Financing Cinema Production as a High-Risk Activity

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Abstract

The role of cinema in Russian culture has traditionally been high. The federal and regional budgets, organizations and citizens take an active part in the financial provision of culture and art. However, despite the fact that the costs of supporting the cinema are assessed as very limited, this creative sector of culture is focused on high profitability, which can be achieved in the process of project management. The specifics of the financing of cinema necessitate the search for innovative approaches involving financial market institutions in order to raise funds for financing venture investment projects. Approved by the world practice ways of attracting financial resources are: sale of a share in the project; transfer of distribution rights; organization of private funds; attraction of state funds; bank loans; tax benefits; preferential use of scenery; charity. Analysis of the economic situation of the cinema organizations leads to the conclusion that it is necessary to make practical use of the methods and institutions of state and public support recommended by science and popular in foreign practice. To activate the work in the film business, it is necessary to search for new tools aimed at increasing profitability and reducing the risks of venture projects. Importance of quality and coordinated establishment of the final variant of the price of a film product by all participants in the process of film production, consisting of a film company, a distributor, a retailer, and taking into account the opinions of the end users of the population (in terms of age and age structure and level of education, place of residence, professional qualifications and employment). Priority in the digitalization environment should be given to the preparatory work: the development of marketing strategies and advertising budgets as necessary elements to stimulate innovation and investment in film production.

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 Abstract: The role of cinema in Russian culture has traditionally been high. The federal and regional budgets, organizations and citizens take an active part in the financial provision of culture and art. However, despite the fact that the costs of supporting the cinema are assessed as very limited, this creative sector of culture is focused on high profitability, which can be achieved in the process of project management. The specifics of the financing of cinema necessitate the search for innovative approaches involving financial market institutions in order to raise funds for financing venture investment projects. Approved by the world practice ways of attracting financial resources is the sale of a share in the project; transfer of distribution rights; organization of private funds; attraction of state funds; bank loans; tax benefits; preferential use of scenery; charity.

Analysis of the economic situation of the cinema organizations leads to the conclusion that it is necessary to make practical use of the methods and institutions of state and public support recommended by science and popular in foreign practice. To activate the work in the film business, it is necessary to search for new tools aimed at increasing profitability and reducing the risks of venture projects. Importance of quality and coordinated establishment of the final variant of the price of a film product by all participants in the process of film production, consisting of a film company, a distributor, a retailer, and taking into account the opinions of the end-users of the population (in terms of age and age structure and level of education, place of residence, professional qualifications and employment). Priority in the digitalization environment should be given to the preparatory work: the development of marketing strategies and advertising budgets as necessary elements to stimulate innovation and investment in film production.

 

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About the authors

Natalya P Molchanova

The Financial University under the Government of the Russian Federation

Author for correspondence.
Email: editor@vestnik-vgik.com

Doctor of Economics, Associate Professor; Professor of the Department of Public Finance, the Financial University under the Government of the Russian Federation.

Russian Federation, Moscow

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