MADRID — In the first half of this year, cinema admissions in Spain fell 2%, following a 4% full-year drop in 2002. Multiplexing is reaching saturation, exhibitors holler. Blockbusters are increasingly front-loaded, scything exhibitors’ B.O.: “Mission: Impossible 2” went out on 298 copies in 2000; “Terminator 3: Rise of the Machines” will bow July 30 on 600.
One would expect new cinema construction to be slowing in Spain. In fact, it’s quite the reverse.
“One has to wonder whether Spanish exhibitors, building so many cinemas, are going to face a similar problem to that seen in America a couple of years ago. It is one of the few countries in Europe where multiplex development has not slowed down following the various U.S. bankruptcies,” says Katherine Wright, an analyst at Dodona Research.
Yelmo Cineplex development director Pablo Nogueroles says unless older multis and miniplexes close faster, Spain will have 5,000 screens within two years. That would probably be the second-highest screen count in Europe, after France.
Spain’s seemingly irrational construction boom can be put down to profound changes in the way and places Spaniards live.
The Spaniards who flocked to the nation’s cities in the 1950s and ’60s to stock its industrial revolution bought flats in ramshackle highrises looming over major roads. Their better-heeled grandchildren are buying semi-detached chalets in city outskirts, creating for the first time ever U.S.-style suburbs. Real estate is soaring in Spain: New house prices shot up 16% last year. Suburbs need shopping malls to attract homebuyers, however, and malls need cinemas to draw customers.
Shopping mall developers are prepared to pay through the nose to get a multiplex, even bankrolling its construction, Nogueroles says. Plexes may well be loss leaders for the mall builders, most of whom turn a net profit, sources say.
Ignacio Castillo, CEO of Cinebox, confirms this. One of Spain’s most aggressive exhibitors, Cinebox aims to open 160 screens at 15 multiplexes by 2005. Of these, 12 multis will be built by mall developers, with Cinebox merely installing the equipment.
For Castillo, building in Spain is now or never: Frantic first-phase construction will last only another two years. Running mall-based plexes can be profitable business: Rafael Serrano, communications’ director at the Spanish Assn. of Commercial Centers, says Spain’s 437 malls received 1.1 billion visits last year. But mall plex margins will be tight, he acknowledges.
“There are already too many plexes in major catchment zones in Spain,” says Elisabetta Brunella, Media Salles secretary general. Exhibs already are girding for a braver new world.
Primitivo Rodriguez, prexy of Spanish exhib org Feece, claims U.S. blockbusters are losing audiences.
According to Javier Ramirez, CEO of Spanish loop Abacocine, distribs’ rentals stand at 60% for a blockbuster’s first weeks. Rodriguez reports that exhibitor bodies in Spain, Italy, Germany and Austria are studying joint initiatives to battle what he claims to be the highest rentals in Europe.
Meanwhile, Ster Century pulled out of Spain last month, selling two plexes to Abacocine. Other foreign loops may follow suit.