With over 5,300 screens across 14 countries, the Mexican chain of movie theatres, Cinépolis, is focussed on strengthening business and entering new markets. Alejandro Ramirez, CEO, Cinépolis, talks to Biz@India about expansion plans, the digital disruption, and more.
How does the outlook of the global economy reflect in the entertainment industry? What is your prediction?
We are seeing that in the largest markets like the US, the EU and most of Asia, growth is picking up. The entertainment industry is sometimes more sensitive to content than to the economic cycle. So even in good economic years if you don’t have good content, you may see a downward trend in attendance to the movie theatres.
We think that 2018 is going to be a good year, in terms of economic recovery and growth and also in terms of content. It is going to be a year that will be slightly above 2017 in terms of content and I am talking mainly about Hollywood films. In terms of Bollywood and the other regional film industries in India also, I think 2018 is going to be a good year.
You mentioned content, so what are the driving factors behind the good content that you are looking at? What are the contents that are changing other grounds?
It is very difficult to predict whether your movie is going to perform well or not. The only test is when it opens up in cinema. So even for films with good budget, director, actors and a good cast, it is not certain if it is really going to connect with the audience. I think the key for developing good content is good stories, so the most important part is screenplay.
In many countries like Mexico, we have a National Film Industry but India is developing good stories that will connect with people. Production, marketing, cast and director – it is important, but it starts with a good story. So, what I have seen till now in 2018 is that many films have the potential of connecting to large audiences because they have good stories and also because some of them are sequels to previously successful films. That is a very good predictor of success because there are people who want to watch the follow up story to the one they already liked. Some people take in Bollywood stories and then remake in Mexico. For instance, Bollywood blockbuster 3 Idiots (2009) was remade in 2017 with Mexican and Spanish actors and it connected with the audience because it was a good story. It was altered to fit in the Mexican context and became the second largest Mexican film.
So you can never be certain until the end of the year that if your predictions were correct.
What about content in the Middle East? Any promising signs over there?
Yes, a lot more content is being generated in the Middle East. There is also a positive trend of more good filmmakers and more films every year that are finding their audiences. Films in the Arab world do well at festivals like the Cannes Film Festival, Berlin Film Festival, and some films do well commercially as well.
What about your business in the Middle East? How many screens are you at currently and where will you take it? The big news is of course that Saudi Arabia is looking at opening the market for cinema. How does it translate?
We are very interested in these countries. So far, we have deals and sites under construction in the UAE, Oman and Bahrain. We will open our first cinema this year in the region and hopefully we will be able to continue to grow in the GCC countries, including Saudi.
How enthusiastic are you about Saudi Arabia?
We are enthusiastic because it is a completely untapped market, with 30 million people, good purchasing power, not many entertainment options and not a single screen. So there is good potential in Saudi. We were also interested in the region in the first place because we knew that one day Saudi would open up.
What’s the potential of Saudi in terms of number of screens?
At least a couple of thousands, doing a back of the envelope calculation thinking that it has GDP per capita higher than Mexico and it has no screens. Mexico has 120 million people and they have about 5,000 screens. So I imagine, 2,000 screens in Saudi would do well.
What is the best way for you to move in Saudi Arabia? If some market opens up tomorrow, would you like to stand alone or pick up a local partner?
We are still analysing both options.
You mentioned that you are reconstructing some screens in Bahrain, Oman and Sharjah.
For now, reconstruction in these three markets is for sure. We have considered a site in Qatar also but because of the political problems in the region, we decided not to do it. Qatar is already a pretty mature market and if you are only going to have one or two sites with a complexity to supply them, we decided it is not worth the effort. But we are interested in growing in the UAE, Bahrain, Oman and hopefully Saudi.
What is the forecast for your company’s growth?
We project that we are going to grow with over 350 new screens. Last year we ended up with 5,300, and we will have 350 more this year. In terms of attendance, we are projecting a global growth of about 8 pc but that also includes the growth of new screens.
How serious is the digital disruption threat for you?
Technology revolutions and disruptive technologies are always a threat. We compete with new entertainment options at home and for the leisure time of people, so if at the end of the day someone spends a lot of time watching series at home, they will have less time to go and watch cinema. Yet, we have seen that people who consume a lot of movies at the cinemas are also those who consume movies in other formats on other platforms. So, real movie-goers enjoy both watching cinema and watching movies at home. We find that a lot of these disruptive services are complimentary rather than a substitute. My friends ask “do you think cinemas will survive?”, and I say “definitely”.
Social and community aspects of watching a movie with other people at cinemas are also important. Watching it on the big screen is qualitatively different, it is much more immersive. People with a kitchen at their home, with an oven, stove and fridge, still go out to restaurants. Similarly, there are days you want to stay inside and watch a series because maybe it’s a Sunday night. But then there’s Friday and Saturday when people say, “Hey, let’s go out”. So I think they are complimentary and cinemas will be here for a very long time.
Is the entrance of Amazon Prime services a threat?
Yes, but not bigger than Netflix in this space that has been around for several years. The good thing about Amazon is that they recognise the value of theatrical window. So all of the movies that Amazon is producing are releasing in the cinemas first and then on their screening service. Whereas whatever Netflix produces is only shown first on their platform. So Amazon is not as disruptive as Netflix. We will actually welcome Amazon because it has more content for cinemas. It is like a new studio.To View the article buy our magazine