Cinepolis: Aggressive Brazil Exhib Build To Continue (EXCLUSIVE)

But ShowEast honoree Eduardo Acuna, Cinepolis Brazil CEO, slams restrictive regulation

RIO DE JANEIRO — Mexican exhibition giant Cinepolis is close to openng a high-end 10-plex Cinepolis RioMar Fortaleza, in North-East Brazil, its latest Brazilian hardtop flagship as it confirmed plans to Variety to continue aggressive roll-out in the Latin America giant.

Cinepolis will open 70 new screens in 2015, 50 in 2016, said Eduardo Acuna, Cinepolis Brazil CEO. Acquisition of rival chains is also “an option.” That, despite high costs of expansion and regulation that, Acuna claimed, is holding back the whole sector.

A standalone site, the Riomar Fortaleza will boast a battery of Cinepolis state-of-the art concepts: A huge screen; Dolby Atmos 9.1 channel, 14,000-watt sound for the 200 sq. meter-plus big screen, 7.1 for the rest; 4DX immersion entertainment; three luxury VIP auditoriums with leather recliners, waiter service, food offerings such as sushi.

The Riomar Fortaleza is one of Cinepolis’ three flagship theaters in Brazil, together with Sao Paulo’s eight-screen Cinepolis JK Iguatemi (pictured), in the city’s iconic shopping mall, and Rio de Janeiro’s six-screen Cinepolis Lagoon, the Rio Fest’s gala theater, and site of the world premiere of “Rio” and “Fast and Furious 5.”

Cinepolis’ Brazil ramp-up has been dramatic. Opening its first multiplex in June 2010, the cinema theater chain has morphed from market entrant to Brazil’s second biggest exhibition loop – in screens, revenues and attendance. Cinepolis now owns 40 multiplexes and 300-plus screens in 30 cities across Brazil, building via plexing and two major acquisitions: Box Cinemas and Cine Maiz, Cinemark, Brazil’s largest operator, took some 15 years to reach 500 screens.

Acuna will be honored with the 2014 ShowEast International Exhibitor of the Year Award on Oct. 27.

Continued aggressive growth will come via both first-phase big city build and second-phase growth.

“Projects come up in Sao Paulo, Rio, Brazilia though there are more projects in smaller cities. Medium-sized cities are starting to get shopping malls and cinemas,” Acuna said at the Rio Festival’s RioMarket.

Potential is huge. Despite rampant construction, Brazil, with a population of 202.5 million, only had 2,700 screens in 2013, vs. 5,500 for Mexico, population 124.4 million. Annual per capita cinema visits is 2.2 in Mexico, 0.7 in Brazil, Miguel Mier, Cinepolis COO said on a roundtable at Rio Market, Co-producing with Mexico.

But huge challenges rankle. Construction costs are rocketing, said Acuna: Brazil’s real has depreciated against the dollar, local currency costs have risen. Building a cinema in Brazil costs 80% more than the same cinema in Mexico, because of taxes, labor laws, he added.

Acuna added: “Over regulation really damages a business. For a cinema here to be successful, it’s more expensive to build, you have many more taxes to pay, many labor laws to comply with, screen quotas, and many things that make our business harder than in other parts of the world.”

“For a cinema in Brazil, we have to sell 50% more tickets than in Mexico at a 60% higher price, and we’ll make less than half the profit that we would make in Mexico.”

The world’s biggest international exhibition group and fourth largest in the world, Cinepolis, it could be argued, can bite that bullet. Acuna’s larger point, however, is that these margins are discouraging market entrants and the overall expansion of a sector which needs to be able to

reinvest profits in order to build more cinemas.

“If regulation was like in Mexico, we would have built twice the number of cinemas,” he concluded.

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