In 2018, the first cinema for 35 years opened within the Kingdom of Saudi Arabia — and interest in the market has been febrile ever since. Mike Thomson looks at the realities of a mass multiplex building programme.
JUST OVER 18 MONTHS AGO, in August 2018, a new cinema opened in the Kingdom of Saudi Arabia, the first for over 35 years. Except it wasn’t a true cinema, but in the words of one Vox exec a “pop-up”, converting a theatre into a one-screen cinema. However, it signified a change in Saudi culture and was the first signs of a territory re-opening its doors. Saudi citizens had to travel to another country to see films up until then. The floodgates were open and numerous operators announced they were going to open in KSA. The market was seen as one of a few left untapped — a boom was on its way.
The question the team at The Big Picture consultancy posed at the 2018 Emerging Cinema Market Conference, a few months later in Istanbul, was what sort of market would the Saudi cinema market develop into? Would it see the same problems that Germany has, languishing with the unfulfilled promise of high attendance, or would it flourish in the same way that Singapore’s market has, exceeing expectations?
But to step back first
In 2018, as part of the Saudi Vision 2030 initiative, driven by the heir apparent, Mohammad Bin Salman al Saud, towards achieving the Quality of Life Program’s goal, Saudi Arabia began to authorise the construction of new cinemas for the first time in 35 years.
The General Commission for Audiovisual Media (GCAM), the licensing authority, took the sensible approach of limiting the licences on offer and deliberately set a high standard of entry level to ensure that the KSA permitted only gold standard cinemas. It wasn’t going to open up the market to just anyone.
The first five licences were granted to AMC (USA), Cinepolis (Mexico), Empire (Lebanon), VOX (UAE) and finally to The Light Cinemas (UK) operating as muvi cinemas, KSA’s first own-brand cinema chain, in conjunction with the Fawaz Al Hokair Group (FAHG). The latter is where the consultancy I am a part of, The Big Picture, fits in. As consultants to FAHG, we highlighted a key area of cinema growth in KSA: property. In all cinema expansions, property is key. Without the locations it is difficult to expand. The inability to secure partners for expansion has certainly prevented some players from applying for licenses in the Kingdom, including one major player that had announced big plans for KSA, later quietly dropping them.
Certainly, muvi has an ambitions programme. Having opened in Jeddah and Riyadh (20 screens) last year, it has further plans to open another 17 cinemas (160 screens in total) in 2020 alone, with more to come after. Likewise, AMC has plans to open up to 40 cinemas in some 15 Saudi cities over the course of the next five years and it too has now opened its first fully operating cinema in Saudi Arabia.
Vox took the route of getting open quickly, initially with a small four-screen cinema in Jeddah, though that incorporated an IMAX screen and was built in such a way that it could be easily expanded. Vox has since opened its full multiplex offer cinema and intends to open no fewer than 600 screens throughout Saudi Arabia over the next five years. Not to be outdone, Cinépolis has started the process to open a number of cinemas in Saudi Arabia. This will include introducing 63 screens to Dammam, Jazan, Jeddah, Riyadh and Najran.
The multiplexes in Saudi Arabia are geared to the younger audience (the majority of KSA’s population is under 30) with IMAX signing a deal with VOX Cinemas to open at least four IMAX venues. muvi opened in Jeddah with the first ScreenX and 4DX at VOX. The scale of growth is rapid — the government hopes that by 2030, Saudi Arabia will already have more than 300 theaters with more than 2,000 movie screens.
So, is KSA the golden ticket or will the market overheat, and exhibitors get burnt? How will exhibitor interests balance between a high demand initially without ending up over-screened when the market settles and competition increases?
With such rapid building, there is a danger of the “land grab” the UK saw in 1996-2002. That produced some stunning cinemas, as well as some turkeys as exhibitors snapped up land, “build them and they will come” being the assumption. Will KSA end up like Orange County where large multiplexes sit underused with too many eateries sat opposite each other? It is very early days still, but there are a few warnings signs.
Just like its fabled long drink, Singapore’s cinema market has proved to be a more long-term entertainment proposition. Back in 1995, cinema operators entered the market, anticipating reaching admission levels of a minimum of 2.0 per capita.
By 2002, it was clear that Singapore was going to exceed that expectation and the reality in 2018 is of 3.4 admissions per capita and 4.4 screens per 100k people. Clearly screen provision is adequate and the cinema market is healthy, with room for further development. For Saudi Arabia, a comparison that is closer to home is the United Arab Emirates (UAE) which has 4.8 screens per 100k population, whereas KSA has ambitions for 7.9 screens per 100K population — 64% up on UAE!