H’wood hopes to cash in as Saudi Arabia lifts ban on theaters – ME exhibitor Cinemacity to enter Saudi Arabia theater-building derby
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LOS ANGELES, March 28, (RTRS): Hollywood is falling head over heels for the Kingdom of Saudi Arabia. The Middle Eastern nation is lifting a 35-year old ban on movie theaters, prompting a mad dash by both US and international exhibitors eager to be among the first to build cinemas in a country that’s been film-deprived for decades. Add to that a well-to-do citizenry of some 30 million — the majority of which is under 25 years old — and it’s easy to see why studios and entertainment companies want to cash in on the gold-rush frenzy.
“This is a very big opportunity for the entire movie industry,” said John Fithian, CEO of the National Assn of Theatre Owners. “It’s a market that’s potentially huge. The vast majority of people in Saudi Arabia are young people with a lot of disposable income and they have a real appetite for movies.”
Indeed, experts believe that in three years Saudi Arabia could produce $1 billion in revenue, and that by 2030 it could be among the 10 biggest film markets.
“It’s a huge population that basically has nothing to do” in terms of entertainment, said Karim Atassi, who oversees business development for Middle East exhibition chain Cinemacity, which has closed deals to develop sites in several Saudi malls.
Statistics suggest that when theaters open, audiences will quickly follow. Although cinemas have been banned for a generation, Saudis are entertainment savvy. They download movies, often illegally. Many have satellite dishes. And they’ve found a way to catch the latest films despite the ban, traveling to neighboring Bahrain or Dubai to get their big-screen fix.
“It won’t happen overnight,” said Andrew Cripps, Fox’s president of international theatrical distribution. “It will take two or three years for there to be meaningful revenue and an infrastructure in place. But once it’s up and running, it has strong potential.”
It’s not just the chance to broaden the consumer base for cinema-going that’s got the industry excited. The country is also interested in injecting capital into a business in need of fresh sources of cash. Plans were recently announced to spend $64 billion on entertainment investments, of which some $10 billion will be earmarked for film and fine arts.
In the mid-aughts, Hollywood, always eager for fresh cash, got an infusion of Middle East oil money when the UAE and Qatar decided they wanted to build a media and entertainment industry from scratch as part of their economic diversification. But the Arab investors soon got burned and for the most part rapidly pulled back. Cut to 2018, enter Saudi Arabia, and the oil cash has been turned back on. This time could be different: The money might not be as dumb.
A deal is imminent under which the Public Investment Fund of Saudi Arabia will acquire between a 5% and 10% stake in Endeavor, the holding company for Hollywood talent agency WME, for a sum believed to be $400 million to $500 million. There are also plans to earmark as much as $10 billion for film projects. The thinking in Saudi Arabia is to integrate the nation’s Hollywood investments with building a local industry, according to several sources.
This all comes at an opportune moment. China, once seen as a virtually unlimited resource for funding, has stopped writing checks to Hollywood. Its government has decided that Chinese money isn’t getting enough of a return on its investment; at the same time, the Trump administration’s order to impose tariffs, possibly on $60 billion worth of Chinese imports, is making the possibility of a trade war with the Asian giant a looming danger. The thought is that Saudi Arabia can help fill some of that funding gap.
It’s easy to understand why hopes are high that the relationship could be profitable for all parties, but there are also reasons to believe this could be something of a mirage in the desert.
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LOS ANGELES: Middle Eastern exhibition chain Cinemacity, which operates in Lebanon, the United Arab Emirates and Jordan, has become the latest entrant in Saudi Arabia’s movie-theater building derby, with plans underway for several sites, including a 20-screen multiplex in Riyadh it hopes to open for business this summer.
Known for luxurious, state-of-the art cinemas, Cinemacity now has two multiplexes in advanced stages in the kingdom, which will operate a total of 31 screens.
Cinemacity has offices in Beirut and Dubai. On Wednesday, it inaugurated a multiplex in the United Arab Emirates’ third-largest city, Sharjah, featuring what is being touted as the UAE’s largest IMAX screen. It bowed with Steven Spielberg’s “Ready Player One,” now making its Middle Eastern launch.
Ever since Saudi Arabia lifted a 35-year ban on local cinemas last December, there has been a rush to build multiplexes there by global cinema chains such as AMC Entertainment, VUE International, and Dubai-based Vox Cinemas, which is the largest regional exhibitor. But it’s not going to happen overnight.
“Many operators are roaming the kingdom trying to make deals, but malls aren’t ready,” said Hammed Atassi, CEO of Cinemacity holding company World Media Holding.
Since no space was originally allocated in Saudi malls for cinemas, which come with certain height and other technical specifications, this means that “projects ready for immediate opening aren’t many,” Atassi said.
The licensing process started March 1 when general guidelines were published. However, “there are many layers of licensing,” said Atassi. Cinemacity is now ready to submit its first batch of documents, which he is confident will be processed swiftly.
Regarding censorship, which is a major concern since movies were banned in Saudi Arabia for religious reasons, Atassi said some titles will of course be chopped “but not as heavy as people may think.” He pointed out that societal changes prompted by 32-year-old Saudi Crown Prince Mohammed bin Salman, who has been driving a program of reforms that in September finally gave women the right to drive, are “coming on so fast” that “you may soon see films with minimum censorship.”
In February, following a 20-year ban on concerts, the kingdom had its first jazz festival in Riyadh, where the New Orleans Marsalis Sextet performed. The Saudi Entertainment General Authority has announced plans to plow some $64 billion into the entertainment sector over the next decade, an investment Hollywood hopes to benefit from.
Atassi said he was not sure when the first Saudi multiplex would open, but said he thought Cinemacity’s 20-screen venue in an unspecified Riyadh mall would be up and running this summer and become the second venue to get ticket buyers past turnstiles.
As for whether the theaters will be gender-segregated, Atassi said they have been “advised to select times of screening” for families and single men, adding that he thinks “this is a first approach that may change later.”
“We don’t see a big problem opening times for both groups to start with,” he said. “It will be simple enough.”
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