From the new issue of Investor, on Georgian film productions: 

"It is not easy to cover the expenses of the film with the small number of screens that are in Georgia. The market is limited and the number of screens is also limited," he said.

"If you want to make a Georgian film commercially successful, you have to expand this market, you have to go outside...either to Russia or international."

There was certainly no shortage of talented Georgians who made it in the Soviet Union, or later in Russia. While we can safely assume that today there are still Georgians in Georgia with the talent of Mikheil Kalatozov, Tengiz Abuladze, and Otar Iosseliani, it is doubtful that the world will hear from them. Being confined to a small market, and in an industry, with a high fixed cost, they seem to face an almost impossible task. The only hope – a new technology that will lower the fixed cost of producing a film, and a world market open to films from other countries.

While the cost of producing a film has indeed gone down and the world film market is indeed more open than ever, there is still an insurmountable obstacle in the way. The film industry is characterized by positive externalities, that is, the more films a country is producing, the easier it is to produce a film. Vice versa, with little film production the cost of producing a film will be very high, implying a vicious cycle in which a film industry will not start without subsidies or other support programs.

Why are there positive externalities? There are many reasons. The large film industry is able to support a very specialized labor pool of screenwriters, directors, or actors. A large film industry allows investors to hedge their risk, by financing, not one but many films. Most importantly, it seems that there are large creative spillovers in film or more generally art production – think of the French new wave of the 1950s, the new German cinema of the 1970s, or more recently the Romanian new wave.