AMC Lags is the company that is lagging behind in the competitive cinema market in Saudi Arabia. Four years later, the American film industry behemoth is falling behind its domestic competitors.
The world’s largest theatre chain is struggling in Saudi Arabia, where there are no other significant global companies.
Even with legal and societal reforms, AMC’s experience shows how tough it is for Western firms to conduct business in Saudi Arabia.
AMC Lags had planned to open 20 theatres by the end of last year, but just 10 have opened. Despite receiving licences after AMC and without direct government assistance, Muvi Cinemas in Saudi Arabia and Vox Cinemas in Dubai both have around 150 screens. According to Saudi Fransi Capital, three other companies are developing theatres and three more have permits, making Saudi Arabia a competitive industry.
Sources say AMC Saudi Arabia replaced CEO John Iozzi with an interim CEO from Vox’s parent firm earlier this year.
According to those acquainted with the relationship, the Saudi government is now seizing more control of its joint venture with AMC. This person claimed AMC presently holds 10% of the joint venture with Saudi Entertainment Ventures, a division of the Saudi sovereign wealth fund.
According to a source involved with the talks, the new collaboration will be simpler, with Saudi Entertainment Ventures, popularly known as Seven, licencing AMC’s name but running the operation.
AMC CEO Adam Aron claimed the virus hampered theatre openings.
‘The greatest appreciation, deepest regard and true fondness’ for his Saudi government allies, said Mr. Aron.
Per a person acquainted with the circumstances and public pronouncements, AMC has committed at least $10 million in its collaboration with Seven. Seven declined to comment.
AMC Lags was chosen as a partner because of its experience establishing theatres, according to John Sullivan, head of cinema development consultancy Big Picture. Rather than experience in new emerging countries, the American firm’s size has come via acquisitions, he added. He emphasised that size didn’t ensure success.
Owners of commercial locations wanted AMC screens because its brand was worldwide known, according to people involved with the rollout. But unlike Muvi and Vox, which are subsidiaries of major retail and shopping-mall conglomerates in the Gulf, the US business lacked local links.
“The ordinary Saudi recognised AMC just when [AMC] came to market,” said Haitham al-Shammari, CEO of Gulf Hub, a Riyadh-based executive recruitment agency. “The Saudis know Vox well.”
Kansas-based When Crown Prince Mohammed bin Salman announced the reopening of cinemas in 2017, AMC applauded. Faced with increasing Islamic sentiment across the Middle East, Saudi Arabia outlawed theatres in the 1980s.
According to a source, AMC Lags began talking to Saudi officials about a presence in the country in November 2017 when Mr. Aron visited a conference in Riyadh. On the same day the monarchy lifted the theatre prohibition, the two parties signed a memorandum of agreement to establish theatres.
The move was part of a Saudi Arabian shake-up. Prince Mohammed also allowed women to drive, banned religious police, and encouraged public sex mixing.
AMC Lags, like many competitors, rushed to develop multiplexes in the US and expanded internationally. A few industrialised nations were yet to increase their exhibitors. AMC promised to open 50 cinemas in five years and 100 by 2030.
According to Mr. Aron, this will be a highly profitable opportunity for AMC.
Earlier that month, AMC Lags and the Saudi government erected a temporary theatre in an underused Riyadh symphony hall, according to sources. For the first time since the 1980s, AMC presented the Walt Disney Co. blockbuster “Black Panther,” which recounted the narrative of a young prince striving to modernise his nation.
After the murder of writer Jamal Khashoggi in October 2018, the CIA assessed Prince Mohammed likely ordered the crime. The country denied any crown prince participation.
Despite other executives pulling out following Mr. Khashoggi’s killing, Mr. Aron openly stated that AMC will remain in the country to serve the 35 million Saudis.
It took AMC Lags over 18 months to open its second theatre. According to those involved, AMC collaborated with Seven on a market plan that included constructing 20 standalone theatres and 30 as part of entertainment venues built by Seven around the country. Not yet opened entertainment clusters by 7.
“Our competitive position in Saudi Arabia will be tremendously strong,” Mr. Aron added, once more theatres and Seven’s entertainment centre open. He added Saudis “appear to be ardent moviegoers.”
AMC’s stock price has soared in recent months, spurred by individual investors’ enthusiasm for AMC and other meme stocks. AMC Lags has bought more than half a dozen additional sites in the United States, a dramatic change from over a year ago, when Covid-19 almost bankrupted the firm.
Almost all of the company’s facilities worldwide have reopened, but attendance remains below pre-pandemic levels.
