Image via AMC Theaters/Wikimedia
AMC Theatres (AMC) has finally cracked through one of the toughest market walls in the world. The largest movie theater in the world will soon raise a silver screen in Saudi Arabia. The company scored the first cinema operating license after the Middle Eastern nation ended its decades-long ban on movie theaters.
According to media reports, the movie theater chain came to an agreement with the Saudi government to work with a Saudi company to open up to 30 cinemas across the kingdom in the near future. The first theater will be open for business in Riyadh, the Saudi capital.
But first to the party doesn’t guarantee supremacy. It’s very likely that AMC will have to go toe-to-toe with local competition in many different markets. That situation makes partnering with a Saudi company a smart move. Especially since the “local” competition will also likely come from outside sources, such as Vox and Novo, cinema companies based in the UAE. The Saudi movie house industry is poised to explode in the near future. Citizens have been getting movies other ways, but now they will be offered the opportunity to see them on the big screen. The move is part of a major shift in economic priorities for Saudi Arabia, which is positioning itself for a world in which oil is much less central to commerce.
For the better part of a century, Saudi Arabia has been one of the world’s biggest suppliers of oil. However, as more electric vehicles are entering the global market, and consumers are choosing alternatives to other products created with petroleum, new streams of income are necessary for the country to maintain its wealth and international status.
One of the key growth areas, according Saudi market planners, is the entertainment industry. The nation’s government is expected to invest heavily in developing businesses and assisting startups in that sector, with early estimates ranging into the billions of dollars. Tourism, especially local tourism, is another area in which the government plans to invest. The Saudis want more of their own citizens to spend money traveling in the country, rather than traveling abroad. Keeping more cash at home is a key strategy for a country that doesn’t know exactly when the oil market will reach its tipping point.
Loosening restriction on entertainment options is one way to motivate that spending. One of the primary reasons so much tourism money is going out of the country is because the nation is traditionally very conservative, not really offering much in the way of entertainment offerings, especially for those who live there.
Mark Angelo, CEO, Yorkville Advisors