The influence of government participation in Russian film industry

Faculty of Economics and Business

Master Thesis

MSc in Business Administration

Entrepreneurship and Management

in the Creative industries

The influence of government participation in Russian

film industry

Supervisor: dhr. dr. F.B. Frederik Situmeang

Author: Ekaterina Kromina

Student number: 11086688

Statement of originality

This document is written by Ekaterina Kromina, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

Abstract

In creative industries, the question regarding sponsoring often arises. The extensive amount of literature confirms that government funding is one of the most important sources of financial support. In many countries creative industries rely on the state support due to a lack of other types of investments. Thus, it is hard to underestimate the role of the government and its influence on creative industries, in particular on a film industry.

The empirical setting for this research is the Russian motion picture industry. The sample consists of Russian films that were released between 2005 and 2016 with or without government support. It was found in this study that high sales performance and superstar’s participation in a movie are crucial for obtaining the government funding. It was also found that possible movie participation in film festivals is not in set of priorities for the government to allocate budget to a production company. Additionally, the analysis showed that participation of a well-known director in a movie production did not correlate with the money allocation from the state.

Key words: movie industry, Russian film industry, government funding, box office revenues, star

Acknowledgements

Thanks to my supervisor dhr. dr. Frederik Situmeang who was enthusiastic about guiding me and helping me through hard times, and who actually convinced me to change the thesis into the quantitative analysis which gave more profound results.

Thanks to a coordinator of my track dhr. dr. Joris Ebbers who shared his kindness, knowledge and experience with me and all the students on our small EMCI-track.

Thanks to prof. dr. Nachoem Wijnberg without whom it is hard to imagine EMCI.

Thanks to my classmate Christiaan who helped me to sort through all ideas and an infinite amount of knowledge about the subject in my head into the system.

Thanks to all my friends who live in Moscow, St Petersburg, Perm and Amsterdam and their everyday support through telephone calls, messages and meetings. Nastya, Natasha, Sasha – you were always there for me.

Thanks to Shurik who was inspiring to me with his deep in mind academic approach.

Especially, thank you Masha, I appreciate the energy you gave me and the idea of a profound analysis that I finally used while pondering the current research.

Thanks to my buurvrouw Alex for chasing me every other day and helping me out with SPSS – it was a miracle how she could explain it in a second.

Thanks to my parents for giving me freedom to study abroad and for believing in my ability to accomplish the master thesis one day.

Table of Contents

3. DATA AND METHOD 22

FILM INDUSTRY IN RUSSIA 22

GOVERNMENT STRUCTURES IN RUSSIAN SELECTION SYSTEM 25

LEADERS AMONG MAJOR FILM COMPANIES 28

DATA COLLECTION 29 VARIABLES 31 THE INDEPENDENT VARIABLE 31 THE DEPENDENT VARIABLE 31 THE CONTROL VARIABLES 31 4. RESULTS 33

PRE-TESTS DATA TREATMENT AND DESCRIPTIVE STATISTICS 33

HYPOTHESES TESTING 34 5. DISCUSSION 40 ACADEMIC RELEVANCE 41 MANAGERIAL IMPLICATIONS 42 LIMITATIONS
 43 FUTURE RESEARCH 44 6. CONCLUSION 45 REFERENCES 47

1. Introduction

In this chapter, the overview of this thesis will be provided. Firstly, it gives an introduction of the research field of this study. Secondly, it explains why this particular topic was chosen and outlines the research question. Thirdly, the research methodology is presented. Lastly, there is an outline of the thesis structure.

Research Indication

Since 1960s the cultural industries have been perceived from an economic perspective (Throsby, 1994). It means that the arts became an important part of economic activity. Pangaker & Smit (2013) declare that the film industry is a significant contributor to the world economy. In particular, motion picture industry has a big economic significance in the global economy in terms of employment opportunities, consumer spending, revenues, trade and has also a high cultural significance (Eliashberg et al. 2006). Despite the fact that movies may bring huge revenues, huge costs are also involved, as firstly all movies need to be filmed. Ravid (1999) notes that movies are expensive projects, it is one of their unique characteristics.

The cultural industry itself is one of fields which has a big diversity of financial support. For example, governments are interested in preserving the cultural heritage, therefore they support cultural institutions (e.g. art funds, theatres, museums, galleries) and provide subsidies (Nowakowski, 2011). Market failure performs as general argument for providing financial support to the arts (Wijnberg, 1994), which happens for instance of supply and demand imbalance. A lot of products in the cultural industry are difficult to market, since consumers are not fully informed about the art that is being provided to them (Wijnberg, 1994; Nowakowski, 2011). In case of market failure governments should intervene to protect and support the cultural goods that are produced. De Vany & Walls (1999) mention that the hardest part of managing a business in the motion picture industry is that there are not formulas for movie success. Authors point out that most movies are unprofitable, and neither large

budgets nor movie stars may guarantee success. However, the difficulty to predict or explain the success of the movie makes the film industry an interesting area to investigate (Prag & Cassavant, 1994; Smith & Smith, 1986).

Therefore, I will be looking into explaining films’ success in trying to attribute the process of filming to major or independent producing companies with or without help from the government. Investments provided by sponsors or investors sometimes do not cover all the costs involved in movie production, which is the case of some films to rely on government support to fill a financial gap (Young, 2006). For the government it is important to set rules of how the filming process will occur, while for a film company it is important to follow these rules.

It is interesting to compare how several countries performed differently in solving the question of funding for the arts and culture. In 1970s, the budget support for the arts and culture in several countries in Europe (the Netherlands, France, Sweden) expanded enormously (Zimmer & Toepler, 1999). Nowadays, governments are short of funds to support encompassing policies; let alone saying, the government support for the arts and culture is deeply affected by the crisis of the welfare state concept. Nevertheless, the government is still interested in supporting its national film industry, for example to make possible the participation of movies in international awards or even creating new jobs.

In 2010s, Germany was spending nearly €400 million annually on funding film projects (BKM, 2012). Partly it was beneficial for Hollywood filmmakers as Steven Spielberg who produced, for instance Bridge of Spies (2015) in Germany in a co-production with Babelsberg film studio. On February 2016 Bridge of Spies had six Oscar nominations, including one for German production designer Bernhard Henrich. “Hollywood likes to take its productions to Germany, where it can benefit from these government grants. But Germany also benefits from the arrangement, with jobs being created and money being spent there,” says German actor Christian Oliver (Schliess, 2016).

In Hong Kong the government supports a film industry by taking care of movies’ distribution and promotion. Last year, the finance secretary John Tsang provided HK$200 million (US$25.8 million) to the Film Development Fund (FDF). This sum of money was used to re-launch the First Feature Film Initiative and support new directors to make their first feature film (FFFI, 2015). Despite the fact that Hong Kong produced 59 movies in 2015 (slightly more than in 2014), the quantity of local movies on film market came down from 22% to 19.4% within one year. Now Hong Kong is considering to increase funding for the marketing of Cantonese films in China (Frater, 2016). Mr. Tsang is going to provide additional HK$20 million (US$2.6 million) for the distribution and publicity of Hong Kong-produced Cantonese language films in mainland China.

Meanwhile in India Minister of State for Information and Broadcasting Rajyavardhan Singh Rathore said that the government is considering to fund entries of Indian movies on international film festivals. “When a creative product from India wins at the international stage like during the Cannes Film Festivals or the Oscars, it will bring pride to the entire nation. The government is working towards this and is looking to start funding entries to international film festivals,” he said (Malvania, 2016). At the same time, the relationships between some filmmakers and the government in India cooled down. Last year well-known directors such as Anand Patwardhan (documentaries and short films) and Dibakar Banerjee (nominated in Cannes Film Festival in 2013 for Bombay Talkies) returned their National Award medals, which were received from the government, as a sign of protest against acts of violence on their fellow scribes (Dore, 2015).

Governments from all over the world are mulling over funding the movie industry for different purposes: from bringing pride to nation and supporting national welfare via supporting particular genres to creating jobs and earning money by way of commercially successful movies support. All determinants in movie production, its following possible success on a local and worldwide scene and supporting national wealth should be harmonized among different actors. It is the aim of this research

to contribute to the understanding of movie industry production, by exploring this gap and understanding the relationship between government and different film companies.

Research question

So far, empirical studies have identified numerous factors influencing relationships between film companies and the government in the movie industry of different countries. In this study, I attempt to define, how the government can influence artistic performance and industry itself through a decision-making process whether a particular producing film company receives funding or not. In other words, this dissertation researches the effect of government’s role on film industry in the Russian cinema market.

Resulting from the foregoing, the research question of this dissertation is the following:

What criteria play the crucial role in providing funding from the government to the particular film company, and how does government participation influence artistic performance in Russian film industry?

Research environment

The research environment of this study reflects the arts industry in Russia, particularly film industry, which is a good setting to investigate the phenomenon of government’s participation in performing arts field. Relationship between the Russian government, which is represented by the Ministry of Culture and its department Cinema Foundation of Russia (Cinema Fund), and film industry is ambiguous: 2016 was announced as the Year of Cinema (Kozlov, 2015). However, the tricky thing is that the state budget will finance projects of some certain film companies, to be more precise eight major ones which were already chosen and financed in 2015. With one big difference: these huge companies will receive 1,8 billion rubles (€22,5 million) free of charge (Boletskaya, 2012).

What about the whole movie market? All other companies have to be compete with each other for another 1 billion rubles (€12,5 million1_{) of subsidy.}

There is a limited availability of research executed in the Russian motion picture industry, although the economic importance of Russian film in Russia is quite large: 177,1 million visitors saw Russian movies in cinemas in 2013 which resulted in revenues of 44,2 billion rubles, approximately €1,3 billion2 _{(Nevafilm, 2014). In 2015 cinema had only 173 million visitors resulted in the revenue}

of 40 billion rubles, approximately €0,5 billion3 _{due to changes in currency exchange rates. It has been}

argued that since 2009 Russia has had the fourth-biggest box office sales in Europe, because the number of cinemas in the country more than tripled from 2004 (Neumeyer, 2014). However, the percentage of Russian films on the national market is still relatively small: in 2013 the number of national films impetuously increased and gained 18% of total box office earnings, or €234 million out of €1,3 billion. In 2014-2015, the share of Russian cinema has remained around 18%. Russian films retained a market share despite the fact that last year there was no national picture in the top 10 highest-grossing films of the year for the first time in many years. The Commonwealth of Independent States (CIS), which is one of the most important sites for Russian films release outside Russia, does not take bigger interest in Russian films: a share of Russian movies in their cinemas even slightly decreased to 17,3% from 18% in 2015 (Boletskaya, 2016). Nevertheless, the impact of the government subsidy is huge: Neumeyer (2014) mentions that €185 million was the amount of state funding provided for the national film industry in Russia in 2013. It is important to mention that the way how the government determines the effectiveness of state support for the cinema is by evaluating the share of Russian movies presented on the screens (Boletskaya, 2016). Still it does not mean that cinemas were full of visitors, thus films and cinema theatres could not earn enough money even from great amount of

1_{In 2015 the currency rate was approximately 1 euro = 80 rubles} 2_{In 2013 the currency rate was approximately 1 euro = 34 rubles} 3_{In 2015 the currency rate was approximately 1 euro = 80 rubles}

screens. Moreover, in 2008 every fourth ruble in the box office was earned by national picture, in 2013 – only every eight ruble. Nowadays, only few movies succeeded in terms of economic perspective, thus the government has to meet this issue head on. In the situation when the amount of government funding is impressive, and the box office of Russian is not that tremendous, questions then arise: to what extent film companies and the government are satisfied with existing situation concerning commerce and artistic success? What are the exact aims the government pursues? How can the government create favourable conditions for movie industry prosperity?

Research Relevance

Academic Relevance

This topic is academically relevant due to the lack of knowledge about the influence of government participation on cultural industries in such countries as Russia, where the state support is crucial for the culture, meanwhile the state’s command of “what to create” is still strong and the funding system is not fully transparent. All countries have different policies in art performance, but some of them have already faced similar problems which are common in Russian state-art relations. Thus, this study will be helpful for governments from various countries to revise old policies and create new ones by analysing the impact of current policies on the culture (DiMaggio, 1983). This research focuses on the under-investigated area of Russian film industry as part of cultural industries. Therefore, the knowledge about film industry performance could be expanded to other parts of artistic industries, for example theatre, classical and modern art, music, book industry, etc. The limited availability of research conducted in the Russian film industry is what makes it interesting and challenging for me to look into this topic. I would like to contribute to the research field and trigger further research on the subject.

Managerial Relevance

On a practical level, directors of performing arts organizations which are involved in a movie creating process will profit from an understanding of how the relationships between film makers and the government representatives work, when the Ministry of Culture and Cinema Fund expert board chooses projects to fund. Not only the film industry but other cultural industries as theatre, modern art, museums, music industry, etc. depend to a large extent on external subsidies, especially from the government (Austen-Smith, 1980; O’Hagan & Neligan 2005). Moreover, not only creative industries but even sport industry also relies on the government funding and sponsorship. Therefore, performance of sportsmen could be different if they have good relationships with their sponsor company or the government itself. That is why a good understanding of the way the government provides its support could be very useful for all participants in cultural and sport industries. Expanding knowledge could facilitate the improvement of a film, concert or exhibition performance which, in turn, positively influences future state investments, finance stability, and possibility of next projects. All these components are quite important especially during economic downturns which nowadays occur in many countries. Concerning particular examples of this thesis, the Ministry of Culture and Cinema Foundation of Russia may benefit from comprehension and observing the findings derived from the current study, it can use all gathered information for future improvement of national policies related to the film industry.

Research methodology

The aim of this thesis is to understand network structures and influence of government decisions in the empirical setting of the Russian film industry. The research design of this study is of explanatory nature, and aims to identify and explain the relationships between the government and film companies of different sizes, and its consequences within filming process in Russia. An inductive research approach is used due to reason of gaining a context and processes that occur between the state and

film industry, with regard to the distinctive roles and impact of each side. The importance of each participant above mentioned is determined, thereby I explore the way in which the government and films could possibly coordinate and solve issues related to funding and changes in art performance.

For this thesis data analysis is carried out by identifying patterns in information, that are valuable in order to propose a qualitative theoretical framework and to give an answer to the research question. The sample consists of all Russian feature films released between 2005 and 2016. I received data from an independent research and consulting Movie Research Сompany (MRC) that managed more than 100 projects related to the cinema and movie research. MRC provided the information and statistics on those films, including budget, box office results, distributors, number of copies made for cinema screening and genre. Data on festival selection, nominations and awards was obtained from The Internet Movie Database (IMDB.com) and a Russian database Kinopoisk.ru. Several sources were used as informational ones to understand whether the government funding was provided to the particular film company or not. The list includes several sources: European Audiovisual Observatory, consulting company Nevafilm Research and government structures of the Ministry of Culture of the Russian Federation: 1) Cinema Fund and 2) Unified federal Automated Information System of information on films in cinemas (UAIS).

Government and cinema experts’ opinions are enhanced by quotations from magazine and newspaper interviews and they are included to the study to disclose the topic. Additionally, relevant knowledge is transmitted concerning the cultural industries, the movie industry in general, the Russian film industry in particular and the role of the government in this situation.

Structure

The structure of this research is as follows. Chapter 2 will provide a theoretical overview of government funding, then it will describe the relationship between the state and film companies by focusing on different measurements. Further, literature regarding a selection system orientation, the role of the government in movie industry and subsidy will be discussed. The literature review brings additional knowledge to the research topic and explains relationships between the following variables: the government funding and film companies that did or did not receive this support. Chapter 3 explains the methodology of a quantitative research used for this study. Furthermore, this chapter gives a detailed description of the variables that are used in the current study, as well as an empirical setting, method of analyses and data collection. Chapter 4 shows a description of the findings. Chapter 5 contains of the discussion, academic and managerial implications, the limitations of this study and suggestions for a future research. Finally, Chapter 6 provides the conclusion of this study. For completion of this study, references are given.

2. Literature Review

Government funding

The role of government subsidies on the output of performing art companies was examined in an extensive number of literature. Subsidies itself tend to encourage higher quality of product, even with a decrease of activity volume (Austen-Smith, 1980). The results suggest that without subsidy, essentially no minority interest productions would be even produced. DiMaggio (1983) showed the results of the government funding decrease policy in the U.S. According to his research, decrease in the government funding led to higher levels of other types of funding, however at the same time it caused a change of kinds of art to be created due to preferences of patrons: corporate sponsors supported conservative organizations, private donors were interested in large and well-known organizations. Therefore, small and innovative groups were “abandone” in words of funding, and the government support could be directed to fill this gap. Alexander (1996) found that government’s interest lays in sponsoring popular art which could be consumed by major audience, instead of supporting art which would attract non-traditional groups. Frey (1999) analysed the effect of different types of state on the aims of the government subsidies and also subsequent effect on creativity. Moreover, he disputed that guaranteed public financing tends to undermine artistic motivation and therefore creativity. Maddison (2004) explored how different factors influenced underlying changes in the level of the government grants to museums in the UK. The results showed that growth in non-grant income was conducive to lower levels of forthcoming government non-grants. O’Hagan & Neligan (2005) found that state subsidies help non-profit theatres to avoid financial restrictions that positively affect artistic innovation, for example in lowering conventionality in the English theatre sector. In comparison to theatres, museums also derive large-scale significant direct support from national governments. In Australia, for example, 50 percent of museum support comes from the government funds and 35 percent from earned income (Mulcahy, 2003). In Europe, museums typically are funded

by a combination of national and local government support, along with private gifts and earned income. For example, in the Netherlands, a number of government-funded national museums were privatized in the early 1990s, although the Dutch government, as trustee of collections, continues its support (Kotler et al., 2008).

The above mentioned research papers confirm that the government funding is important form of support for cultural industries. There is a number of direct and indirect instruments, which could be provided at local and state levels (Kotler et al., 2008), such as subsidies to organizations and individuals, tax concessions for donations, support for arts education or legislation, for example the enforcement of copyright laws (Throsby, 1994).

Governments have been under pressure to make tougher spending choices than in the past, and social services agencies increasingly have precedence over arts and cultural organizations (Kotler et

al., 2008). Nevertheless, the art sector receives funding from the government but within special

programs which regulate this relation. For instance, in the Netherlands there is program “basic

infrastructure” for the allocation of structural state subsidy to the performing arts which takes four

years. The structural subsidies are provided either directly through the central government or indirectly through funds that are financed by the state. The main core of the “basic infrastructure” is to develop cultural organizations over the whole country. Each region receives financing which is used to subsidize different organizations developing cultural products: from museums, film to the fine and performing arts. The written by an independent advisory report about which organizations should receive subsidy is used by the Minister for Education, Culture and Science to allocate the available funds among cultural organizations (Plasterk, 2008).

In comparison to policies of creative industries representatives, government of each country has its own definition of artistic and commercial value. Due to the reason that the state is one of the main

money contributors to the creative industries, the role of the government is huge within the whole process of launching, development and sustainability of creative sector. For successful continuation of co-operating, the government needs to evaluate projects where it was involved. In that case, the state has different policies, therefore it becomes the selector and the government is able to moderate culture industry. Through significant for the state as the main film supporter criteria, government preferences become clear, and therefore the future of film industry.

What are the consequences for the film industry in case of the government being new selector? How does the industry change? And what are government’s criteria of film evaluation as a selector? These questions correspond to selection system topic which will be discussed further.

Selection Systems

Production of film companies is a creative product which relates to experiential goods. In other words, it means that it is very difficult to value its quality before purchasing the product. As soon as the product is acquired, lack of satisfaction is impossible to compensate. Moreover, the quality of product after consumption is subjective, thus could be hardly evaluated (Caves, 2003). One of ways how to determine the value of cultural products is with help of selection system theory (Wijnberg & Gemser, 2000). Selection system theory gives an explanation of basic principles of how the selection process goes. It was discussed in many works lately, for example by Ebbers & Wijnberg, 2009; Gemser et al., 2008; Mol & Wijnberg, 2007, etc. The theory claims that product value is not given, but it could be determined by certain selectors’ classification, by their decisions and opinions. Thus, the value of a good is within set of individuals’ preferences who act as selectors and decide whether the product is successful.

In creative industries the value of selectors’ decision is more crucial than in other industries. Their expertise becomes more valuable due to the hard process of evaluation of product individual

characteristics (Hirsch, 2000). Selectors influence the opinions of the consumers; they can help to improve the quality perception significantly by their judgment which is part of defining process for customers in product competition. For that reason, it’s important for product to have a competitive advantage by establishing higher value in opinions of the most influential selectors (Wijnberg & Gemser, 2000).

There are three types of selection systems: market selection, peer selection and expert selection. Market selection indicates consumers, simply movie viewers who pay for ticket, of a product as selectors, whose decision for consumption is independent and occurs without intrusion by others. The same time producers are the selected. In peer selection producers themselves act as selectors. Their opinion creates the ground on which consumers make judgements and evaluate the product. For example, some film awards like Oscar or BAFTA where jury consists of movie industry representatives (directors, producers, etc.) could be a good example of peer selection. In expert selection there is a third party who is neither producer nor consumer but who can provide expertise by virtue of specific knowledge of a product thereby influences consumer’s decision. In the cultural industries viewpoints of consumers are driven by critics (Shrum, 1991).

Some authors claim that the two main types of selection in the cultural industries are expert and peer selection (Wijnberg & Gemser, 2000; Priem, 2007). Nevertheless, this could change over time. In the case of the impressionists, they made a change from peer selection to expert selection by giving weight and value to the role of an expert. This change contributed to success of both painters and experts. Experts received more credibility and significance, their opinion influenced the consumers in a different way. In this case, competitive advantage was attained by successful cooperation of both groups, producers and selectors.

play a new role as a selector. As it was mentioned earlier, in different countries and in a variety of arts the government becomes the main contributor, and Russian film industry is not the exception. Moreover, the government organizations like the Ministry of Culture, Cinema Fund, etc. are responsible for money allocation within the industry for different purposes. It can be concluded from state decisions that the government has the power to form the selection process through its evaluations of cultural products. In our case, the film industry in Russia seems to have specific characteristics based on which the government comes to a conclusion on money allocation process. That brings us to the next chapter of the role that quality signals play in the government-industry relations.

Quality signals

Signalling theory tends to explain how the producer assures customer regarding the quality of his product and how third party signals, for example awards or reviews, signify it. Signals are helpful for the customer to evaluate the product; therefore, the customer is more likely to choose this specific good over others. Each producer is interested in improving the perception of his product, thus the signals emitted straight away by the producer, first party signals, are often not taken into consideration as reliable and decisive for the consumer (Dewally & Ederington, 2006). The third party signals come from the side experts, who are not related to the producer of the product. Their independent evaluation of the good quality makes third party signals more trustworthy and valuable to the consumers than the first party signals from the producer (Dean & Biswas, 2001). Even though, third party signals could influence differently depending on the credibility of the source. Obviously, highly appreciate authorities have more influence on the customer decisions than the low ones. Furthermore, since creative industry goods are experience products that may be affected by information asymmetry, using quality signals facilitates to determine the value of a product (Kirmani & Rao, 2000).

There are different signals of quality which may be helpful for a consumer to make a decision, for example awards. Obtaining an award could have different consequences: it may bring an award

winner additional money, make him and his work famous or give some specific privileges. Moreover, important to notice, an award serves as a signal of quality that helps consumers and other actors to make a preference within their value system. In the cultural industries the role of awards as a signal seems especially important due to difficulty in quality evaluation prior to consumption (Gemser et al., 2008). As it was mentioned earlier, film is an experience good which has to be watched first to be sure whether consumers like it, and in case the movie does not meet their expectations, no refund is possible. As a result, it enhances the significance of signals of quality as awards that consumers can take into consideration prior to watch a particular movie. For blockbusters and major film companies advertising and screen intensity as signals may stimulate ticket sales to a much greater extent. In case of independent films, relatively limited marketing budget and lack of ubiquitous word of mouth (Gemser et al., 2007) may expand the role of winning awards for ticket sales growth.

Besides awards, there are other signals of quality in film industry such as star power which refers to the role of superstar in driving the success of a movie. In the film industry superstars could bring higher expectations of quality of forthcoming movie which consequently will increase sales in case of their excellent performing in previous projects. Different studies found positive effect on movie sales performance (Ainslie et al., 2005; Elberse, 2007; Karniouchina, 2011). In Korean movie industry statistics shows that having superstar among cast rises odds of a movie to be a hit by 15-19% (Jung & Kim, 2010). According to Elberse (2007) the involvement of superstars increases the expected revenues on average of US$ 3 million. Participation of a star could also positively influence sales performance indirectly through positive word of mouth prior and within movie is released at cinemas (Karniouchina, 2011). Not only movie stars but also movie directors influence consumers’ and other actors’ decision. Directors with successful list of released movies in the past might indicate good quality of subsequent movie they participate in. Thus, another signal of quality is director power which relates to the role of successful movie director. According to different studies, where the

relationship between director power and film sales performance was observed, directors usually have an indirect effect on consumers’ evaluation process and therefore sales performance (Ainslie, et al., 2005). Research by Jung & Kim (2010) claims that participation of popular director increases the probability of movie success by 10-15%, just slightly less than participation of a superstar. Hence, both star and director power positively affect sales performance.

In this study, it will be examined which criteria fulfilled by the film companies fit best the criteria of the selectors that are presented by the government organizations as the Ministry of Culture and Cinema Fund. As it was mentioned earlier, important by government’s opinion criteria determine the future behaviour and preferences in making movie process of majority film companies in the movie industry, thus the industry itself. Consequently, it will be studied how the receiving subsidy from the government by film company correlates with this company performance later on and their future relations.

Hypotheses

H1. There is a positive relation between the government funding and high sales performance

(box offices) of film company movies.

H2. There is a positive relation between the government funding and award nomination or

award win of a particular movie.

H3. There is a positive relation between the government funding and the presence of director

power in the film production.

H4. There is a positive relation between the government funding and the participation of

3. Data and Method

Film industry in Russia

The story of cinema in Russia begins on May 4 in 1896. It was a 10-minute screening of several short films in the St. Petersburg’s Aquarium Theatre (Segida & Zemlianukhin, 1996). By 1913, more than 1 400 theatres were opened in Russia. Usually, the standard duration of movie-picture show had lengthened not more than an hour. Russian cinema production was flourishing in the beginning of twentieth century: around 129 films were released in 1913, this number was four times as many films as it was released in 1996 when production figures dropped to 34 full-length feature films (Segida & Zemlianukhin, 1996).

Since the increasing of cinematography worldwide and its huge popularity, the Soviet Union had to have a central state directory committee of the Soviet Cinematography. In 1922 Goskino USSR (USSR State Committee for Cinematography) was founded in the Soviet Union. The system of “state command” (goszakaz) – the state commissioning of films to represent some parts of current Party policy, which thus provided more extensive distribution category and a higher pay rate than for other filmmaking projects – would be for a long time, producing around 25 percent of total film production. Within 1960-1980s the industry producer annually from 120 to 150 films (Schmemann, 1982). The same time conflict between the government and cinema industry has grown in strength. Several movies from 1960-80s had been cut and removed by Goskino’s political decision. Case of the film director Elem Klimov serves as an interesting example of what kind of conflicts Goskino had inside. Klimov’s fourth film, Agony (Agoniia; Mosfil’m, completed 1974, released 1981; distributed in the United States as Rasputin), had been shown at foreign film festivals but was released in many years later in Russia where it became a hit with audience of 18,4 million viewers (Segida & Zemlianukhin, 1996), an excellent number at a time when the average draw for a Mosfil’m production was 17 million (Schmemann, 1982). Based on the story by writer Valentin Rasputin’s popular novella Farewell to

Matera (Proshanie s Materoi, 1976) faced with the impediment from Goskino that didn’t give permission for a movie to go the Cannes Film Festival in 1982 (Schmemann, 1982).

By the early 1980s a typical production budget was under $600,000 (Schmemann, 1982) and around 40 million viewers attended a movie. Finally, the film industry had a hit – Vladimir Men’shov’s melodrama Moscow Does not Believe in Tears (Moskva Slezam Ne Verit; Mosfil’m, 1980) which has been watched by 80 million viewers or even more in the first year.

The growing accessibility of television sets and the increase of broadcasting range were partly responsible for a steady decline in cinema attendance, from twenty visits in the 1970s to fifteen visits a year by 1982 (Schmemann, 1982). However, the cinema industry persisted strong, with production expenses compensated by ticket sales.

In the late 1980s, it seemed that the audience forgot about movies. By the time Conflicts Commission was founded to review the status of films in some different groups: films that had been abandoned, films released in highly distorted form and films blocked even before their completion.

Dissimilar to the late Stalin era, when state police asked for “limited number of pictures, but many viewers” (Karakhan, 1996), the new crisis that followed in 1991 was defined by few films and no spectators.

By 1995 even the most successful movie attracted 300,000 viewers. The most cinema-going public in the world had stopped going to the movies. The main components in the late Soviet period, structuring and funding the cinema industry, were also crashed.

Cinema in period of first two periods of Vladimir Putin’s being a president (2000-2008) emerged from the shadows to the limelight of international attention. As the Russian economy stabilized under Putin (Rozhnov, 2007), the cinema sector began to grow and advanced to the fifth largest film market in the world, with box offices grossing around $600 million in 2007.

The distribution of domestic films picked up as well. The season 2003-4 marked a breakthrough for Russian cinema, when author cinema gained the attention of international festivals with Andrei Zviagintsev’s The Return (Vozvraschchenie) winning the Venice Golden Lion in September 2003, and Alexei Popogrebsky’s and Boris Khlebnikov’s Roads to Koktebel being named Best Film of 2004’

by the International Film Critics Association (FIPRESCI), while Dmitri Meskhiev’s Our Own (Svoi)

took three awards at the Moscow International Film Festival in 2004. For commercial cinema, the watershed was marked by Night Watch (Nochnoi Dozor, released 11 July 2004), which had a production cost of $3,5 million and was the first film to gross in excess of $10 million at the box office. Night Watch was subsequently bought by Fox Searchlight, and has been released in a number of European countries and the US.

The journey from a broken-down system to an industry was a long one, and it might speak of profits and blockbusters only after 2004. The exhibition sector had expanded since 2002, when the first multiplex (nine screens, owned by Formula Kino) opened in central Moscow in the new shopping mall, Atrium, in front of if the Kursk Railway Station. Other multiplexes followed suit and by 2005, Moscow counted 216 screens, followed by Saint Petersburg with 59 screens and Yekaterinburg with 21 screens. These developments make the Russian film market a considerable player in world cinema distribution. Moreover, the national distribution network explained immensely to cater for a growing number of exhibitors, including the distribution companies Gemini, Karo, Cascade, UIP and Central Partnership. Production rose, and with it the share of Russian films at the box office: for 20% of titles released, Russian films have grossed approximately 30% at the box office in 2006.

Another recent, very encouraging development is the rise of Russian animation. After Soyuzmultfilm had been disbanded, a variety of animation studios were founded in the 1990s, the most important being the studio Pilot, The Petersburg studio Melnitsa (Mill). In 2008, the animated epic tale Ilya Muromets and Robber-Nightingale (Il’ia Muromets i Solovei-razboinik, dir. Vladimir

Toropchin, CTB and Melnitsa) was released, grossing almost US$10 million at the box office – a stunning achievement for a cartoon. This gives hope for the rise of the animation industry, following the path of feature film production.

Russian film production could thus build on a developed and sophisticated infrastructure. Films are produced by independent companies, often with backing from television, although many continue to receive subsidies from Goskino (State Committee for Cinematography) or its successor, the Federal Agency for Culture and Cinematography. The major television channels such as Channel One, Rossiya, NTC (with its – now independent – film production arm NTV-profit), and the private channel CTC have developed powerful film production arms. In recent years TV channel TNT joined this group, in 2015 TNT become number two in terms of revenues after Channel One among Russian channels (Geodakyan, 2016). The large independent studios – Sergei Selianov’s CTB in Saint Petersburg, Igor Tolstunov’s Profit, Yelena Yatsura and Sergei Melkumov’s Slovo in Moscow and the production and distribution company Central Partnership (CPS) of Armen and Ruben Dishdishian – strike a sound balance between mainstream commercial cinema and auteur films.

Government structures in Russian selection system

The main finance contributor in Russian film industry is the government. Only small part of support is provided by other types of sponsors. Therefore, all movie companies from small and independent to big corporations are interested in being selected by the state to receive funding.

Between film companies and the government, there are several levels of different types of organizations. The Ministry of Culture is responsible for all culture industries in the country. Considering cinema field, there is a special organization which is called Cinema Foundation of Russia known as Cinema Fund (Fond Kino) or officially Federal Fund for Economic and social support of the Russian Cinematography. Cinema Fund plays a role of selector and the government funding distributor. This organization was established in 1995 as a main supporter of cinematography that has

to make Russian cinema known and prominent in the international perspective. “It is the Ministry of Culture that defines policies of money allocation in the cinema industry, – the impact on Cinema Fund, its economic agent, will be strengthened,” says Vladislav Surkov, the chairman of the government in 2012 (Boletskaya, 2012). The Cinema Fund receives money from the budget not directly, but through the Ministry of Culture in accordance with special agreement between the Ministry and the Fund. Each four months, Cinema Fund reports to the Ministry of Culture, and the Ministry may check its work at any moment. Cinema Fund needs to support economic incentives in Russian film industry, especially with regard to greater returns from movie release due to lack of normal competition on the market. Producers compete primarily for sources of funding, not for higher box offices. Since 2012 Cinema Fund is responsible for only commercial films financing. Thereby, “Cinema Fund would stimulate economic development of the industry, rather than distributing budget money without compensation,” says Vladislav Surkov (Boletskaya, 2012). Therefore, Cinema Foundation focuses on supporting the commercial cinema, while the remaining films will be financed jointly with the Ministry of Culture (Safronova, 2012).

Due to lack of complete information how the selection goes, I will make some assumptions which I will test as my hypotheses later on. Every year Cinema Fund selects leaders by the results of their work over last years. There are several possible criteria which are important in decision-making process of the government structure for money allocation, as it follows:

1. High box office or sales performance of a movie,

2. Movie has at least an award nomination on a well-known film festival (local or international),

3. One or more famous artists participated in the movie, 4. Well-known director is involved in the movie.

even within majors some companies receive more funding, other have less support. Several film companies become leaders among majors. Within last several years, eight major film companies have an advantage in obtaining money from Cinema Fund in a first row: avoiding other possible additional criteria, these studios are first to receive funding from the government. Moreover, the amount of state money support is larger for these films’ production than for that of others, usually independent film companies.

Important to notice that 2016 is proclaimed by the government as the Year of Russian cinema, thus all state support this year is provided without obligation to be reimbursed. Earlier Cinema Fund used a special funding scheme to support a number of projects with a certain commercial potential return. This funding scheme worked as it follows: firstly, Russian film companies fill documents to become a participant of state support program and receive money for production or/and promotion of any specific movie; second, Cinema Fund evaluates potential of each project; third, fixed funding is allocated among film companies for a particular movie and purpose; finally, after movie release abovementioned film companies have to return granted funds to the government. For example, in 2012 almost 6,3 billion rubles (€185,3 million4_{) has been assigned in the budget for the movie sector: 3,8}

billion rubles (€111,8 million) went to the Cinema fund, and the rest 2,4 billion rubles (€70,5 million) were used by the Ministry of Culture for other or simply independent cinema projects. After money allocation, the leaders of the industry received approximately 60% of Cinema Fund money. After movie release, producer returned to the Cinema Fund 5% of his own income, but in proportion of Fund participation in the production process. Usually producer gets 40% of profit, therefore if the Fund gave for movie production half of its budget, it will get back 5% of the half of producer’s 40% – i.e. 1% of the profit (Boletskaya, 2012). In comparison to 2012, four years later eight

leaders received only 1,8 billion rubles (€25,7 million5_{) of budgetary funds, while all other}

organizations received only 1 billion rubles (€14,3 million). The total number of how much Cinema Fund received for money allocation is 2,8 billion rubles (€40 million) which is for 1 billion rubles smaller than that in 2012. The scheme in 2016 worked almost in the same way as it was in 2012 except for reimbursement part. The spread of money distribution within government structures is presented on Table 1.

Table 1: Government funding, mln Rub

Source: the Ministry of Culture and Cinema Fund

Leaders among major film companies

List of companies-leaders of the domestic production, that have an advantage in obtaining state support from the Cinema Fund, has been just slightly changed within last years in Russia. In 2015 and 2016 this list was as it follows: film company TaBBak (Bazelevs) by Timur Bekmambetov, STV by Sergei Selyanov, Non-Stop Production by A. Rodnyansky, TRITE Studio by Nikita Mikhalkov, Enjoy

Movies by Georgy Malkov and Andreasyan brothers, Directorate of Film (Direktsiya Kino) by

Anatoly Maximov, Art Pictures Studio by Fyodor Bondarchuk and Dmitry Rudovsky, and the last but

5_{For beginning of 2016 the currency rate was approximately 1 euro = 70 rubles}

10451543 1835 2098 23602641 2741 2445 1592 1563 24383071 3500 2451 3320 2861 3196 38943201 3000 3705 2800 0 1000 2000 3000 4000 5000 6000 7000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

not least Central Partnership which is part of Gazprom-Media holding. It means, these eight film companies which are leaders among majors in Russia are first to receive the government funding without any additional contest. Although, leaders were different even two years ago, and it’s likely that next year current list of leaders will change. Changes among Russia’s leading film production companies for period of 2011-2016 are presented below on Table 2.

Table 2: Domestic film industry leaders by year Source: Cinema Fund

Leading companies 2011 2012 2013 2014 2015 2016

Art Pictures Studios x x x x x x

Direktsiya Kino x x x x x x

CTB Film Company x x x x x x

Strela Film Company x

Koktebel Film Company x Non-Stop Production x x x x x Igor Tolstunov's Production Company x x x x x x Interfest (Real-Dakota) x x Rekun Cinema x TRITE x x x x x x TaBBaK (Bazelevs) x x x x x x Rock films x x Central Partnership x x x x x x Enjoy Movies x x x x

Data collection

The database used for this study consists of 10 years’ quantitative data concerning the government funding allocation among Russian film companies for particular movies in the period from 2005 to 2016. The study revolves around this period due to access to comprehensive availability of data regarding films from industry leaders, major and non-major film companies that were selected by the government, receive funding for production and/or movie promotion and also did not receive support. In average, more than 100 films are supported by Cinema Fund and/or the Ministry of Culture annually (MRC).

This data is carefully filtered for the specific goals of this thesis. In the selection process of films, it was the goal to include as many Russian movies from this time period as possible. To make sure no selection bias would have place, different sources were used to gather information about films. Both types of movies that received the government subsidy and ones that did not receive were selected from European Audiovisual Observatory, Unified federal Automated Information System of information on films in cinemas (UAIS), Nevafilm Research and other different cinema news and/or research sources. Only movies that were produced by Russian film companies were included, even if they had international teams. In total, 266 films released between 2005 and 2016 were included in the sample, 233 of which received government funding and 33 of which did not gain government support.

After sample of films was selected, data of their characteristics, financial situation, film company they belong to were collected. Data on box offices and budget was dedicated from independent research and consulting Movie Research Сompany (MRC) that gathers this information from different sources. Data on festival selection, nominations and awards as well as data on particular stars’ and directors’ participation in each movie was achieved from The Internet Movie Database (IMDB.com) and Nevafilm Research. Data on whether government funding was provided to the particular movie or not was taken mainly from web-sites of the Ministry of Culture of the Russian Federation and Cinema Fund.

In order to prepare the data for analysis, simple excel table has to be set, including variables as it follows: the name of the movie, the year of production, the producing company, the characteristic whether major or non-major film company it is, the total box office revenues, the award nomination, the star participation, the well-known director participation, whether the government funding is provided, the amount of government funding provided. This table can be transformed into statistical program.

Variables

Out of several criteria taken into consideration during data collection, four have been analysed in this research. I chose them as best probable variables based on the correlations between each criterion and the positive decision of the government, which are the following: box office, award nomination, star power and direct power. However, none of movies of the study have been deleted, thus the randomization has been maintained and selection bias has been avoided. The next step was to analyse the relationship between those four and the funding that the Ministry of Culture and Cinema Fund provided to the studied films.

The independent variable

Every year the government supports film industry despite losses or not returning investment back. The measure of the government funding giving to the film company for movie production and/or promotion will serve as independent variable.

The dependent variable

The research will analyse impact of control variables on one dependent variable which is whether film company receives funding from the government or not. The film company had to obtain any kind of money support from the government that could be used for production or promotion of the movie in order to be positioned as a film with the government funding. For each film the dependent variable was dummy coded (1=subsidy received, 0=no subsidy received). This measure serves as dependent variable. Depending on what motivates the government structures to support films, other movie companies would change their position and priorities in order to obtain funding.

The control variables

In this model I intended to test the effects of the moderating variables on dependent variable. The list is mentioned below: sales performance, award nomination, star power and director power.

Due to the fact that I did not use more than one item per variable, there was no need in the Cronbach’s alpha reliability.

Sales performance

Box office success is used for measuring movie sales performance. Sales performance as variable is included due to it is expected that box office results could affect government’s choice regarding providing funding. Firstly, film expenses and their box office were collected from online source. Then, the net revenue of each movie that film company receives is calculated with help of the formula. Usually, the film company receives up to half of box office, thus this figure was taken as the revenue of the company. The last 50% is taken by cinema theatres. Finally, the movie could be considered as successful one when film company not only can pay movie expenses (therefore, having zero profit), but also when it gains some extra profit. The government receives its 5% of investment back from producer’s profit. In case of deficit, even if the movie was popular among visitors enough to beat off all the costs without gaining anything extra, the government does not receive any money back. As a result of when the sales numbers are low, the revenue will only cover their expenses. Hence, only commercially successful movie that earned at least double of its cost (to pay all bills) plus excess of money, this film is recognized as a one with positive sales performance and receive 1 in binary system. All other films are marked as 0, and these movies are recognized as films with low or negative sales performance.

Award nomination variable

For every movie it was investigated whether a film received an award nomination or even an award winning in any film category. All types of local and international well-known film festivals were recognized and included as sufficient. Award nomination for the movie in this study is a categorical binary variable, i.e. it can only have two results: affirmative=1 or negative=0 one. In order to be included the movie has to obtain at least one nomination or win of one of the awards.

Star power variable

Star power a categorical binary variable which has two results: there is a superstar in film cast, then it is =1, or no superstar was involved, then it is coded as 0. To determine, whether an actor or an actress could be considered as a superstar, the database of actors from Kinopoisk.ru, Russian version of IMDB.com, was taken. This web-site aggregates indicators preferences among visitors regarding films, genres and personalities, including actors and actresses. Top-250 of Russian movie stars was chosen who are considered as movie superstars and whose participation in a movie could positively influence box office.

Director power variable

Director power is another categorical binary variable which has two results: whether the film has a well-known director, then it is =1 or it has not, so =0. The list of famous movie directors is based mainly on one important characteristic: the particular director is a superstar among directors. Thus high sales performance of his movies, which determine their success, could be explained as a result of his name appearance among authors.

4. Results

Pre-tests Data Treatment and Descriptive statistics

While preparing all data for the following analyses, all studied variables were examined for data that could be missed by running frequencies tests. However, no absent values in the relevant cases were found.

Once all the data is gathered and handled, statistical analyses are carried out using SPSS. In Table 3 we can see results from descriptive statistics. When we look at means, we see that only 22% of movies with government funding are directed by well-known directors and only 32% of them have

superstars in the cast. Each 5th _{movie sponsored by the government had an award nomination. Less}

than 30% of released with the government support movies showed high sales performance.

The analysis shows that two covariates, high sales performance and award nomination, have a statistically significant effect on the government funding at the level of 1%. Although, one covariate (famous director) does not have any significant effect on the fact that the movie will receive money from the state. Therefore, the analysis confirmed that this hypothesis could be rejected. To test hypotheses, I ran the Independent Samples T-test.

Table 3 Descriptive statistics and correlations

Variables Mean S.D. 1 2 3 4 5

1. Government funding ,872 ,3345 1

2. High sales performance ,289 ,4544 .195** 1 ,001 3. Award Nomination ,211 ,4090 -.365** -.270** 1 ,000 ,000 4. Famous Director ,223 ,4168 -,100 ,017 .390** 1 ,103 ,782 ,000 5. Superstar ,321 ,4836 .132* .246** -,038 .208** 1 ,031 ,000 ,542 ,001

**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Hypotheses Testing

H1. There is a positive relation between the government funding and high sales performance

(box offices) of film company movies.

From the Table 4.1, showing some basic descriptives, it is clear that 77 films with high sales performance and 189 movies with low sales are included in the test. Moreover, 97,4% of successful movies and 83,1% with low box office had the government support.

On Table 4.2 the p-value of Levene's test is printed as < 0.001, so I reject the null of Levene's test and conclude that the variance in government funding for movies with high sales performance is provided differently than that for movies that are not successful in terms of box office. It means, that for the t-test the second row of "Equal variances not assumed" should be used. The 95% CI is [.0786, .2081], which does not contain zero; this agrees with the small p-value of the significance test.

Since p < .0001 is less than chosen significance level α = 0.05, I can reject the null hypothesis, and conclude that the mean providing government funding for movies successful and not successful in terms of box office is significantly different. Based on the results, I can state the following:

• There is a significant evidence to support my research proposal that high sales performance does affect that movie receives government finding. There is a positive correlation.

• There was a significant difference in mean provided government funding between movies with high and low sales performance, t263,483 = 4.360, p < .001.

• By 14,33% more often government funding is provided for movies with high sales

performance rather than for ones with low sales.

Table 4.1 N Mean Std. Deviation Std. Error Mean Yes _{77 ,974 ,1601 ,0182} No _{189 ,831 ,3760 ,0274} Group Statistics

Did the movie show high sales performance?

Governement funding

Table 4.2 Lower Upper Equal variances assumed 57,456 ,000 3,225 264 ,001 ,1433 ,0444 ,0558 ,2308 Equal variances not assumed 4,360 263,483 ,000 ,1433 ,0329 ,0786 ,2081 Governement funding

Independent Samples Test Levene's Test for

Equality of Variances t-test for Equality of Means

F Sig. t df Sig. (2-tailed) Mean Difference Std. Error Difference 95% Confidence Interval of the Difference

H2. There is a positive relation between the government funding and award nomination or

award win of a particular movie.

From the Table 5.1, it can be concluded that 56 films with an award nomination and 209 movies without film festival participation are included in the test. Furthermore, 64,3% of movies with nomination and 93,8% without one received the government funding.

On Table 5.2 the p-value of Levene's test is printed as p < 0.001, so I reject the null of Levene's test and conclude that the variance in government funding for movies with award nomination is provided differently than that for movies that have not been selected by any type of film festival. It means, that for the t-test the second row of "Equal variances not assumed" should be used. The 95% CI is [-.4283, -.1615], which does not contain zero; this agrees with the small p-value of the significance test.

Since p < .0001 is less than chosen significance level α = 0.05, I can reject the null hypothesis, and conclude that the mean providing government funding for movies with award nomination is significantly different. Based on the results, I can state the following:

• There is a significant evidence to support my research proposal that award nomination does affect that movie receives government finding. There is a negative correlation.

• There was a significant difference in mean provided government funding for movies with award nomination and without, t62,564 = -4.419, p < .001.

• By 29,49% more often government funding is provided for movies without award nomination.

Table 5.1 N Mean Std. Deviation Std. Error Mean Yes _{56 ,643 ,4835 ,0646} No _{209 ,938 ,2421 ,0167} Group Statistics

Did the film receive an award nomination? Governement funding Table 5.2 Lower Upper Equal variances assumed 131,079 ,000 -6,351 263 ,000 -,2949 ,0464 -,3864 -,2035 Equal variances not assumed -4,419 62,564 ,000 -,2949 ,0667 -,4283 -,1615 Governement funding

Independent Samples Test Levene's Test for

Equality of Variances t-test for Equality of Means

F Sig. t df Sig. (2-tailed) Mean Difference Std. Error Difference 95% Confidence Interval of the Difference

H3. There is a positive relation between the government funding and the presence of director

power in the film production.

From the Table 6.1, it is clear that 59 movies created by famous director and 206 movies that did not have a well-known director are included in the test. Besides, 81,4% of movies with a famous director and 89,3% without one had the government support.

On Table 6.2 the p-value of Levene's test is printed as p < 0.001, so I can reject the null of Levene's test and conclude that the variances are not assumed to be equal. It means, that for the t-test the second row of "Equal variances not assumed" should be used.

Although, the 95% CI is [-.1901, .0308], which contain zero; this does not agree with the small p-value of the significance test. Since p (0,155) > .05 is more than chosen significance level α = 0.05, I cannot reject the null hypothesis, and conclude that the mean providing government funding for movies with famous or not well-known director is not significantly different. Based on the results, I can state the following:

• There is no significant evidence to support my research proposal that having a famous director does affect that movie receives government funding.

• Hypothesis 3 is reject. Table 6.1 N Mean Std. Deviation Std. Error Mean Yes _{59 ,814 ,3928 ,0511} No _{206 ,893 ,3096 ,0216} Group Statistics

Did a famous director make a movie? Governement funding Table 6.2 Lower Upper Equal variances assumed 9,755 ,002 -1,636 263 ,103 -,0796 ,0487 -,1755 ,0162 Equal variances not assumed -1,435 79,762 ,155 -,0796 ,0555 -,1901 ,0308 Governement funding

Independent Samples Test Levene's Test for

Equality of Variances t-test for Equality of Means

F Sig. t df Sig. (2-tailed) Mean Difference Std. Error Difference 95% Confidence Interval of the Difference

H4. There is a positive relation between the government funding and the participation of

superstar in the film production.

From the Table 7.1, it is evident that 81 movies had a superstar among cast and 182 movies that did not have a superstar are included in the test. Also, 93,8% of movies with a superstar and 84,6% without one had the government support.