Readers' views No 250, July 2005
Executive Vice-President, AMEDIA, Moscow

Your article on Russia sends out some useful signals about the need for reform (“Russia’s economy: Keeping up the good times”, No. 249, May 2005) in areas like energy, banking and so on. However, Russia really is taking off in other business areas, particularly television and film. And why not, given its rich cultural history in music, ballet, theatre and writing?

The German company RTL, owned by the giant Bertelsmann, has just invested €100 million for a 30% stake in Ren TV, the sixth network in Russia. The Swedish Modern Times Group now owns 39.6% of the fourth network in Russia, CTC, which is valued at $1 billion. In five years, the Russian TV advertising market has grown from $240 million to $2 billion, putting it ahead of countries like Spain.

Now the AMEDIA/Sony coproduction, “Poor Anastasia”, a 127-part Russian telenovella, has been sold in over 20 countries worldwide, including Spain, Greece, China and central and eastern Europe. It cost just under $100,000 per episode to produce. In the US it would cost many times that. This is just the beginning of what could be a burgeoning market for Russian series abroad.

The Russian movie industry is also developing rapidly. It has gone from $40 million in 2001 to $290 million in 2004 and is expected to reach $400 million this year. The Russian market is expected to grow rapidly to over $1 billion in the next three years. The US box office was worth $9.4 billion in 2004, but they have 33,000 screens. In Russia there are only 500. Spot the potential: if Russia had one screen for every 50,000 people as in OECD countries, the Russian film, “Turkish Gambit”, the largest movie of all time in the Russian box office, would have grossed $100 million, instead of $20 million! “Lord of the Rings: Return of the King” was the biggest US entry at $14 million.

While Russian movies are growing their domestic market share–US films have slipped from 95% to 85% of Russian movies in the last two years and are expected to be squeezed further–there should also be a significant export market for these films. Another movie, “Nightwatch”, has been bought by Fox for release in the US. In Venice in 2003, the Russian film “The Return” won the Golden Lion and was sold in over 100 countries. And there is a large Russian-speaking community abroad.

While Mr Putin should not, as you say, turn his back on reform, neither should you overlook these new areas which form a key part of Russia’s enormous potential.

Tim Horan
Executive Vice-President, AMEDIA

©OECD Observer No 250, July 2005

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