With moviegoing on the rise across Europe after a 40-year decline, and the continent’s economy emerging from recession, local and international companies are pouring hundreds of millions of dollars into the construction of new multiplexes and the refurbishment of tired old cinemas.
The multiplex revolution is reenergizing film distribution in Europe, where most countries have long been underscreened compared with the U.S.
The boom is breaking down the old cozy and restrictive relationships between distribs and the traditional circuits, and bringing family audiences back to the cinema. It is contributing to the wider release of major titles in Europe and an increase in marketing budgets.
Competition from new state-of-the-art theaters has forced existing operators, whether mainstream chains like MGM or arthouses, to renovate or die. Indeed, in some countries, notably France, old screens are closing faster than new ones open.
Meanwhile, Euro distribs worry that the construction will do little to better the plight of local films; after all, many of the new screens are being built by the major U.S. studios and other outsiders. A slight lull in the expansion over the past couple of years, thanks to the general worsening of economic conditions, has now been superseded by a fresh wave of investment from companies like Warner Theatres and United Cinemas Intl. from the U.S., Flebbe, Kinopolis and UGC from Europe and the Hong Kong-Australia joint venture Golden Village.
Credit Lyonnais officially put MGM’s European cinemas up for sale last week, and couldn’t have picked a more auspicious time. The French bank and its advisers at London-based S.G. Warburg already have received more than 50 serious expressions of interest in MGM’s three chains in the U.K., the Netherlands and Denmark – together Europe’s largest circuit. The list of potential buyers is split equally between financial investors and entertainment groups.
But for all that, the reconstruction of the European exhibition business remains patchy, and the consensus among theater owners is that the market still has a lot of room to grow.
Charles Wesoky, the former UCI chief who now runs his own cinema consultancy ICFC, estimates that outside the U.K., Europe’s most advanced multiplex territory, the exhibition market has so far been developed to only 5% of its screen capacity. Germany and Spain are the focus of much activity at the moment, while France remains a law unto itself and red tape has stifled progress in Italy.
* The advent of multiplexes more than doubled U.K. ticket sales in the past decade, from 54 million in 1984 to 125 million in 1994. The 70 or so multiplexes now account for 33% of all British screens, and over 40% of all cinema visits. Yet the U.K. still has among the fewest screens per person in Europe, and distribs are bracing themselves for a logjam this summer with several Hollywood blockbusters fighting for space. According to MGM chief exec Bill Doeren, 60% of the population still live more than a 20-minute drive from a multiplex.
The original U.K. pioneers, UCI (owned by Paramount and Universal) and National Amusements, appear to be nearing the end of their British expansion. But Warner and MGM are picking up the pace with an aggressive construction strategy. MGM, the largest exhibitor with 20% of all U.K. screens, has seven multiplex sites in various stages of construction and as many as 30 deals under negotiation, although the fate of these projects clearly depends on the new owner. Warner has eight new multiplexes in the works, including six in London’s suburbs.
* In Germany, where the first multiplex arrived five years ago, progress has been more gradual, but that’s about to change. UCI and Warner, alongside local players Flebbe, Ufa and Kieft-Politt, are plotting a multiplex explosion. “Germany will suddenly go mad in the next five years,” predicts Warner’s Euro chief Peter Dobson. “There are only 11 multiplexes now, but I’d be surprised if there weren’t 70 in five years’ time.”
He says the impact on admissions will be less dramatic than it has been in the U.K. because Germany is starting from a higher level with around 130 million entries in 1994. German companies prefer to build their multiplexes in the city centers, the traditional focus for social life, whereas the American investors are tending to focus more on the kind of suburban sites that have proved so successful in the U.K.
* France remains a virtually closed shop for foreign investors, with the market sewn up between Gaumont, Pathe Cinema (owned by Chargeurs) and UGC, who together control 50% of admissions with only 20% of all screens. The overall number of screens in France has been declining for a decade, but the three local majors are investing in new multiplexes and refurbishment, and the Bert family, co-owners of the 20-screen Kinopolis behemoth in Belgium, are building their first French site. UGC, which already has a cinema in Belgium, has now started building its first multi in Spain and may also be eyeing Italy.
* Italy has long resisted modernization of its exhibition sector, with a patchwork of rundown theaters desperately in need of new investment and a Kafkaesque licensing system designed to protect the status quo. “In Italy you need a license to build a cinema, and to get a license you need to be God,” says UCI finance VP Mark Monaghan. Warner and UCI are knocking on the door, and signs are that it may at last be opening a crack thanks to the country’s political upheavals.
Last week it surfaced that Golden Village, a partnership between Australia’s Village Roadshow and Hong Kong’s Golden Harvest, will build a 12-screen cinema near Rome next year, in tandem with local exhibitor Giuseppe Ciotoli. Italy currently has only one genuine multiplex, a 10-screen complex in Milan owned by Fininvest.
Faced with restrictions on new building, the emphasis among forward-thinking Italian exhibitors like Vittorio Cecchi Gori and Fininvest is on splitting their single screen sites into doubles or triples. That is beginning to have a visible impact on admissions, up to 98 million in 1994 from 83.6 million two years before.
“Council regulations are still very restrictive about construction,” says Carlo Bernashi, president of the exhibitors’ association Agis. “This bureaucratic blockage, together with the prohibitive land prices in Italy, is limiting the development of multiplexes beyond those with two or three screens. But transformation of large old cinemas is going ahead with a considerable rush. There’s a real spirit of renewal taking hold of exhibitors here.”
* The number of screens in the notoriously underscreened Netherlands will increase by a third over the next few years, and seating capacity will double, thanks to extensive construction plans by MGM, the Warner-Chargeurs-Morgan Creek joint venture and Kinopolis. Local group Minerva is also investing in renovations.
* Warner will open its first Spanish multiplex this March and has three more sites under construction. It already operates one multiplex near Lisbon in Portugal, and is building three more. UCI owns eight multiplexes in Spain through its Cinesa subsid, plus a circuit of conventional theaters, and will open two more multiscreen sites this year. UGC is due to start building its first 15-screen cinema in Madrid this spring, and American Multi-Cinemas is believed to be plotting 25 screens in Barcelona.
Among local operators, Enrique Gonzales Macho’s Alta Films is building five-screeners, while Yelmo Films is expanding with upscale eight-screen sites mixing arthouse and mainstream pix. “Towns that historically didn’t get a print for six months are now getting them on the first day,” says Frank Pierce, senior VP of Warner’s European distribution arm.
* In Sweden, the traditional dominance of Svensk, with 56% of the market, is being challenged by Sandrews with an aggressive multiplex construction program in major cities. Svensk is fighting back with new investments of its own, and the two chains have clashed in recent months over attempts by Svensk to prevent Sandrews getting hold of major Hollywood movies for its new sites.
The other Scandinavia territories remain fairly static, although Finnkino, the main exhibitor and distributor in Finland and the Baltic States, was recently sold by Union Bank to the publishing and video powerhouse Rautakirja.
* UCI is plotting an entry into Poland, and Warner’s Pierce picks out Greece and Turkey as territories where Hollywood distributors would love to see multiplexes develop.
The immediate impact of all this pan-European activity in the expanding size of major releases. “The Lion King” went out with 657 prints in France, 496 in Italy, 198 in Spain and an enormous 759 prints in Germany, when 500 would have been tops a few years ago. The same even applies in the specialist market: A standard crossover release in the U.K. has swelled from 40 prints to nearer 70.
Growing auds are encouraging distribs to commit bigger bucks to marketing. The exhibitors themselves, having risked so much capital building theaters, have also become far more active on the publicity front, with a whole range of special initiatives designed to get locals visiting these swanky new venues more frequently. UCI has launched a series of kids’ promotions in the U.K., and is planning to roll them out in other territories soon.
It’s not simply that the new theaters get existing auds (mostly young adults) buying tickets more often; clear evidence in Germany and the U.K. shows that multiplexes are reviving moviegoing as a family activity, which means more visits from the 35-plus age group, and more from kids.
It’s a family thing
That’s partly because of convenience and comfort, and because the multiplexes tend to be concentrated in suburban locations, often shopping malls. Also, the extra screens mean the multiplexes can let films run for longer than traditional city center theaters with fewer screens, which gives older auds, who follow the new releases less closely than the younger crowd, time to catch up on pix they might otherwise have missed.
Some Euro producers view the multiplexes with suspicion, and a certain amount of envy, noting that Hollywood pix tend to take the lion’s share of all those extra screens, skewing the market even more towards big-budget American blockbusters. Spain has an exhibition quota for local films, and British directors Ken Loach, Alan Parker and Mike Leigh have argued that something similar is needed in the U.K.
Multiplex owners everywhere say that they simply show the movies their audience wants to see, and that doesn’t mean a lot of arthouse fare. “If you try and mix an arthouse policy with a commercial firstrun policy, you end up with an identity crisis,” says MGM’s Doeren.
Smaller films, too
But there is evidence that the new cinemas are providing real new opportunities for smaller films to break out of the arthouse ghetto. In the U.K., films like “The Piano,” “The Wedding Banquet” and the low-budget Scottish thriller “Shallow Grave” have crossed successfully to the multiplexes after platforming in specialist locales.
That, for the first time, offers distributors of smaller films the real chance of a lucrative upside for crossover hits that could not previously stay on arthouse screens long enough to cash in on their positive word-of-mouth.
Michael Williams in Paris, David Rooney in Italy, David Molner in Berlin and Marlene Edmunds in Amsterdam contributed to this report.