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Saudi Report 2021: Blockbuster opportunities, by Motivate Val Morgan’s Avinash Udeshi

Motivate Val Morgan’s Avinash Udeshi examines the post-Covid cinema landscape, and polls cinema chains about their plans to capitalise on Saudi Arabia’s unprecedented potential for growth.

Let’s wait till the situation stabilises. Are movies releasing? Is occupancy reduced? No one goes to the cinema… or even ventures out of their homes. Are cinemas even open?

Welcome to being a salesperson at Motivate Val Morgan and facing the opening salvos while trying to pitch for cinema advertising currently.

Bah!

Cinemas across the GCC have already welcomed more than 5 million customers in 2021. The reality is that audiences are continuing to patronise cinema. Content released in cinema has evolved to be more diverse. A country in our portfolio is presently even adding several screens and hosting more admissions than in 2019.

It is no secret, though, that with two seats behind, in front and on each side being blocked off to create a safe environment, the movie theatre is visually going to look empty.

So here is the story (based on true events) of what unfolded:

In March 2020, cinemas shut to curb the spread of the deadly Covid-19 virus. 

A few months later, cinemas re-opened in select markets, operating at limited occupancy due to social distancing measures, with strict sanitisation protocols in place. Movie studios, however, withheld new blockbuster releases, awaiting the collective reopening of cinemas across the world, thus affecting the content pipeline in markets where cinemas were open for business.

The lack of new content and reduced seating capacities had a short-run effect on movie demand and box office revenue. Nevertheless, the industry remained resilient and improvised by re-releasing movies that performed well at the box office in previous years as well as new content such as Minari – a Korean movie that had six Academy Award nominations and for which actress Youn Yuh-jung secured the Oscar for Best Supporting Actress. Many other smaller movie titles also found a theatrical window and success at the box office.     

Cinemas thus gave audiences a reason to return to their beloved large screen and partially circumvented the effect of the pandemic to ensure a steady revenue for their business. This led to 51 per cent of patrons returning to the cinema when compared with 2019.

Recently released Godzilla vs Kong has reached a new global benchmark, having already grossed $422m worldwide. It is presently the highest-grossing film in 2021 across 19 markets including the UAE, China, Russia, Spain, Australia, Hong Kong, Taiwan and Mexico. In combined like-for-like markets, and at today’s rates, Godzilla vs Kong is running 6 per cent above Kong: Skull Island, 44 per cent over Godzilla: The King of Monsters and 90 per cent ahead of Godzilla, and the movie is still to release in 20 more markets including Brazil, Japan and the UK. Another recent release, Mortal Kombat, has already totalled $72m globally. 

Both Godzilla vs Kong and Mortal Kombat, along with Nobody – an action film starring Bob Odenkirk – have generated over 500,000 admissions in the UAE so far.

In Saudi Arabia, Arabic movies rank very high in terms of popularity. Egyptian comedy Waafet Reggala is the biggest box office hit in the history of Saudi Arabia. The film – about four friends who unite for a holiday on the coast of the Red Sea – has done astounding business in the kingdom, bringing in a total of 765,412 admissions for a cumulative box office of SAR 52,625,412 in 12 weeks as of April 15, 2021. The film remains at the No.1 position in the country to date.

Having said that, audiences in KSA love cinema in any form. Movies in languages such as Hindi, Tamil, Telegu and Malayalam – the national and regional languages of India – and even Korean movies, along with the Hollywood and Arabic titles – are watched with equal enthusiasm.

In Saudi Arabia, cinema exhibitors continued their build with gusto, adding many multiplexes after the lockdown. Weekly admissions in KSA decreased by a mere 11 per cent when compared with 2019. This impressive feat has been achieved in Saudi Arabia as it is the only market across the globe to add cinemas on such a massive scale.   

As a medium the unique attributes of cinema remain unchanged; it is still the best environment for brands to showcase their ads. If anything, current cinema audiences are more courageous – given their love of being out of their homes – and are those whose incomes have not been that affected due to the pandemic.

We thus started sharing all the above information with agency planners and clients, and while we continue to offer insights from our research studies on the quality of engagement and cinema demographics as before, we now also offer quantitative insights by way of a forecasted admission model and guarantee delivery on these forecasted admissions, with weekly reviews through a comprehensive post-campaign report.

The idea was to launch a new cinema advertising currency as one that was no longer focused on blockbuster titles but instead was driven by admissions.

We reflected the current admissions in our rates, delivered many presentations on the same and sent out related collateral, but did not get much traction.

And then things turned a corner. From the time the news of F9 – the latest instalment of the Fast & Furious franchise – and Salman Khan’s Radhe were made public, our engagement with planners and clients increased exponentially.

Thus, we realised that although we wanted to change the narrative of cinema advertising to ‘not about the content but the cinema environment and its patrons’, the importance of blockbuster titles to the psyche of brands, planners and clients remains, and will remain, unparalleled.

Globally too, cinemas are opening their doors after the extended hiatus. This will only add to the narrative and restore confidence in studios, pushing them to release an unprecedented line-up of movies that have been held in reserve; more than 150 releases are planned in 2021, of which more than 20 are blockbusters.

Delivering box office numbers of $1.1bn in April, with over 20 countries still in lockdown and with all countries having a seating capacity restriction, cinema has proved that no other business – be it streaming services or any other platform – can match its return on investment.

These numbers have now persuaded major studios, including Warner Bros, to confirm that blockbusters will debut in theatres first in 2022, before making their way to streaming platforms.

Here you will hear from leading cinema exhibitors in KSA and gain insights and a glimpse into the future plans they have for the medium over the coming year. With ad campaign briefs pouring in and several ads across a range of industries going live on the screen this month across our portfolio, long live cinema!


Industry Snapshot: Sari Khumaiyes, commercial director, AMC Cinemas

KSA has been a key market for many well-established industries for decades. It’s a market that enjoys high purchasing power (driven by youth) and is currently enjoying a significant transformation since the establishment of Vision 2030, which opened the door for many new industries such as cinemas.

KSA’s cinema industry was born in April 2018 when AMC Cinemas opened the first cinema in Riyadh’s King Abdullah Financial District. Since then, the cinema market in KSA has kept on growing year-on-year very significantly, becoming a leading market in the Gulf and the Middle East.

The importance of the KSA market was also demonstrated after last year’s cinema closure due to the pandemic, which lasted for three months. Cinemas in KSA reopened in June 2020, welcoming guests with 50 per cent restricted capacity (till today) and with limited content as all big blockbuster movies were significantly delayed or kept on hold. Despite such challenges, Saudi moviegoers returned safely to the cinemas and exhibitors continued their expansion plans, opening 17 new cinemas in 10 cities across Saudi between June and December. As a result, the KSA box office was considered the only growing cinema market
in the GCC and the Middle East in 2020.

The growth journey in KSA is expected to continue, as 2021 started with positive momentum. Major film studios started releasing their content, and the current film slate for this year is very promising and will be appealing to the Saudi moviegoers.

We are continuing to expand in 2021, aiming to close this year with 12 cinemas and 76 screens in eight cities. Our target by 2025 is to have 51 cinemas and 445 screens in 19 cities.


Industry Snapshot: Rawan Haidar, head of revenue, Cinépolis Gulf

Cinépolis is the third-largest cinema exhibitor worldwide and has tapped into markets across the globe. The market where we see potential for the largest and most consistent growth is in Saudi Arabia. We expect to reach 100 screens by the end of 2022.

We are currently operational in Jeddah and Dammam and have two sites under construction, in Jizan and Jeddah. Our plan over the next 12 months is to continue our growth path in Jeddah and Dammam while expanding our presence into Riyadh.

We take pride in our ability to bring all types of content to our audience, be it Hollywood, Indian or local content. One feature that sets Cinépolis apart is our movie festivals and alternative content, which cater to customers who prefer a more unique viewing experience.


Industry Snapshot: Mahmoud Mirza, marketing director, Muvi Cinemas

The cinema industry in KSA is a new market for all cinema exhibitors. When the ban on cinemas in Saudi Arabia was lifted and the first cinema was opened in 2019, we took advantage of the opportunity and opened our first site that year. Today Muvi Cinemas is a market leader by box-office
share with 10 sites across six cities. Due to population and based on global benchmarking, the screen count in KSA should be between 1,800 and 2,300. However, the market today is only about 350 screens.

Currently, we are in six different cities with 103 screens. Our plan is to open an additional 30 sites with more than 300 screens in the coming 12 months. Mostly the new openings will be targeting Riyadh and Jeddah, in addition to becoming the first cinema chain to operate in Qassim province and Taif City, with two sites in each. Our premium cinema platform, Muvi Suites, will be opening a complex in Khobar.

Saudis are not new to the film industry, and as a culture, we are big fans of all genres. The tastes of Saudis are like people from everywhere else as we appreciate the efforts of great productions. There are so many moviegoers who are big fans of not only actors, but also directors and writers, and who follow the global awards and ceremonies that are related to the industry.

Action, comedy and family films are still considered to be the preferred choice. Usually, action movies are produced with higher budgets in order to have content that meets audience expectations. Saudi Arabia is considered to be the biggest market for Arabic content, and this was proved with the Egyptian title Waafet Reggala; it broke all records to see the highest box office admissions since the first cinema in Saudi opened. Almost 800,000 tickets were sold, which is even more impressive given the fact it is an R18-rated film and it is only targeting adults.


Industry Snapshot: Mohamed Al Hashemi, country head, KSA Majid Al Futtaim Leisure, Entertainment, Cinemas and Lifestyle

Saudi Arabia is the region’s top-grossing territory and is on track to become a billion-dollar market in the next three to five years. As such, it is a priority market for Vox Cinemas and we have ambitious expansion plans, which underpin our commitment to bring our world-class leisure and entertainment experiences to families across the kingdom.

Last year, Vox Cinemas opened three cinemas across Saudi Arabia, some of which are in new cities such as Tabuk, whose first cinema we were proud to launch, and others are in cities where we are already established, including Jeddah and Riyadh. Building on the momentum of 2020, we will continue with our ambitious expansion plans. Earlier this year, we opened the first-ever multiplex in Hail, which reiterates our commitment to enter new cities, support job creation and make our leisure and entertainment and concepts accessible to families throughout the kingdom. We will open three more multiplexes – two in Riyadh (15 screens total) and one in Jubail (with five screens) – this year, which will bring us to 154 screens across 15 movie theatres in six cities by the end of 2021.

Vox Cinemas has a wide range of customers with diverse tastes. Audiences here enjoy local content, and Egyptian films have been particularly popular in Saudi Arabia, such as El Badla, El Khetta El Aayma and Waafet Reggala. Master, which was distributed by Vox Cinemas in Saudi Arabia, has been the highest performing Indian title across the kingdom since cinemas opened in 2018. Demand for blockbusters is also high and Japanese anime culture has a large following here. As a guest-centric brand, we screen a wide variety of movies to cater to the different tastes and preferences of our guests.

 

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