The Great Film Depression: How Ukraine Risks Losing Its Unborn Hollywood

The development of Ukrainian cinema is primarily attributed to state funding. The planned budget expenditures for financing the State Film Agency increased nearly fourfold from 2015 to 2021, rising from 176 million UAH to 665 million UAH.

However, following the onset of the large-scale war, the authorities sharply reduced expenditures in this area. According to the revised state budget for 2022, film expenses were supposed to be 150 million UAH, but only 62 million UAH were actually utilized.

In 2024, support for Ukrainian cinema was expected to return to pre-war levels and even exceed the 2021 figures. However, two months before the year's end, the State Film Agency was able to use only a quarter of what was planned.

Conflict Between Authorities and Market Participants

Since 2022, the State Film Agency has been criticized for its poor management. After the war began, the agency abandoned the practice of pitching – a transparent method for distributing budget funds among films. This decision was justified by the "conditions of martial law."

Additionally, the Council for State Support of Cinematography (RPK) – an organization under the State Film Agency that decides which films receive funding – refused to hold new elections for its members. This was supposed to occur every two years, with the next round scheduled for March 2023. The reason remained the same: the war.

All of this outraged filmmakers. They accused the State Film Agency of opacity and illegitimacy. Back in January 2024, the Union of Filmmakers and several cultural figures signed a letter calling for a change in the leadership of the State Film Agency and the composition of the RPK, suggesting that funds allocated for cinema support should be redirected to the Armed Forces of Ukraine.

"The main issue is their total fear of working transparently. The Council for Cinematography Support lost touch with reality after the full-scale invasion. All decisions were made behind closed doors, without broadcasts or public transparency; the public only received protocols," says producer Andrii Kotliar, one of the signatories of that letter.

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On March 7, 2023, the Cabinet of Ministers extended the terms of office for RPK members led by a former business partner of the President's Office head Andrii Yermak, Artem Kolyubaev. Following this, the State Film Agency decided to resume the pitching practice. However, after a lawsuit from the National Union of Filmmakers, the court declared the RPK's composition illegitimate, preventing the distribution of the budgeted funds for industry support.

Only in the summer did the State Film Agency re-elect RPK members. At the end of October, the new head became former director of the Odesa Film Studio Andrii Osipov.

What About State Funding

By September 2024, the annual spending plan of the State Film Agency was only 25% fulfilled: of the nearly 666 million UAH allocated, only 172 million UAH were used. The unspent nearly 500 million UAH is planned to be distributed among 96 projects by the newly elected RPK on November 19. However, the council warns that not all will receive funding.

The situation is expected to worsen in the future. The thing is, in 2025, funding for the State Film Agency is planned to be reduced by 70% to 204 million UAH. According to the new head of the RPK, such a drop threatens the stagnation of the Ukrainian film market. "The request for the necessary funding volume was voiced, and its significant reduction is a dangerous situation that will lead to a prolonged crisis for years," warned Osipov.

The reality is that currently, the projects in theaters were mostly initiated between 2018 and 2021. Successful films that were showcased between 2022 and 2024 were in the final stages of production before the onset of the large-scale war. This allowed the market to be filled with quality products "inertia-wise."

However, according to Osipov, this effect will end in 2026-2027 if state funding is sharply reduced. Such a situation may also pose a threat of losing talent. "The Ukrainian market is just beginning its development, and successful Ukrainian directors, screenwriters, and producers have only made their first films in the last four years," says the producer of the film "Luxembourg, Luxembourg," Volodymyr Yatsenko.

"As an author, I would be ready to give my project to another country if they finance it. Then it will be a film of another country with a Ukrainian director," emphasizes producer of the film "La Palisiada" Valeriya Sochivets, which will represent Ukraine at the "Oscar" award in 2025.

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The budget committee of the Verkhovna Rada states that the reduction in funding for the State Film Agency is due to the low level of fund utilization in 2024. Artists and the State Film Agency blame each other for this situation.

The latter believes that funding might have been cut due to the actions of the signatories of the mentioned letter. "Within our community, there are people who say that funding allocations from the State Film Agency should be canceled. It seems that some filmmakers cannot win in the competition and, in response, exhibit unfriendly competition. Such criticism led to parliamentarians deciding to reduce funding," says Osipov.

The claims about conflict among filmmakers are not unfounded. However, it looks less like a dispute among producers and more like their unification against the State Film Agency. Many market players have opted out of participating in the 19th competition for the distribution of state funds for film projects. Producers interviewed by the Economic Truth supported the boycott of the pitching process.

"What is happening with a competition that all strong players are ignoring? What films will be made? For me, it’s obvious. The audience is accustomed to quality Ukrainian cinema, and it will be overwhelmed by a new wave of garbage," says Yatsenko.

Is It Possible to Make the Film Industry Profitable

Making films in Ukraine is a loss-making venture, as domestic films have a low likelihood of recouping their costs at the box office. Even the most successful projects in theaters cover only a portion of production costs. For instance, "Mavka" with a budget of over 180 million UAH grossed 156 million UAH in theaters. One of the most expensive films in the country's history, "Dovbush," which cost about 120 million UAH, only recouped half of that amount.

The cost of producing a feature film depends on the genre, financial goals, and strategy. Ukrainian films cannot expect dollar multi-million budgets, but this very limitation encourages domestic studios to be inventive.

To make money from films, one must engage in low-budget projects or choose a diversified funding structure and income-generating strategy, believes Yatsenko. For example, a film may not break even at the box office, but streaming platforms or television channels may be interested in acquiring it.

Where to Find Money for Films

Currently, films in Ukraine are being produced "at a loss," even by successful studios. When discussing their achievements, they can only note a reduction in the losses of large projects. In other words, producing serious films in Ukraine is only feasible with subsidies from the state or other sources.

Companies and independent filmmakers without a financial cushion can rely on state or Western funds. The optimal option