Cinemas to unleash exciting opportunities for Saudi Arabia

Published: 28 Dec 2017

By Jayashree Rajagopal, Sr Analyst, and Vidya S Nath, Director, Frost & Sullivan


On 11 December 2017, the Ministry of Culture and Information for the Kingdom of Saudi Arabia (KSA) lifted a 35 year-old ban on cinemas. The government of KSA signed a resolution paving the way for licenses to be granted to commercial movie theatres, with the first cinema expected to open in March 2018. This radical move will give a new lease of life to the almost non-existent film industry in KSA and create value for all the stakeholders involved.

The opening of cinemas is a part of the Vision 2030 program that is focussed on reforming the social, cultural and economic status of KSA. The past year has witnessed some ground-breaking announcements such as permission for public music concerts and comedy shows and allowing women to drive. The 32-year-old Crown Prince Mohammed bin Salman has been credited for these reforms that are expected to impact the economy; and the socio-cultural representation of the country in the world arena.

"This marks a watershed moment in the development of the cultural economy in the Kingdom.  Opening cinemas will act as a catalyst for economic growth and diversification. By developing the broader cultural sector, we will create new employment and training opportunities, as well as enriching the Kingdom’s entertainment options. - Awwad bin Saleh Alawwad, Minister of Culture and Information, KSA

KSA’s sovereign wealth fund, the Public Investment Fund (PIF), has signed a memorandum with the United States of America (USA) based company AMC entertainment to explore theatrical exhibition and related investment and partnership opportunities. IMAX has announced that it will open around 20 theatres in the next three years. Dubai-based Vox Cinemas already has cinema buildings in KSA which have to be equipped to start screening. More announcements are expected in the next few days.

Film Industry in KSA: Past and Present

Figure 1: Key Market Indicators, the Kingdom of Saudi Arabia, 2016

The cinemas in KSA were shut 35 years ago on the recommendations of Wahhabi clergy and conservative groups who believed that cinemas affect the socio-cultural environment of the country. The major source of film viewing is satellite TV that is strictly censored, YouTube, and trips to proximate countries in the region, the United Arab Emirates (UAE) and Bahrain. However, in the past ten years with the aid of advanced technologies and easy access to other gulf countries, this ban has not been a complete deterrent in making and watching movies in cinemas.

Around ten movies released between 2004 and 2017. Most of these movies have been funded by the Rotana Group and a few foreign collaborations. Wajda, the first feature film shot entirely in KSA and the first feature-length film made by a female Saudi director, was KSA’s first official entry at the Oscar in the foreign film category in 2013. In 2017, Barakah Yoqabil Barakah has been sent as a nomination for the same. But due to the absence of local theatres, it is highly unlikely that many of these movies will be recognized by the local Arabic population.  The locals watch high quality series produced by MBC and Rotana on their TVs that align largely with their socio-cultural ethos. Also, there is high demand for Hollywood movies of various genres, especially from Gen Y and the middle-aged people who constitute around 60% of the population. The demand has been stimulated by students who leave the country to study abroad and return to share their evolved socio-economic liberal views with their peers.

The Ministry of Culture and information announced in 2016 that they plan to develop a new media city that provides physical location and necessary technical facilities for local and international journalists operating in KSA. As a part of the  National Transformation Programme, the Government has allotted a direct funding for the establishment of overseas media centres and $ 1600 Million to set up a Saudi media city. The media houses that will operate from the free zone will have to function within the rules and regulations of KSA.

Economic Implications

Entertainment spending has been limited in KSA, despite average purchasing power being high. This led to the entertainment expenditure of the people of KSA being diverted to the neighbouring countries. As an example, citizens who want to watch movies in cinemas typically drive to Bahrain. But now with changing policies, expenditure on leisure and entertainment is increasing, and new age shows such as concerts and comedy and premium cinemas will comprise a significant pie of that expenditure.

Figure 2: Film Industry, Present and Future, the Kingdom of Saudi Arabia

The Government clearly wants to utilise revenue generating opportunities and create an ecosystem that will help in building solid business systems. Media and Entertainment is being viewed as one underserved industry category. By 2030, the Government plans to open around 300 cinemas that will constitute 2000 screens. This is expected to contribute around $ 24 Billion and create more than 30,000 jobs. With the opening up of theatres, the Government expects that the household spending on entertainment will increase from 2.9% to 6%.

Regulations: Current Status

Currently the British Board of Film Classification (BBFC) is used to rate films on Pay TV channels. This is expected to remain so until the adoption of a Saudi classification system for the content. But for cinemas, the censor details are yet to be released. The regulations for entry of cinemas technology companies and censorship are to be framed by General Commission for Audio Visual Media (GCAM) and are expected to be strict due to the impact of conservative groups.  In the hindsight, local film makers who make movies in alignment to the socio-cultural environment are expected to benefit from the move since their movies will get a proper release platform.

World Cinema: Lessons to Learn

Cinemas is a major form of entertainment across the world. From single screen cinemas to the over the top (OTT) videos, the interest on cinemas has not faded away due to the viewing experience associated with it. In fact, as the purchasing power of people increase, watching movies in theatres forms a major expenditure associated with entertainment.

The film industry in India is largest in the world with around 1900 films produced in 2016. Due to diverse culture, linguistic and social backgrounds, India has a number of sub-film industries that contribute to the grand total.  In terms of number of screens and revenue, North America is the frontrunner; this can be attributed to the high purchasing power of people and high-quality film productions.

France, which is known to be the birth place of cinema, has maximum number of screens per million people. The French film industry is self-sufficient with Hollywood movies contributing to only around 40 percent of the releases. The movies are artistic and cater to the interests of French people. In terms of revenues and admissions, France is among the top three film industries in the world. Japanese Film industry is one of the top three revenue generating film industries in the world. With high quality content and technology in their mantel, the film industry has been self-sufficient and also represented well in international platforms by winning four Oscars, the maximum number of awards in the foreign language category, any Asian country has won till now.

China has the maximum number of screens next just to North America; but most of the screens are in multiplexes and they screen commercial movies. The film industry is facing the challenge of strict regulation subjecting all movies it releases to intense censorship for offensive or politically sensitive content. Also, the distribution is a restraint since the screens are not available for local productions. With the kind of resources and technology that China has, it can produce movies that are comparable or out-perform the Hollywood movies both in terms of content and viewing experience. But the industry still has a long way to go.

Table 1:  Comparing the Major Film Industries of the World

Source:  and Frost & Sullivan Analysis


Cinemas in MENA: How are they different from KSA?

In GCC, the movies on cinema screens are largely Hollywood. In countries like the United Arab Emirates (UAE) and Qatar, Bollywood, Kollywood and Mollywood movies also form a major part of movie released due to the presence of expat population. In terms of Arabic movie making, Jordan and Lebanon are the major destinations due to the presence of talent and ease of funds. Egypt, that was the hub of Arabic films a few years ago has bounced back after a sluggish period during which the locals where attracted towards Hollywood movies. Now Egypt is fast becoming the movie hub again by producing films that reflect the new age realities. There are established media cities in Egypt, UAE and Jordan.

In KSA, the expat population is lower as compared to UAE and Qatar and hence Hollywood movies will be of high demand. In terms of film production, KSA is still far behind and the opening of cinemas has kindled new interest among film makers.

Table 2: Comparing the Major Film Industries of GCC

Road Ahead

Opening cinemas is just a beginning to the long journey of establishing a proper Saudi-wood industry.

The success of the film industry in many countries can be attributed to the liberal regulations and the ease of acquiring finance for film making. As the film industry expands, the Governments have initiated various schemes to encourage the industry. This includes hosting film festivals, National Awards and opening institutes that teach various aspects of film making with the help of experts. KSA has to learn from world examples to set up a strong background for making the film industry to be successful in the long term.

Figure 3: Factors Impacting the Film Industry

Based on the analysis on the operations of cinemas and film industries around the world and other MENA countries; the following will be essential to create a platform and take the industry to the next level.

  • Movie viewing experience will be the key to attract the TV glued audience to the theatres. The experience should match the sociological mindset of the current generation. It is yet to be seen if theatres will have family based arrangements or segregate the male and female audiences.
  • Ticket price is one important parameter that needs will take time to get stabilised. Considering that the cinemas in Bahrain and UAE have been hosts to the people of KSA, the rates need to be comparable to that in these countries. Average ticket price can be around 10-15 USD initially. The pricing will be a bit tricky and have to be monitored and changed to improve the audience number.
  • For the next three to five years, the Hollywood movies will play a major role in attracting crowd. But the demand for local content will increase once the hype on cinemas is over. Government has to invest initially to improve the filming conditions and then can encourage private collaborations
  • On the supply side, there is a dearth of experts in cinema making in KSA. There are a few independent film makers who have been influenced by foreign makers. There needs to be a proper system of educating the KSA youth on the latest trends and technologies on the various areas of film making with the help of local and foreign experts.
  • Regulations and licensing terms are expected to be strict initially but have to change as more and more reforms happen in the social front.
  • The establishment of the media city is a major initiative that is expected to attract foreign media companies. A combination of proper infrastructure, regulations and concessions will contribute towards the success of the media city.

The opening of cinemas has created ripples through the entertainment ecosystem triggering excitement among producers and consumers alike; it is the responsibility of the Government to progress steadily towards establishing an inclusive film industry that will reap benefits for all.

Sign in to read the rest of this article

Not signed up? Register now Forgot your password?

Help Desk

Full list of offices

For more information and general enquiries, contact Frost & Sullivan near you.

North America
tel: +1.877.463.7678

Select a location near you..