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Developing countries pique exhibs’ interest

LAS VEGAS — International cinema operators remain cautiously enthusiastic about the continued expansion of overseas business despite concerns about the high cost of building state of the art theaters, and rigorous competition among multinational and locally owned companies.

With international box office making record leaps six years in a row, Millard Ochs, of Warner Bros. Intl. Theatres, sees no end in sight for growth. At a Monday morning session on international exhibition at ShoWest, he said overseas modernization has taken only 10 years to accomplish what took 30 years in the U.S.

Asia, Latin America and Eastern Europe were repeatedly emphasized by members of both morning panels, which were moderated by Peter Ivany, CEO of Hoyts Corp.

Consolidation on horizon

The current pace of building, some panelists and audience members predicted, will result in consolidation, at least in some areas of the world.

Panel member Alejandro Ramirez Magana, of Mexico’s family-owned organizacion Ramirez Cinemas, emphasized that distribs and exhibs, whether local or multinational or partnerships of the two, must work together to maximize business.

In terms of government restrictions on business, Ramirez said quotas “in general hurt quality” and offer “no incentive” for local filmmakers to make better pictures. Subsidies, Ramirez contended, work much better, citing increased moviegoing for local pics in Spain, France and Italy and Germany.

Self-regulating market

Mexico has eliminated strict price controls on theater tickets, Ramirez said, but the market pressure keeps the prices low, roughly $2 for his theaters and up to $3 for his rival Cinemex.

Multinational operators also need to be acquainted fully with markets they want to enter, said Joe Peixoto of Canadian-based multinational Famous Players. “Growth has been fragmented,” he said, but he thinks that in the future, more companies “will consolidate and the pie will get bigger.”

Ochs, who dodged a question about how much international business will go to vertically integrated companies like Warner Bros., instead surmised that by 2001, 75% of worldwide business will be international and 25% domestic.” Of that 75%, he speculated there would be an even split between local and multinational companies. Currently overseas counts for a little more than half worldwide box office of about $11 billion for U.S. fare.

In a subsequent discussion of megaplexes vs. multiplexes and whether some overseas developers might want to skip the latter in favor of the former, some panelists didn’t think it was realistic to build what AMC’s Chip Harris defined as a megaplex: a theater of 15 screens or greater.

Overbuilding was also a very real concern among panelists and members of the audience, one of whom doubted the wisdom of building two giant theaters literally across the street from each other at Ontario Mills in Southern California, where AMC just opened a 30 screener, and Edwards Theatres is putting the finishing touches on a 24-plex.

That situation notwithstanding, AMC’s Harris countered some exhibs skittishness toward the megaplex. With costs so high and so much riding on the investment, “Why build a 1975 theater, a multi of 12, when you can build one for the future? Give the customer the benefit of the doubt,” he said.

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