Move follows lifting of 35-year ban on cinemas in the kingdom
Saudi Arabia's PIF signs cinema deal with US-based AMC Entertainment
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is eyeing the kingdom’s emerging cinema sector, which may grow to be worth over US$1 billion in the coming years, via an agreement with US-based cinema chain AMC Entertainment Holdings.
"In line with the fund's mandate to help unlock promising new sectors within the kingdom, PIF and AMC Entertainment will explore theatrical exhibition and related investment and partnership opportunities in Saudi Arabia," PIF said.
The signing of the non-binding Memorandum of Understanding between the two entities, announced on Tuesday, came the day after Saudi Arabia announced the lifting of a 35-year ban on cinemas, triggering a wave of interest from international companies looking to tap into newly created demand in the country for entertainment services.
PIF said that it expected the Saudi cinema sector to grow to be worth around $1bn.
Public cinemas were banned in the country in the 1980s as they were considered a corrupting influence and a threat to religious and cultural identity. Saudi citizens and residents wanting to watch the latest movie releases have until now been obliged to use illegal streaming services, or to travel to neighbouring countries to watch them in the cinema.
The Saudi government on Monday said movie theatres would be permitted to begin showing films from as early as March, with licensing and regulation details expected to be announced during the coming weeks.
The government said the films would be censored to make sure they remain "in line with values and principles in place and do not contradict Sharia and moral values in the kingdom".
AMC, the owner of the Odeon brand, is one of the world’s largest movie theatre operators, with approximately 1,000 theatres and 11,000 screens across the globe.
“This announcement is an historic moment for the theatrical exhibition industry and a tremendous opportunity to connect AMC’s movie products with the kingdom of Saudi Arabia’s more than 30 million citizens, many of whom we know are movie fans based on their regular visits to cinemas in neighbouring countries,” the company's president and chief executive Adam Aron said.
The Dubai-based conglomerate Majid Al Futtaim, which owns the Vox Cinemas chain, has already said it wants to open the first movie theatre in the kingdom.
Imax, which operates the only theatre in Saudi Arabia, airing educational films at a science centre, told Bloomberg that it is already been approached by chains about building more theatres.
The lifting of restrictions on cinemas follows the easing of other social restrictions, notably the revoking of a ban on female drivers, announced in September.
But it also coincides with government efforts to stimulate the country's domestic tourism and hospitality sector as a means of creating jobs for Saudi nationals, as well as repatriating much of the sizeable funds spent by Saudis on leisure pursuits outside the kingdom.
The country's Vision 2030 economic development plan, designed to diversify Saudi Arabia's economy to lessen its reliance on oil, envisages the creation of 1.2 million new jobs in the tourism sector by 2030.
The Saudi government said it expected to open more than 300 cinemas with more than 2,000 screens by 2030, building an industry that would contribute more than 90bn Saudi riyals (Dh88.14bn.) to the economy and create 30,000 permanent jobs over the same period.
Under the 2020 National Transformation Programme, the government envisages total new tourism investments will reach 171.5bn riyals from a baseline of 145bn riyals.
The 2020 plan also aims to boost the contribution of the tourism sector to GDP to 3.1 per cent from the current 2.9 per cent.
Among the ambitious projects already announced is The Red Sea Project, which will transform a 200-kilometre stretch of Red Sea coastline into a luxury resort featuring hotels, residences and transport hubs.
PIF will provide initial investment for the project, which has already attracted investment from the British billionaire businessman Richard Branson, the founder of the Virgin Group.