The first estimates of Serbian-Montenegrin box-office in 2006 show the biggest decline since the economic embargo imposed by the UN Security Council from 1992 to 1995. From January to November, Serbian theaters sold 1.52m admissions, falling 43% from 2005's 2.65m 2 and earning a total gross of about $4.5m (SD306m), which is 36% down from $7.7m (SD477m) last year. As the value of 1 US dollar went down from 71.39 Serbian dinars in January to 57.56 in December, and average ticket price jumped $.28 (SD20) in ten months, the difference in American currency is 38%.

There are several causes for this more than alarming state of Serbian-Montenegrin theatrical market (Montenegro became an independent state in June but the distribution system has not yet been completely separated). The primary problem for the film business - piracy - has been somewhat lowered since the Serbian Parliament adopted the law on special authorisation for property of intellectual rights last spring.

This brought on raids and confiscation of pirated DVDs that had been freely sold on every corner and arrests of the people selling them, but hasn't stopped piracy because a lack of the law enforcement.

As former habit cinema-going practically became pirates-buying, the exhibition sector suffered the most. In November the leading Serbian exhibitor, state-owned Beograd Film decided to close eight of its 14 theaters in the center of the key city which accounts for half of the overall market. Eight other cinemas have not been in use since 2003, and most of them closed because of the lack of audiences.

Beograd Film went on a strike because of 20 months of unpaid salaries, poor conditions of work and terrible state of the cinemas. The process of privatisation is frozen and the National Agency for Privatization shows no interest in changing the current state. This leaves Belgrade with 20 active screens, while the second largest city Nis (300,000 citizens) has only two and Novi Sad (200,000) four. By comparison, Slovenia which has the same population as Belgrade (2m) has 96 active screens.

2006 saw both the rise of local films production with unprecedented 13 local releases and the fall of the percentage of their market share. The Serbian-Montenegrin theatrical market had always been predominantly driven by local films and it is one of the rare territories in the world where local products regularly outperform Hollywood blockbusters. In 2005, Srdjan Dragojevic's We Are Not Angels 2 sold 657,143 admissions to gross $1.9m and Zdravko Sotra's Ivko's Fete's sold 617,607 tickets to gross $1.6m, compared to Harry Potter And The Goblet Of Fire's 79,516 admissions and $220,343 by January 4, 2006. This year, for the first time since 2003's triumph of Lord Of The Rings: The Return Of The King, a Hollywood film was the most successful one: The Da Vinci Code grossed about $421,899 from 118,252 tickets on ten prints after a run of 20 weeks. It is followed by the third part of We Are Not Angels franchise (114,390 admissions, $390,000) and the first ever co-production of all former Yugoslav states, Rajko Grlic's Karaula (101,461 admissions, $313,000)

Top Five Films in Serbia and Montenegro 2006 (Estimates by November)

1. The Da Vinci Code (distributor: Tuck) 118,252 admissions for SD26,832,755 or $421,899
2. We Are Not Angels 3(Cinears) 114,390 for SD23,627,968 or $390,000
3. Karaula (Cinears) 101,461 for SD20,291,146 or $313,000
4. Ice Age 2 (Tuck) 97,847 for SD17,846,321 $258,642
5. Seven And A Half (Mirius) 58,931 for SD12,595,619 or 193,778