The conventional structures of the cinema industry in its three major aspects – production, distribution, and exhibition – had been shattered by the Civil War. The shortage of films and equipment meant that priority had to be given to the production of newsreels and agitki and the production of Soviet feature films was consequently neglected. As the existing supply of films was exhausted, as electricity supplies were interrupted, and as the economic crisis worsened, so the number of cinemas still in operation fell. This further reduced income which might have been used to stimulate production. The cinema was caught in a vicious circle. As late as 1923, the journal Kino observed:

Two things above all else were needed for the regeneration of the cinema and for its use as an effective propaganda weapon: organisation and resources. The two principal Soviet film organisations to have survived the Civil War were V.F.K.O. in Moscow and Sevzapkino (Severo–Zapadnoe oblastnoe upravlenie po delam fotografii i kinematografii – North Western Directorate for Photographic and Cinematographic Affairs), formerly P.O.F.K.O. (Petrogradskii oblastnoi fotokinokomitet or Petrograd Regional Photographic and Cinematographic Committee) in Petrograd.