Korean cinema chain sets sights on Russia

Russia In Review

CJ CGV will operate in the local market through a joint venture with local real estate developer ADM Group, which purchased several dozen old movie theatres in the Russian capital from Moscow City Hall in 2015 for further reconstruction and renovation.

Brad Kim, VP of CJ CGV, told Russian federal news outlet Vedomosti that his company plans to open 150 to 200 cinemas across the country. Through the joint venture with ADM Group, he added, the company intends to open 33 cinema complexes with 160 screens by 2020 in Moscow alone.

It is not known yet, however, how much money CJ CGV will have to invest in its Moscow network. ADM Group reportedly requires about $650 million to rebuild old cinemas, most of which have been out of service for years and hence require extensive capital repair. 

Additionally, “to improve its position in the country and offer high-quality products to its visitors,” the company may consider allocating investments in the Russian movie industry as well. CJ CGV is among the top production companies in Korea, and in the past it has pumped money into at least two films in Turkey—a market where the company has also been emerging in recent years.

At the same time, several other Russian media, citing sources at CJ CGV, reported that the company considers Russia “a gateway to Europe,” believing that its products established in local markets, including movies, could be exported to the European Union in the future.

Russian Movies Perform Well on the Internet

Russian movies account for almost 15% of sales on domestic online platforms and their share is steadily rising, according to recent reports on online cinemas.

So far in 2017, revenue for Russian movies on the Internet is 3% higher, compared to the same period in 2016, reaching the highest figures ever, although it still lags behind the 20% share of Russian movies in off-line cinemas.

Online sales of Russian movies were particularly strong during certain months. For instance, in January 2017 during the New Year holidays, sales reached 48% out of all film purchases on Russian online platforms, while in March sales hit an unprecedented 60%.

Okko, one of the largest online cinemas in Russia, stated on its website that the share of domestic films in the online sales is growing because the number of quality movies produced by Russian filmmakers is rising. At the same time, to some extent the rise is also associated with the improvement of advertisements and promotional campaigns for Russian films, Okko added.

In early November 2017, Russia’s Minister of Culture, Vladimir Medinsky, also cited the strong performance of the domestic cinema industry. He said that in 2017 the combined box office of Russian movies jumped by nearly 20%.

To further improve gross sales of Russian movies online, the country’s Internet watchdog Roskomnadzor is currently seeking the power to block websites distributing copyright-infringing material within 24 hours of being alerted to the infringing content’s presence, without any court order. It is believed that the new system will significantly benefit the efforts of the country’s law-enforcement agencies to take down Internet piracy once and for all.

More Russian Films to Be Presented in IMAX

The Russian film Furious: The Legend of Kolovrat will be the third domestic movie shown in IMAX in 2017, according to Olga Pilnikova, Imax Corp.’s marketing director in Russia and CIS. Prior to the current year, only three Russian films were shown in the format, starting with the release of Stalingrad in 2012. According to Pilnikova, Imax is ready to consider releasing of a greater number of Russian films on its screens.

In 2016, Russian cinemas sold 3.58 million tickets to IMAX, up by 6.5% compared to 2015. It is believed that IMAX accounted for 0.8% of viewers and 1.2% of screens in Russia and collected 3.8% of the total box office for domestic cinemas in 2016.

Pilnikova explained that Imax Corp. wants more Russian movies to be shown on its screens because domestic movies are gaining popularity among viewers in the “premium segment,” with higher prices for tickets compared to the country’s average. This segment also includes IMAX venues.

Furious: The Legend of Kolovrat was produced with state aid from the Russian Cinema Fund, with a price tag of 360 million rubles (US$6 million) and expected box office of 800 million rubles ($13.5 million). It is another example of what in Russia is called “patriotic movies”—pictures that depict an important historic event or wartime achievement of the country.

In 2012, following the release of Stalingrad, Imax Corp. unveiled plans to release at least two to three domestic films per year on its screens. Those plans, however, were not destined to come true—at least just not yet.