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Wednesday, April 30, 2008

That's Russian Entertainment!

Reuters reports:

Before grumbling about rising movie ticket prices in the United States, consider a trip to the multiplex in Russia.

The recent Matthew McConaughey movie "Fool's Gold" is playing at Moscow's 11-screen Oktyabr Cinema for 300 rubles per ticket -- that's $12.70. [LR: In a country with an average wage of $4 per hour, a Russian needs to work for three hours to pay for a single movie ticket; a whole day's wages would be needed to pay for a date]. Stick around for the later showing of the horror film "Shutter," which is running only in Oktyabr's 35-seat VIP room, and the price jumps to 1,200 rubles ($51).

A night out at the movies or the occasional theater seats might require budget-balancing in the West. But that same escapism is becoming a luxury item in Russia, where out-of-home entertainment can eat up a sizable portion of the average wage of the working class and those on retirement incomes. "Certainly, there is a segment of the Russian population that is left out of entertainment because of the price," says Maria Lipman, analyst at the Carnegie Moscow Center, which studies public policy issues.

But even as Russia spawns a growing middle class and disposable income increases of about 10% each year, the average net monthly wage translates to $524 per month and the average monthly pension to $130.The increasing prices aren't limited to Moscow's entertainment industry; the city was named the most expensive in Europe two years running, according to Mercer Human Resource Consulting. At the same time, PricewaterhouseCoopers estimates that the average price of a movie ticket in Russia was 101 rubles ($4.12) in 2006. Today, Moscow prices range anywhere from 150 rubles-500 rubles ($6.12-$20). And for "event" movies, ticket prices often are hiked during the first two weeks in release. In Moscow, prices also can vary depending on the time of day or whether it's a weekend showing.

Leonid Ogorodnikov, CEO of Russia's largest movie chain, Caro Film, explains the variance in cost as the price of ensuring quality. "There are theaters in which prices don't go up on weekends and holidays, but these are old cinemas that don't guarantee quality presentation, sound, service, etc.," he says. "These are attended by moviegoers who aren't ready to pay for a quality film screening."

Kirill Ivanov, vp operations and development at Cinema Park, Russia's fourth-largest exhibitor, chalks up the expensive ticket prices to extremely high rental rates for cinemas in Russian shopping centers. "If before this concerned only Moscow and to a certain extent St. Petersburg, now the rental rates in small cities are just through the roof," he says.

But Sergei Lavrov, box office analyst at Russia Film Business Today, places the responsibility for high ticket prices squarely on the shoulders of the film business. "With so little regulation in this country, distributors can do whatever they like," he says.

Although reserved seating is becoming increasingly common in Europe and the U.S., tickets in Russia are divided into economy and VIP categories. Some theaters even set aside halls with much smaller capacity, with tickets selling for as high as three or four times the usual admission rates. If prices are beyond your reach, don't even think about heading out to a Moscow nightclub. A booth can cost as much as $12,000 in some hot spots.

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