The Middle East: A Market with Vision

The Middle East:A market with vision

In the context of emerging markets, few are embracing cinema as keenly as is the Middle East. Melissa Cogavin explores the rapid growth of the sector in a burgeoning — and premium — region

TWENTY YEARS AGO, pre-internet and Whatsapp, researching cinema activity in the Middle East would have been complex, possibly quite inaccurate and certainly decidedly vague, buoyed up by anecdotes and conjecture over hardfacts. The region was difficult to navigate as a westerner, mired in political tension and tradition and, in the case of Saudi Arabia, cinema as an art form was until recently subject to a 35-year ban entirely.

In a radical shake up, and facing some hard truths about reducing its reliance on declining oil reserves (the official line being ‘lower oil prices prompting fiscal tightening and diminished government accounts’), the Gulf Cooperation Council (GCC) member states are ushering in unprecedented structural reform, something unimaginable only a few years ago; each state — mainly constitutional monarchies — has laid out aggressive plans which have seen cultural barriers lifted, rules relaxed and an embracing of consumerism on unprecedented levels. Across the seven member countries, investment on education, infrastructure, retail and leisure is being executed on a colossal scale. As a result of this more liberal agenda, opportunities are opening up and this is good news for the workforce, education, young people, women, technology, retail and each members’ GDP. The effects are being felt right down to the kind of film you can go and see at your local cinema in the region, and who was involved in making it and who serves you the popcorn.

The trickle-down effect of Vision 2030 on the region (see panel overleaf) has seen unrivalled and rapid development of new cinemas in a burst of creativity not experienced in established markets such as Europe. In Dubai, whose journey began around 20 years ahead of much of the rest of the region, the architecture alone is astonishing; the city has emerged from the desert, limited only by the imaginations of architects and the deep pockets of developers. No planning regulations and listed building status to worry about here. The skyline is one jaw-dropping, gleaming, towering work of art after another. The same is true for the shopping malls and the cinemas within.

In April, I saw for myself how high-end the cinemas are in Dubai, without exception. Roxy Cinemas has cornered the market in the boutique experience; one site showcases lavish English country house style décor inside a 1.2km-long shipping-container BoxPark development. One 40-seater auditorium contained $10k reclining Chesterfield seats. At Novo Cinemas near Abu Dhabi I saw cream leather recliners with a built-in iPad to order freshly cooked high-end food. At Vox your dinner comes from a ThEATre by [Gary] Rhodes’ restaurant. At Reel Cinemas’ Platinum Suites in its 26-screen flagship cinema in Dubai Mall you can enjoy Egyptian cotton covered pillows, cashmere blankets, literally hundreds of staff members — cleaners, cashiers, ushers, security guards ensuring the auditoria are spotless, the drinks ice cold, the food delicious, all served with a smile and perfect English. It was dazzling; if this is Dubai, what will the Kingdom of Saudi Arabia (KSA) be like in a few years? The carbon footprint is a worry, granted; but the young population takes the climate crisis seriously with new developments having a zero-carbon footprint. “We are much better than India or Indonesia,” I was told, a little defensively. Clearly it’s all about perspective.

Entertaining a youthful population

Across the GCC region (which includes Saudi Arabia, Kuwait, UAE, Qatar, Bahrain and Oman) new-build cinemas in shopping centres are taking place, and existing malls are being retrofitted with state-of-the-art cinemas in Saudi to cater for a disproportionately young population - 75% is under 35. With women now allowed to drive for the first time a ban on cultural attractions is somewhat limited — there’s a lot of appeal in getting out of the heat and going shopping. It’s the main pastime in the Gulf. All the bigname operators are investing in Saudi. Adon Quinn, general manager of Muvi Cinemas, the country’s first homegrown chain (the licence owned by UK operator The Light) told me that its first cinema, a 15-screen retrofit to an existing mall, opens next month in Jeddah. Over the coming two to three years they expect to open eight further locations within the next eight months, and an astonishing 250 screens within two years with the creation of new malls across the territory. An interesting upside to such late development is that best practice is being applied routinely in the KSA thanks to everywhere else having had to learn from its mistakes.

Muvi recently organised a pop-up cinema on the beach in Jeddah. Four showings in one evening took place of a firstrun movie at a beachside screen complete with protective wall to prevent piracy, bean bags and a café. The first show was at 7.30pm, the last at 2.30am, and each show had an occupancy rate of 90%. In this case the featured film was from Hollywood, but Egyptian films are an even bigger draw in this region. Adon told me, illustrating the point about the country being totally underserved by cinemas: “Occupancy is routinely 85-90% in cinemas here. You have to book 3-4 days in advance to see anything.” Obviously, a tipping point will occur at some stage where saturation of the market is the most likely disruptor but that is clearly a few years away.

Even Kuwait, one of the most religiously conservative countries is seeing rules relaxed and development in earnest. Mike Thomson of The Big Picture knows the country well. “The National Cinema Company had a 50-year exclusivity deal that ran out six or seven years ago — up till that point they had the market to themselves,” he told me. Skilful negotiation aside, I asked him what that meant for growth. “Obviously there is competition coming in the shape of Grand, Vox and others, and that in turn has meant that the NCC has had to review its offering,” he explained. Without competition, the multiplex offer is decidedly dated and the boutique experience is yet to reach Kuwait, so a big revamp is underway, seeing a rise in standards across the country. There is clearly opportunity in this territory for operators with big dreams and money to spend — much like its population.

A burgeoning homegrown slate

Local film production is also seeing a dramatic uptick in the region, so competition for screen time may soon be an issue. Leila Masinaei is the driving force behind the MENA Cinema Forum, now in its second year and taking place in Dubai this October. She explained that there have been three key recent developments that affect local film production: perception, education and demand, and she sees this phenomenon rolling out across the region over time. “There was a point in time in Dubai when we had maybe one or two arts centres across all of the UAE. There’s been a dynamic shift; 10-15 years ago theatre, film and art were viewed as nothing but hobbies, fun careers. There has been huge investment from the government and these days if you’re an actor, it’s a profession that’s taken seriously now.

“The second is education. The Sharja Performing Arts Academy is newly opened — it’s a palace and 100% funded by the government of Sharja.” Investigating the academy online, you can see its palatial setting offers BA courses in acting, theatre and film production and, according to Leila, it is one of the best-equipped, most advanced centres in the world. For those who don’t know the region, Sharja is one of the Emirates alongside Abu Dhabi and Dubai itself.

Finally, Leila explained that the effect of the Vision 2030 initiative of the KSA has done a huge amount to bring investment and talent to the region, raising the standard of local film production and increasing demand.

“The speed of film production has increased. The number of titles, regional and national collaborations is increasing year-on-year. Recently I have met a handful of people from seven or eight organisations who began by self-distributing

their own movies. They’re now investing in other films. That’s unrecognisable from 15 years ago. What’s happening in the KSA today mirrors what happened in the UAE back then.”

Leila also made the point that national pride among young audiences is an important driver in the surge in local film production. “There’s a return to self,” she explained. “It’s an expression of: ‘I’m a global citizen but I am also an Emirati and I appreciate my roots.’ There used to be a theory here that to be modern you had to be western. It’s not like that now. You can be modern in an Arabic country.”

So culturally the region is developing fast, but so far, event cinema hasn’t really been exploited. The big chains are aware of it and some are more invested than others, but all see the potential of bringing additional programming to complement Hollywood and homegrown content. In Saudi Arabia and Kuwait no event cinema production has made it onto screens there yet; however one of the elements of the Vision 2030 initiative has allowed concerts and theatrical events to be permitted in public for the first time, lifting the ban on mixed crowds, dancing and singing in public.

Vision 2030: the Saudi way ahead

You may have heard the phrase “Vision 2030” bandied about but what is it and how does it affect the cinema industry? Mohammad bin Salman bin Abdulaziz Al Saud (known locally as MbS), King of Saudi Arabia, is a highprofile monarch with progressive plans. In the policy brief outlined by the Middle East Policy Council the list of initiatives is ambitious and exhaustive. The first details were announced in April 2016, but the extent of the change that is proposed makes Brexit look like a walk in the park. Here are just a few topline plans:

The curbing of subsidies and resulting changes to the compact between the Saudi population and the royal family Restructuring to accelerate government decision making and efficiency Establishing two Councils to oversee government strategy Examining state-owned sectors as candidates for privatisation Public investment fund restructuring to increase investment resources and allow the fund to manage new types of assets; Strategic transformation and establishment of the country as a leader in industries other than oil and gas; Forming strategic partnerships and enhancing Saudi Arabia’s trade links with nations worldwide and increasing exports. The creation of a society in which all enjoy a good quality of life, a healthy lifestyle and an attractive living environment

Rapid change — and little resistance

The pace of change is eye-watering. What might take years of debate and round-the-houses negotiations in parliament in the UK can be decided overnight. “You plan your life with the possibility of disruption here,” Leila explained sagely. “Wars, alliances, infrastructure changes things quickly. Change is a constant here and it’s rapid. We understand that. Normal life will continue, with a new set of changes.” With the expectation of change, the resistance to it is removed, so rapid change can be facilitated. One of those changes is immigration. Avtar Panesar, VP of special projects at Yash Raj Films — one of India’s leading film studios — explained that in 2004 Dubai alone represented just 6% of the company’s international business (by comparison, the UK market was 35% and the US was 30%). “People said I was mad to invest in Dubai at the time, but I felt there was an opportunity.”

Around that time, the UAE was experiencing an explosion in its Indian population; it was 1m in 2004, it’s now 3m. Avtar’s hunch proved correct — now the UAE accounts for 30% of Yash Raj Film’s international business, so clearly content in this region is diverse. It can’t be just a numbers game though, can it? Avtar laughed. “Not at all. In the Emirates, marketing and distribution costs are much lower because the place is so much smaller, but these days it’s the same market share as the whole of the US. A $10m box office for both Hollywood and Bollywood content is common.”

He went on to applaud the work of cinemas themselves. “Credit to exhibition in the region — it’s a part of the world that is willing to work collaboratively with distribution and they will listen to us. Why? Because they are hungry for our business, they see the opportunities as much as we do. They have a great appreciation for the bottom line.”

The increasing profile of women is something that came up again and again. John Sullivan of The Big Picture told me that in Saudi Arabia the workforce is well-educated, engaging and enthusiastic. They are young and fully supportive of the reforms taking place. The ratio is also refreshing; 50:50 male/ female, even at management level. Kuwait paints a much more traditional picture, with men in management positions, and more visible roles in general — and that looks set to stay. Kuwait isn’t trying to compete with any of its neighbours in being the most progressive (the big reserves of oil there are likely to be a factor), though there is a definite sense of that taking place elsewhere in the region.

“High-profile women leaders are encouraged, and their accomplishments applauded in the UAE.”

Room for competition, not over-saturation

There are gaps in the market; distribution has yet to take hold in the GCC as a standalone business, and the cinema chains compete for product from the West to distribute amongst the other chains themselves. At present there is only one distributor — Front Row Filmed Entertainment — that is in the enviable position of hoovering up all the business, but there is plenty of room for healthy competition. It seems inevitable that this will take place over the next few years. Local offices for major studios may well spring up as they see the potential in investing in the lucrative Arab market. There will be a sweet spot, where the number of cinemas just services the swelling population — there is a danger it may eventually tip over into saturation. But all this seems a long way off and as Adon Quinn reminded me, “Let’s just speed to market while the going is good.”

All of this activity, the liberalisation of trade, the embracing of diversity, the huge state investment and the education of the workforce is going to be a force for massive positive change in the region. Dazzling though this all is, there are caveats. These are still sheikhdoms. Perceived freedoms may not quite be as they seem. Doing business here is different. There are cultural, political and ideological differences between the West and the GCC to be mindful of, but the opportunities are extensive and exciting — and for creative industries, the next ten years will be captivating.

Censorship? Easing restrictions

Censorship is also being affected by this shift in attitude. I can vividly recall in the early 2000s sending the Saudi censor board a VHS copy of Disney’s U-rated animated feature “Atlantis” for release on DVD. Featuring a watery cast dressed mainly in modest swimwear, any suggestion of flesh came back from the board edited out. The result was a nonsensical 12 minutes of footage. Unsurprisingly, “Atlantis” never got a release in Saudi Arabia.

The Vision 2030 edict is now lifting censorship restrictions to facilitate trade and compete with its neighbours in the region. The sense is that Saudi Arabia wants to be seen in censorship terms as liberal as the UAE so in turn the UAE is having to work a little harder to stay one step ahead. That isn’t to say that it’s anything like as liberal as the West and every piece of content still needs to pass through a strict censor board. But the shift is noticeable. Perhaps it’s time to revisit “Atlantis”.