This article seeks to explore the reasons for the diverging curves in film production and audience response in post-Soviet cinema history. I shall examine the correlation between film production and audience response in order to address the issue of whether the crisis in Russian cinema depended on the collapse of the system and the decline of traditional forms of film production and distribution, or whether it is a natural result of the demise of cinema as an art form a century after its 'invention'. I begin by looking at traditional forms of management in the administrative structures of the film industry (Goskino, the Film-makers' Union) and their response to political changes, in particular with the introduction of new laws on cinema and authors' rights. The transition from state-subsided to independent film production, and from state-managed to commercially driven distribution is assessed in conjunction with the different areas of marketing the final product through theatrical release, video and television sales. Finally, I consider the state of Russian film. My purpose here is twofold: I outline the new structures for film production and distribution, and I point out their implications and dangers. I assess Russian cinema of the 1990s both as a powerful industry and as an art form that is instrumental to the state's attempts to define a national identity and validate the nation's cultural heritage.