a crime, a theft, and it is illegal”. According to Akcijonaitė there is also a lack of specific policies working in the right direction, with only some vague actions carried out by the Government in recent years. Balžekienė also underlines Lithuania’s inaction with regard to piracy: “Our government has no policy for this, like in Germany where you can really get punished for downloading or streaming a pirate copy. In Lithuania things are still not regulated”.
All these aspects were discussed in a professional panel organized last year by Europa Distribution and MIA, where a group of experts gathered in order to examine the impact of piracy in the distribution sector. Daniel Goroshko, CEO of A-One Films, also alluded to a cultural problem and a lack of information, specifically with Russian audiences: “Piracy is considered absolutely normal, no one would bother to make a secret of it. The situation is bad enough to even create issues for other territories: if a film is released in Russia before the Baltic countries, it can ruin their release, so we try our best to coordinate”. This general concern towards the Russian market was also brought up by Ayrapetyan: “Every sales company is worried about Russia because they think we have a special problem with piracy. I can understand this fear, because when the content is leaked in Russian Internet it spreads very fast, but the problem is that first copies don’t come from our country. We can’t remove the content from the Internet mainly because it is not in Russian websites. This situation is frustrating, and sometimes makes it very difficult when we try to collaborate with some companies”. In recent years there has been a substantial growth in the number of people looking for independent cinema online. If we add the new consumption habits brought by VOD platforms and subscription TV, with an increasing number of viewers watching cinema at home, the big question is how independent distributors and exhibitors are going to attract those audiences with legal alternatives. “I think this is where all of us should focus in the future because more and more people will watch films at home and we have to educate in different fields: fighting piracy, doing proper marketing and investing in communication about legal platforms” (Balžekienė).
Exploring different paths
When talking about the current landscape for independent distributors in Lithuania, it is important to note that for most of Europa Distribution members distribution has become just one part of their business model. In a rapidly changing environment, and with all the difficulties referred above, distributors are constantly exploring different paths and strategies to succeed in the market. Kino Pasaka is quite a good example of this trend: “Our company has two main operating goals: one of them is distribution and the other one, which is actually our main activity, is exhibition. We have an art-house cinema in Vilnius with two screens. We also have a VOD platform for our cinema, so we are basically working on these two scenarios every day”. Balžekienė affirms that one could not exist without the other, but that is also Pasaka’s biggest advantage. Having their own theater and VOD platform to show their films is a real game-changer for an independent distributor. “During all these years it has allowed us to look at our releases in a creative way, having all the possibilities on the table”. Regarding the Kaunas International Film Festival, the situation is a little bit different. Due to the concern that this kind of events may work against independent distributors, in the way that they also compete for Creative Europe funding and raise the screening fees for distribution, the Kaunas Film Festival mainly shows titles that are not in the regular cinema repertoire. “This should be the role of festivals”, according to Jurga Liutvinskienė, who also talked about their current projects in the field of cinema education: “Our main focus now is on school screenings and film clubs screenings with the titles of our catalogue”. For Greta Akcijonaitė, who has just launched a new company, Greta Garbo Films, the main goal is now set in audience development projects. “At this stage these are a crucial part of distribution activities because as a new company we still need to find our audience”. Some of these initiatives are the Scope100 project and the European Film Challenge, both launched in collaboration with other fellow distributors around Europe. “These kinds of initiatives are growing in Europe because distributors and exhibitors are inventing new ways to attract, reach and talk to audiences” (Akcijonaitė).
Regardless the country and business strategy, social media have become one of the main tools and greatest allies for independent distributors when it comes to communication and marketing. Ayrapetyan explains that A-One films relies strongly on their media as a way to connect with the Russian audience. Their marketing team is always trying to find a new approach for every film release, working hard in social media and getting people involved in the process: “Our audience is waiting for our movies. Before their release we already have a group of people that are actually waiting to attend the films, and that is great. It is really important to have a direct contact with your followers”. For Balžekienė at Kino Pasaka social media is also the perfect way to introduce their films to the public. “We try to find the main message of a movie and then look for all the imaginable market possibilities in order to identify the right audience for each film. I think for a small distributor like us the growth of social media has really helped”. Balžekienė also stresses the importance of using creative tools and advertising for their marketing goals: “The biggest problem with independent distributors is that we don’t have enough money to promote the films, so we have to use what we’ve got: creativity”.
It’s never been just a business
When asked about the reasons that still drive them to work in distribution despite all the difficulties, our members show a strong passion for their job and a huge respect for their audiences. “I think that finding a good title and the right audience for it is like ‘catching a great fish’. I am really happy when this match happens, when you find a film that you love and share it with the people that will also appreciate it” (Balžekienė). The team at Kino Pasaka is committed to find this connection between their films and their audiences, so the latter will keep coming back to the cinemas and trust European and independent titles. This ambition is also shared by Ayrapetyan at A-One Films, who believes that “what really matters is to reach an audience that is interested and ready for the kind of cinema that you bring”. However, Pasaka’s director knows that for this connection to arise it is essential that they trust the films they are working with: “First of all I have to love the film, and then I can find the best creative solution to make the audience love it as well. For us this was never only a business, we work with titles that we personally love”. Greta Akcijonaitė also remarks the stimulating nature of the job, where good experiences often overshadow the more arduous ones. “I like the dynamics of this work. There is always something changing, new projects, new approaches, new possibilities to be creative… And I like the people in the industry”. For the Kaunas International Film Festival it is also a matter of responsibility, focusing on bringing good content to the public and preserving a healthy work environment with other fellow distributors: “We refuse to be part of a downward spiral where festivals are working against each other” (Liutvinskienė).
Regardless some of the major differences between the Russian and Lithuanian markets, the hope for more screens and possibilities to show art-house films is something that unites all independent distributors in these countries. They also wish for a bigger involvement of their respective governments, asking them to be more attentive to the needs of independent distributors. But most importantly, all of our members are devoted to keep working in order to promote independent cinema and bring better choices to the audience, while fighting for a sector that is more than just a business.
References:
Chris Dziadul. (2018). Russia’s OTT journey. Available:
Baltic Films. (2017). Facts and Figures 2017. Available:
http://nkc.gov.lv/en/wp-content/uploads/sites/2/2014/09/FF-2017-web.pdf
Baltic Films. (2018). Facts and Figures 2018. Available:
http://www.lkc.lt/wp-content/uploads/2012/12/Facts-and-Figures-2018-Baltic-Films.pdf
Tristan Priimägi. (2017). Lithuanian audiences partial to local and US films. Available:
http://cineuropa.org/nw.aspx?t=newsdetail&l=en&did=323573
Aukse Kancereviciute. (2017). LITHUANIA: Country Report 2016. Available:
https://www.filmneweurope.com/news/lithuania-news/item/114099-lithuania-country-report-2016
European Audiovisual Observatory. (2016). Focus on the Audiovisual Industry in the Russian Federation. Available:
https://rm.coe.int/ru-focus-audiovisual-industry-2015-en-pdf/168078353f
Isabella Weber. (2017). Everything you always wanted to know about distribution but were afraid to ask: Piracy. Available:
