Russian cinemas show Disney movies despite boycott over Ukraine war

At a movie theatre in central Moscow this month, people had come to watch an illicit film. It wasn't a documentary about the war in Ukraine or political persecution under Vladimir Putin's regime. It was "Avatar: The Way of Water."

Since Russia's invasion of Ukraine last year, Russian cinemas were supposed to have been left without most of the Hollywood blockbusters that had been the core of the country's movie fare pre-war.

Within the first month of the war, the U.S.' major movie studios announced they were pausing theatrical releases of their new movies in Russia, as Western governments imposed unprecedented sanctions on Moscow. Disney, which produced the new "Avatar," said it was doing so in response to "unprovoked invasion and tragic humanitarian crisis." Warner Bros, Paramount, Sony Pictures and Universal also stopped their releases.

But more than a year on, most major U.S. blockbusters are widely available in Russian movie theaters, which are circumventing the de facto boycott by illegally screening high quality pirated copies. With authorities doing little to stop this -- and at times even encouraging the practice -- it means Russian movie-goers are still able to watch most of the same movies as the rest of the world.

The theaters showing them are not underground pirate cinemas either. They are some of the country's largest chains. Showings of "Avatar: The Way of Water" -- the second film in James Cameron's Avatar series -- were easy to find in theaters in Moscow and across Russia.

At the Kinomax cinema in Moscow's Riga Mall, the scheme for showing "Avatar: The Way of Water" was simple. Customers buy a ticket nominally for a different Russian film -- one that also includes a "preview" screening. In this case, the "preview" was the over three-hour "Avatar" sequel.

"It's like you buy a ticket to one movie, and you're getting another," said Nikita, who came to watch the film and like most people ABC News spoke with at the cinema gave only their first name. "It's a somewhat surprising situation but what can you do."

Most people outside the cinema also shrugged at the irregular showing, saying they were glad they still had the chance to watch foreign movies.

"We live in Russia. Nothing ever bothers us," said Maria. "So, we have to look for some loopholes, tricks."

The practice of presenting "Avatar" and other Hollywood films as a preview is widespread in Russian theaters as these establishments attempt to avoid fines under Russian laws which still prohibit the practice.

Movies released in cinemas require a distribution certificate from the Russian Ministry of Culture. However, by listing a licensed Russian film as the main billing with the "Avatar" preview tagged on, cinemas can write down the screening as legitimate, according to the Russian state newspaper Izvestia. It is the little known Russian films that are also assigned the massive viewing figures and financial takings that are actually coming from these preview films.

In reality, by showing "Avatar" as a preview, cinemas are still violating the Ministry of Culture's regulations which carry a fine of roughly $1200 to $2450, according to Izvestia. But because of the high takings from films like it, many companies prefer just to risk the fine, the newspaper wrote, citing industry sources. Regardless, the ministry is hardly enforcing the rules, Izvestia wrote.

Russian authorities have done little to stop the screenings. In fact, former president, Dmitry Medvedev, a Putin ally and now deputy head of Russia's security council, encouraged Russians to illegally download Western films and series no longer released in the country.

"Find the right pirates and download them," Medvedev told Russian news agencies in March. "If they've left us, all these 'Netflix' and so on, it means we will download it all, we will use it for free. And I would that it was spread all round the internet, so as to cause them maximum losses so that they go bankrupt," Medvedev said.

State television has also told people openly about the opportunity to watch the movies as previews in cinemas.

The Walt Disney Company declined to comment on the screenings of its movies in Russia. (Disney is the parent company of ABC News).

The studio boycott was initially catastrophic for Russia's cinema industry. Movies released by Sony, Disney, Paramount, Universal and Warner Bros. accounted for 80% of the Russian market pre-war, according to a leading Russian industry magazine.

The Russian cinema industry has lobbied the government to legalize the unlicensed screenings and Russia's parliament has moved towards doing so. The parliament now is reportedly close to completing a bill that would allow Russian companies to license films, series and music against the wishes of owners from "unfriendly countries."

The bill would give Russian courts the right to re-assign the licenses to Russian companies in certain circumstances, according to the business paper, Vedomosti. Some experts, however, warn that this would violate international trade agreements Russia is party to.

Movies are just one area where Russia is trying to adapt to its new isolation. Kremlin friendly businessmen bought some high-profile Western brands and reopened them under new names: McDonalds' is now "Tasty. Full Stop" and Starbucks has been reopened as "Stars." Products from most well-known brands are still widely available via the gray market and are imported by resellers from countries like Turkey or Kazakhstan.

Only a small percentage of the hundreds of foreign companies that announced they were leaving Russia have actually done so and the Kremlin has used hardball tactics to try to block their exits by creating bureaucratic hurdles that have made the process complicated and expensive. Companies now have to receive permission from a government commission to exit the market by selling at a below market price and they must make a direct donation from the sale to the Russian state.

Some companies decided to continue operating, but many are currently trapped as they struggle to complete the exit process. The Kyiv School of Economics which has been tracking over 3,100 foreign companies in Russia through its Leave Russia project, says only 216 have fully exited and that 474 have announced a decision to leave.

"There were so many announcements when the war started by companies that they were going to leave. But in practical terms, it turned out to be very difficult unless you were prepared to just leave your business," Tatiana Orlova, a lead economist at Oxford Economics told ABC News.