AMC lags behind in Saudi Arabia’s surprisingly competitive cinema market

Four years later, the American cinema giant lags behind local rivals.

The market of the Kingdom of Saudi Arabia is proving difficult for the world’s largest cinema chain, which was expected to dominate a field without other major global players.

AMC’s experience illustrates how Saudi Arabia remains a difficult place for Western companies to do business, even with the country’s efforts to woo international business with legal and social changes.

AMC said it would open up to 20 cinemas by the end of last year, but is currently running 10 with about 65 halls. Its two biggest competitors, the Saudi brand Muvi and Dubai-based Vox Cinemas, run about 150 monitors each, despite having won licenses to operate after AMC and without the direct state support that AMC has. Three other companies are building cinemas, and three more have obtained licenses, according to investment bank Saudi Fransi Capital, making Saudi Arabia a competitive market.

Earlier this year, AMC’s Saudi company replaced its CEO, John Iozzi, and installed a former CEO of Vox’s parent company as interim CEO, according to people familiar with the changes.

Now the Saudi government is taking greater control of its joint venture with AMC, and the two sides are planning to renegotiate the terms of their contract, according to people familiar with the partnership. AMC currently owns 10% of the joint venture with Saudi Entertainment Ventures, a subsidiary of the country’s sovereign wealth fund, and the U.S. firm receives fees for licensing its brand and for managing the partnership, these people said.

A new partnership is likely to involve a simpler relationship in which Saudi Entertainment Ventures, also known as Seven, pays a fee to license AMC’s brand but operates the operation, according to a person familiar with the discussions.

In a statement, AMC CEO Adam Aron said the pandemic slowed the pace of its theater openings.

Cinemas in Saudi Arabia opened in April 2018 for the first time in decades.


Ahmed Yosri / Zuma Press

“AMC is perfectly pleased and pleased with our expansion into the Kingdom of Saudi Arabia,” Mr Aron said, adding that he had “the highest praise, deepest respect and genuine devotion” for his Saudi government partners.

AMC has invested at least $ 10 million, or about $ 1 million per year. theater, in its partnership with Seven, according to a person familiar with the details and public statements. A spokesman for Seven did not respond to requests for comment.

Seven teamed up with AMC, believing the world’s largest operator would bring expertise to develop cinemas, said John Sullivan, director of Big Picture, a cinema development consulting firm that advised on the establishment of Muvis. But the size of the U.S. firm has largely come through acquisitions of competitors rather than experience in emerging markets, he said. That size did not guarantee as much success as first appeared, he added.

AMC entered the kingdom and believed that its brand was internationally recognized and therefore landlords would like to have AMC monitors in commercial centers, said people familiar with the rollout. But the U.S. company did not have local connections like Muvi and Vox, which are subsidiaries of established retail and mall conglomerates in the Gulf, the people added.

“The average Saudi citizen, they only knew the AMC when [AMC] came on the market, ”said Haitham al-Shammari, CEO of Gulf Hub, an executive-search consulting firm based in Riyadh, and a former consultant to Seven. “Vox is very well known by the Saudis.”

Kansas-based AMC praised the opportunity in the kingdom when Crown Prince Mohammed bin Salman in 2017 announced the reopening of theaters. Saudi Arabia banned cinemas in the 1980s, when its rulers, who faced growing Islamic sentiment throughout the Middle East, allowed conservative clerics greater influence.

The AMC first began talking to Saudi officials about a presence in the kingdom in November 2017, when Mr Aron attended a conference in the capital Riyadh, according to a person involved. In December, the two sides unveiled a memorandum of understanding to build cinemas, the same day the kingdom announced it was stopping the theater ban.

The move was part of a broader shake-up of Saudi Arabia. Prince Mohammed also allowed women to drive for the first time, excluding religious police and urging sex to interfere publicly – past taboos.

Like many other competitors, AMC had raced to build multiplexes in the United States in recent decades and expanded into international markets. Saudi Arabia was one of the few developed countries where exhibitors had not yet expanded. AMC promised to open up to 50 cinemas within five years, and as many as 100 by 2030.

“We expect this to be a very lucrative opportunity for AMC,” Mr Aron said in an earnings call in April 2018.

That month, the AMC and the Saudi government opened an unused Riyadh symphony hall as a makeshift cinema, even before stroking the details of a joint venture, according to those involved. That month, AMC hosted the first film shown in Saudi Arabia since the 1980s, Walt Disney Co.

s blockbuster “Black Panther”, a debut seen as symbolic because it told the story of a young prince who tried to modernize his country.

But after the October 2018 assassination of journalist Jamal Khashoggi – an operation that the Central Intelligence Agency concluded Prince Mohammed had probably ordered – interest in foreign investment in the country declined. The kingdom denied any involvement of the Crown Prince.

Even when other leaders withdrew agreements after Mr. Khashoggi’s death, said Mr. Aron publicly stated that the AMC would continue to work in the kingdom, citing the best interests of Saudi Arabia’s 35 million people.

AMC opened its second theater in December 2019, almost 18 months after the first. AMC worked with Seven on a marketing plan that outlined AMC opening 20 independent theaters and a further 30 as part of entertainment venues to be built by Seven across the country, according to those involved. Seven has not opened any Entertainment Clusters yet.

Mr. Aron said the company’s competitive position in Saudi Arabia “will eventually be incredibly strong” as it rolls out more theaters and Seven’s entertainment clusters open. He said Saudi consumers “appear to be keenly interested in going to the movies.”

Globally, AMC’s stock price has been at a rapid level in recent months, driven by interest among individual investors who have piled into it and other meme stocks. Using the liquidity raised by these thousands of shareholders, AMC has acquired more than half a dozen new locations in the United States, a twist from more than a year ago when Covid-19 brought the company to the brink of bankruptcy.

The company has said that virtually all of its locations around the world have reopened, but participant levels remain below pre-pandemic levels.

Write to Rory Jones at

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