Cinema operators opt for mall locations, multiple screens

Newsroom 19/05/2008 | 15:45

Filling cities with malls, malls with cinemas, cinemas with people
According to data released by the European Cinema Yearbook (ECY), Romania has the fewest cinema screens compared to the number of inhabitants in the EU, one screen for more than 200,000 inhabitants in 2007. In 2007, the local market had only three development poles for multiplex cinemas, Bucharest, Cluj-Napoca and Oradea, which amounted to a 40 percent market share of screen numbers and 80 percent share of tickets sales, says the study.
Still, operators such as Movieplex Cinema are looking at cities like Sibiu, which is a target for commercial centers and retail park investments, as developers such as Immoeast, Plaza Centers, TriGranit, Mivan and CA Immo International have put Sibiu on their agenda. Still, Sibiu has only one mall to tempt multiplex operators, Promenada Mall.
Hollywood Multiplex Operations officials have said that they are in talks with mall developers in other cities around the country. “Besides the three cinema centers we run – Hollywood Multiplex in Bucharest and Oradea and the single-screen cinema Cinema Pro – we are in discussions with commercial center developers,” said Ioana Piscociu PR specialist at Cinema City International, the multiplex firm operating cinema centers in Iulius Mall in Iasi and Timisoara.
“Bucharest is a key market. Early next year we will open a Cinema City multiplex in the Sun Plaza commercial center and later in 2009 we will open a 20-screen multiplex, including an IMAX theatre, in the Cotroceni Park project. We have also signed agreements for an additional two locations in the city,” said Mooky Greidinger, CEO of Cinema City International. The Holland-based multiplex has invested approximately EUR 5 million in Romania and plans to invest some EUR 50 million in the next two to three years in a network of 25 multiplexes, all over the country, according to Greidinger.
Globally, the data emerging from ECY study revealed, the world's digital screens surpassed the 4,000 mark at the end of 2007, whilst the growth of multiplexes in Europe is slowing. In 2006 there were almost a billion European spectators, 4.6 percent more than in 2005. Greidinger finds the multiplex Romanian market very small and not comparable to the situation in Europe. “Romanians visit the cinema an average of 0.2 times per year, while Western Europeans go at least 2.5-3 times a year (visits per capita). This is clearly not because people in Romania do not like the cinema, but rather because there is no modern infrastructure of multiplexes in the country,” said Greidinger.

Advertising, popcorn and soda boost profits
Like any other multiplex, the revenues from selling different products at the kiosk and advertising revenue add a big percentage to operators' profits, on top of the money from selling tickets. For example, Movieplex Cinema Plaza Romania gets 60 percent of its profits from the box office, 30 percent from leasing a space to a bar selling different products such as popcorn, sodas and candies and 10 percent from the advertising.
The amenities and equipment needed to design and operate a cinema hall are costly. To equip a small multiplex with four screens and about 700 seats could require more than EUR 1 million of investment, according to operator data. MediaPro reports that the maintenance costs for a multiplex cinema depend on factors such as the size of the multiplex, and its position in the city and commercial center. The value of investment depends on the development time schedule which can be from three to six months and the pay-off can take from 9 to 12 years, Piscoiu said.

Single screen-cinemas ‘too expensive for the market'
It seems that the old cinemas once found at the corner of the street no longer appeal to multiplex investors, who all seem to agree that the costs of refurbishing the old single-screen halls are prohibitive. Romania follows the European trend in this respect, according to Piscociu. The multiplex operators present on the European markets are looking at developments within commercial centers rather than restoring old cinemas. The only local single-screen cinema which is highly advertised and hosts upmarket events and movie premieres is Cinema Pro, as it is part of a big media holding and is a profitable business, say company officials. “The boulevard-type cinemas address a specific type of consumer, different from the audience of multiplex cinemas in commercial centers,” said Piscociu.
Similarly, the representatives of Movieplex Cinema Plaza Romania are in no doubt that the old cinemas have no chance against the multiplexes and that single-screen cinemas cannot survive away from busy commercial areas. Elena Mihai, of Movieplex Cinema Plaza Romania, said that opening such a business in a commercial boulevard area with heavy traffic and shopping opportunities may be a good idea (local examples are Patria and Scala on Magheru Boulevard in Bucharest). “I know some stand hall multiplexes in European countries which are doing very well,” said Mihai. And the company made its position very clear: “We are not interested in investing in old cinema halls for there is no profit in such a business,” said Mihai.

By Magda Purice

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