SAUDI PIF TO TAP INTO RECENTLY PERMITTED CINEMA INDUSTRY

▶ Fund estimates kingdom’s decision to lift 35-year ban on sector will unlock gains worth $1bn

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is eyeing the kingdom’s emerging cinema sector via an agreement with American cinema chain AMC Entertainment Holdings.

“In line with the fund’s mandate to help unlock promising new sectors within the kingdom, PIF and AMC Entertainment will explore theatrical exhibition and related investment and partnership opportunities in Saudi Arabia,” PIF said.

The signing of the non-binding understanding between the two entities, announced yesterday, came the day after Saudi Arabia lifted a 35-year ban on cinemas, triggering a wave of interest from international companies looking to tap into newly created demand in the country for entertainment services.

PIF expects the Saudi cinema sector to grow to more than US$1 billion.

Public cinemas were banned in the country in the 1980s because they were considered a corrupting influence on religious and cultural identity. Saudi residents wanting to watch the latest movie releases have had to use illegal streaming services until now, or travel to neighbouring countries to watch them in cinemas.

The Saudi government on Monday said movie theatres would be permitted to begin showing films from as early as March, with licensing and regulation details expected to be announced during the coming weeks. The films will be censored to make sure they remain “in line with values and principles in place and do not contradict Sharia and moral values in the kingdom”.

AMC, owner of the Odeon brand, is one of the world’s largest movie theatre operators, with approximately 1,000 theatres and 11,000 screens across the globe.

“This announcement is a historic moment for the theatrical exhibition industry and a tremendous opportunity to connect AMC’s movie products with the kingdom of Saudi Arabia’s more than 30 million citizens, many of whom we know are movie fans based on their regular visits to cinemas in neighbouring countries,” the company’s president and chief executive Adam Aron said.

Dubai conglomerate Majid Al Futtaim, owner of Vox Cinemas chain, has already said it wants to open a movie theatre in the kingdom.

Imax, which operates the only theatre in Saudi Arabia, airing educational films at a science centre, told Bloomberg it had been approached by chains about building more theatres.

The lifting of restrictions on cinemas follows the easing of other social restrictions, notably the revoking of a ban on female drivers, announced in September. These reforms coincide with government efforts to stimulate the country’s domestic tourism and hospitality sector as a means of creating jobs for Saudi nationals, as well as repatriating much of the sizeable funds spent by Saudis on leisure pursuits outside the kingdom.

The country’s Vision 2030 economic development plan, designed to diversify Saudi Arabia’s economy to lessen its reliance on oil, envisages the creation of 1.2 million jobs in the tourism sector by 2030.

The Saudi government said it expected to open more than 300 cinemas with more than 2,000 screens by 2030, building an industry that would contribute more than 90bn Saudi riyals (Dh88.14bn) to the economy and create 30,000 permanent jobs over the same period.

Under the 2020 National Transformation Programme, the government aims to boost the contribution of the tourism sector to GDP to 3.1 per cent from the current 2.9 per cent.