Going to the movies in Saudi Arabia is a pricey proposition.
AMC chief Adam Aron predicted that a $20 ticket price could increase to between $30 to $35 a pop in a matter of months as moviegoers in the Kingdom get to experience cinema-going for the first time in 37 years. AMC became the first exhibitor to open a location in the Middle Eastern country on April 18, kicking off its new location with a gala presentation of “Black Panther.”
“Honestly, [the price] is too low,” Aron said during a panel discussion on Saudi Arabia at CinemaCon on Monday, adding, “Pent up demand is so high that at the moment price is not a barrier.”
It’s not just a chance to see movies on the big screen for the first time in generations that’s inspiring people to open their wallets. The inflated ticket price is also attributable to a high sales tax and an additional 25% sales tax that the Saudi government is imposing on entertainment products.
Andrew Cripps, president of theatrical distribution for 20th Century Fox International, expressed alarm about the high prices and said he was concerned it could set a precedent.
“It’s not in the long term interest to see prices go up,” he said.
With a population of 32 million people, 70% of whom are under the age of 30, Saudi Arabia represents an attractive economic opportunity for the movie business. Analysts predict that the country could be one of the top-ten movie markets in a matter of years, with the potential to eventually hit $1 billion in box office revenues.
Hurdles remain, however. Saudi Arabia has essentially had to build its infrastructure from scratch. It is currently establishing a ratings system and developing a censorship process. “Rampage,” a Dwayne Johnson action-adventure, has been granted a release date in the country, and “Ferdinand” and “Avengers: Infinity War” are currently being shown to censors.
“We’ve seen markets open, but I don’t think we’ve ever seen a market open with no infrastructure in place,” said Cripps. “Here you’ve got the opportunity to develop a new industry literally from scratch.”
Aron said the legalization of movie theaters is part of a broader reformist movement in the country. The AMC chief said that the 32-year old Saudi Crown Prince Mohammed bin Salman has instituted a period of liberalization as a way to maintain an autocracy in the face of social upheavals in the region. The Arab Spring, a series of protests and demonstrations in the Muslim world that toppled several regimes, spurred bin Salman to begin opening up his culturally conservative country. It’s not just movies. Women are being given the right to drive, sports stadiums are no longer being segregated by gender, and Saudi Arabia has unveiled a multi-billion dollar entertainment investment fund.
“The pace of change and liberalization is unprecedented,” said Ahmed Ismail, CEO, Majid Al Futtaim Ventures.
Like Aron, Ismail sees an opportunity in Saudi Arabia. His company owns Vox Cinemas, which has been building a new location in the Kingdom for over a year. It will open in a matter of weeks.
“The Saudi customer is quite sophisticated,” said Ismail. “It’s a customer that will be very demanding in terms of providing a cinema experience that’s different and great.”