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CENTER GROWTH FUELS BIG LATIN AMERICAN CINEMA BOOM

By María Bird Picó

Latin America is seeing a boom in movie theaters, and this complements an accompanying boom in shopping centers.

The number of cinemas in the region has exploded in recent years, despite rampant movie piracy. The steady increase in disposable income during the past decade is allowing more people to attend a movie theater, a privilege once reserved for the middle and upper classes in metropolitan areas.

Brazil, the country with the second-highest number of movie screens in Latin America (1,700), after Mexico (with 3,197), is about to get a whole lot more. Top Brazilian exhibitor Cinemas Severiano Ribeiro and leading film producer Luiz Carlos Barreto announced this year their Cinema for All campaign, through which they plan to double Brazil’s current screen count to nearly 3,500 by 2008.

Such international chains as Plano, Texas-based Cinemark and Mexico City-based Cinépolis are building new cinemas throughout the region. Cinemark alone has about 900 screens throughout Canada, Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Honduras, Mexico, Nicaragua, Panama, Peru and El Salvador. Imax is entering Guatemala and Costa Rica, having done well in Ecuador and Mexico. In Guatemala the Imax cinema will be part of a nine-screen multiplex in the 484,000-square-foot (45,000-square-meter) Pradera Concepción mall, now under construction in Guatemala City.

“When we decided to expand internationally, we chose Latin America, because we already had a great deal of success and experience in our Latin markets in the United States,” said James Meredith, vice president of Cinemark’s international division. “It seemed like a natural fit. And movie theaters are a natural fit with shopping centers.”

In Colombia, for instance, which Cinemark entered in 1999 through a partnership with Casa Editorial El Tiempo, a Bogotá-based newspaper publisher, most of the multiplexes are located in shopping centers. Those include Centro Comercial El Tesoro, in Medellín, and Cable Plaza, in Manizales.

“Movie screens are very important for our retail developments,” said Ricardo Diaz, president of Multiproyectos, the developer of Pradera Concepción, a 484,380-square-foot regional center, and the owner of two other malls and two open-air centers, all of which are in Guatemala. “Central America has a sizable young population that looks for entertainment options. Movies are a cheap and varied form of entertainment. They also generate clients for the food court.”

Cincinnati-based Marketing Developments, a retail marketing consulting firm with experience in Latin America, estimated in the late 1990s there was a demand for about 25 to 75 additional movie screens per Latin American market. The gap has closed since then, but Marketing Developments’ president, Stanley L. Eichelbaum, SCMD, says he believes that opportunities still abound, particularly with the rising income levels and in the second-tier cities.

Entertainment is an important component of the new generation of malls in Latin America, given that expeditions to shopping centers are a family affair, says Eichelbaum.

Movie theaters are proving especially popular. Latin America’s box-office take went up 24 percent last year to $910 million, according to the most recent Motion Picture Association annual report on the international theatrical market.

But though the market is ripe, players are facing a lot of illegal competition in the form of cheap, bootleg DVDs. Movie piracy has dealt a major blow to the industry, says Mario Garavito, who has been in the business in his native Peru for 26 years. It is so rampant that pirated movies sell for as little as $1 at traffic lights, and appear as early as 45 days before a movie reaches theaters in a region. He estimates that the number of cinema attendees in Peru has plummeted over the past 12 years from as many as 10 million a month to 1 million now.

For all this, Focus 2005, a survey of world film market trends conducted by the European Audiovisual Observatory, reports that Mexico’s gross box-office receipts have doubled over the past five years. Last year Mexico had 164 million moviegoers, about 50 million more than Brazil. But the market could be even bigger. Mexico’s movie industry estimates that it loses about 40 million ticket sales every year to piracy. In other words, pirated movies have a market share of about 25 percent, says Ramón Ramírez Guzmán, Cinépolis’ director of marketing.

To confront the competition from piracy, theater operators are enhancing the movie-watching experience by expanding the snack menu, offering VIP theaters and providing special ticket rates, among other things.

“People continue to go to the movies for the experience,” said Costa Rica-based Luis Monestel, director of international operations at Cinépolis. In his country three of the 15 movie screens Cinépolis has at the new Terra Mall, in San José, are VIP theaters. For $7, a moviegoer sits in one of 80 leather seats and enjoys drinks and food, including sushi. Economy-class moviegoers pay $3.71 for a regular chair in a 130-seat theater, but still get to enjoy popcorn, baguette sandwiches, coffee and tea. All of that is hard to replicate on a plastic disc.

The growth of shopping centers is also helping to make movie theaters more attractive than bootleg DVDs. Shopping centers offer ample parking, security and shopping and dining options, executives say.

In Mexico, theaters in shopping centers are stronger performers than freestanding cinemas, according to Cinépolis. By the same token, movie theaters benefit shopping centers, says Ramírez. He cites Interlomas, a mall in the Bosque de las Lomas sector of Mexico City, which had dark stores until Cinépolis opened 16 screens there nine years ago. The mall is thriving once more, and the tenants closest to the screens say sales are especially brisk, he reports.

All of which promises to make the marriage of cinema and shopping center a happy one — and one that is likely to last longer than the average Hollywood union.