With the region's film making beginning to take off, Gulf Business examines the infrastructure, investment and interest in local cinema. GLENN FREEMAN reports
A fatal taxi accident on Dubai's Sheikh Zayed Road; a troubled Emirati youth and a tempestuous relationship between an air hostess and an advertising executive: all sub-plots of City of Life, the first locally-produced feature film directed by an Emirati, Ali Mostafa.
Following its May debut the film has been attracting strong interest locally. This is the first large-scale production of its kind for Dubai and it could be just the first drop of a waterfall, as investment in films and the screens they show on builds momentum across the Middle East.
Massive investments are being poured into establishing some semblance of a local film industry, with Abu Dhabi's ImageNation the most notable of these. The all-important infrastructure for this industry has gone through interesting times in the last few decades, particularly within the last 18 months. Cinemas and the distributors that deliver the films to their customers are now jostling for position in what has been a tough environment.
Films - even without a highly developed film-making sector - are big business in the region in the form of cinema viewing. In the UAE, the cinema market has grown rapidly in recent years, fuelled by a boom in shopping mall construction and population growth. Figures from UK-based Dodona Research show that number of screens has grown to more than 200, up from just 140 in 2003. Gross box office revenue has also risen rapidly year-on-year. From a base of $22.8 million in 2003, this climbed to $49.2 million in 2006 and pushed beyond $71.3 million in 2009.
Driven by a number of factors, including overwhelmingly young demographics across the region and a climate that forces most people to seek indoor entertainment for much of the year, cinemas form a large part of the modern lifestyle for both the local and expatriate populations.
According to Cameron Mitchell, general manager of the UAE's well known entertainment provider CineStar, in terms of audience nationality demographics, all the GCC countries have their own unique make up, "but I think the UAE is definitely the most diverse...with the most content and the most film releases."
In the UAE, around 70 per cent of films shown are Western, 15 per cent Hindi, 10 per cent Arabic and the remainder split between other foreign-language films. Other Gulf markets have their own demographics, with Mitchell generalising that the bulk of Kuwaiti audiences are Arabic, along with a smaller mix of Indians and Westerners, with a similar breakdown in Bahrain.
Given the relative youth of the UAE as a nation, and the still-emerging economic centres across the GCC, the significant opportunities are offset by a number of difficulties. One of these is the uneven playing field. Along with wealth, much of it comes down to wasta - an Arabic word that is most closely interpreted as 'influence' in English. Powerful, well-connected, highly-capitalised local family corporations trading on reputation and financial clout still dominate the business.
So says Gianluca Chakra, managing director of Front Row Filmed Entertainment (FRFE), a Dubai-based film distributor concentrating primarily on independent cinema. A fast-talking Lebanese-Italian with an American accent, Chakra has been based in the UAE for years and has carved out his own niche within the local film industry.
But it hasn't come easily. Chakra speaks frankly about the early situation of the film business in the Middle East, particularly the Gulf countries and more specifically the UAE. Talking about what he describes as a monopoly situation, he says that a tie-up between trail-blazing regional distributor Gulf Film and Grand Cinemas created something of a vacuum for those seeking to operate within the local cinema industry. "It lasted for quite a long time. I've been here for seven years now and trust me, releasing a film is a constant battle," he says.
According to Chakra, the business relationship between Grand Cinemas, the UAE's first and largest cinema company, and dominant distributor Gulf Films, effectively controlled which films where shown in which cinemas. Of the UAE's screens, Grand Cinemas operates 133, CineStar 40, Al Massa Cinemas 34 and the remaining 32 divided among smaller, independent.
Gulf Film, a partnership between Ahmad Golchin and Salim Ramia, has been operating in the region for around 30 years. It also owns Grand Cinemas, the largest chain of cinemas in the Middle East. Sitting alongside Grand Cinemas, which concentrates on the distribution of western blockbusters, are its wholly-owned subsidiaries Phars Film and Al Nisr Cinema and Film distribution, which cover the distribution of English and Hindi 'Bollywood' titles within the UAE and broader Gulf region.
As the dominant player, Chakra says that Gulf Films had access to first screening nights for Hollywood blockbusters, which are the highest-ticket sellers in this market. "The rest of the films were then left for the other distributors and exhibitors," he says.
The difficult business environment Chakra encountered in the UAE prompted their 2005 alliance with Kuwait National Cinema Company (KNCC). Kuwait has the second-largest film industry in the Gulf, after the UAE, with the small Gulf country bordering Iraq accounting for around 45 per cent of movie ticket sales in the Middle East.
At the time of the partnership formation, KNCC owned all the cinema screens in Kuwait. Chakra says this relationship enabled his company to wrest back some control of the UAE film industry from Gulf Films, using its influence in the Kuwaiti film market to offset that of its UAE competitor. By bartering access to Kuwait cinemas in exchange for similar access to more UAE cinemas, Chakra says they were able to create a more tenable situation in this market, but it is still difficult.
"In the US for example, there are anti-trust laws that prevent an exhibitor from distributing titles in his cinema [only], as it would not favour competition. This is a major point that the US government has taken into consideration, giving everyone a chance to compete."
"Unfortunately, the UAE and GCC governments [and] the National Media Council do not know this, and I don't think they will ever give it consideration," he says.
Though difficulties continue, Chakra believes the situation here has improved since the entry of CineStar which in 2006 heralded a more open and competitive environment. CineStar in the UAE is a joint venture between Australian cinema giant Greater Union and Majid Al-Futtaim (MAF), a local company with an extensive portfolio of companies including some of the biggest malls across the Gulf. MAF owns a 51 per cent stake in the venture, but Mitchell emphasises that it is managed by Greater Union, "and we pay market rent, we don't get any favours." He alludes here to MAF's ownership of Mall of the Emirates and the newly opened Mirdif City Centre, two of CineStar's main UAE revenue centres.
From the group's newest cinema inside the palatial retail development, Mirdif City Centre, Mitchell spoke generally about the cinema industry, and more specifically about the opportunities and challenges within the Middle East.
"We have massive costs and overheads...it is tough, without food and beverage, cinemas wouldn't be feasible," he says. "A lot of cinemas in the UAE lose money. Sixty per cent of box office revenue goes to film distributors, you're paying massive rent, with massive overheads in regards to electricity and water. It is very much a low-margin business. If you don't get to a certain level, you lose money," he says candidly, but concedes that, "overall, the right cinemas, matched with the right mall in the right area, they make a bit of money."
Though costs across the board continue to increase - the price of electricity and water alone have risen six-fold in the last few years - ticket prices have remained at the same level for over a decade, at around $8 for adult admission to a film. "If you look at anything in the UAE, what's the same price [today] as it was 11 years ago?" asks Mitchell.
However, this is both a curse and a blessing. The relatively low cost has meant that the entertainment industry has, in some ways, weathered the recession better than others. Mitchell makes the interesting point that, during the recession, the travel and aviation industry's losses have been the cinema industry's gain. When people choose to either spend their holidays at home or to travel domestically, they are more likely to visit cinemas and shopping malls.
The spacious floor plans of the UAE's malls provide an ideal environment for cinemas. According to Mitchell, this enables them to continually ramp up their offerings to stave off the ever-present threat of home cinema technology and film piracy. "We need to constantly revise our offering to ensure we offer an experience above and beyond what people can get in their own lounges: the drinks, the digital surround sound, the snacks and so forth," he says, mentioning its various packages including Premium Gold Class and executive class and standard seating.
The danger of an over-abundance of cinemas in the UAE is another threat Mitchell raises. Drawing comparisons with the effect of residential property oversupply on the local real estate market, he describes the potential impact if too many cinema screens flood the market in the UAE.
He says that if some developers had followed through with plans in 2007 and 2008, at the height of the boom, "they would have killed the business here. We had developers coming in saying they were going to build individual cinemas with 200 screens."
The flip side of that glut situation can be found just next-door in Saudi Arabia. The largest and most populous of the GCC nations, with a population pushing beyond 28 million, is unusual in that there are no commercial cinemas, with the display of films forbidden by the Kingdom's religious authorities.
So far it seems that reality is unlikely to be changed any time soon. A trial run of film screening last November did not go down well. A limited screening of Menahi, a locally-made comedy about a young Saudi Bedouin who moves to the city, saw an angry reaction from conservatives. Though a poll of Saudi nationals showed some 90 per cent were in favour of the opening of movie halls in the Kingdom, the screening of Menahi evoked an outcry from some clerics who issued fatwas against watching the film, claiming it would lead to forbidden activities, such as the free mixing of men and women, and listening to music.
Given such opposition, industry insiders have mixed feelings on the future of cinema in Saudi Arabia, despite persistent rumours that it will one day allow the opening of cinemas. Mitchell is non-committal, referring to speculation that Saudi Arabia may soon move away from the strict ban, but airing uncertainty as to whether it will ever eventuate. However, he does mention that most of the new malls built there have the construction 'shell' necessary for cinemas to be added at a later date.
Chakra is less optimistic when speaking about the future of film in Saudi Arabia. "It's doomed," he says. He feels that although Saudi Arabia's demographic does represent so much potential, with the strict censorship and religious aspects counting against it, there will never be a film industry there. "I've been hearing it will be opened up for about five or six years," he says, but doesn't place much stock in these rumours.
For neighbouring Bahrain, however, Saudi Arabia's lack of cinemas seems to works in its favour. According to various sources, one of the reasons Bahrain's cinema market is so strong is that Saudi Arabian nationals can drive across the causeway into Bahrain to watch films. And for the rest of the Gulf, the interest, and thus the investment potential, of film remains strong. n
Shooting the Gulf
While local film production slowly gathers pace and the cinema sector continues to play whatever it can, wherever it can, the greater Middle East is seeing its popularity as a backdrop for international films rise.
Over the past few years a number of films have shown stories taking place in the Gulf, with some of the more notable recent films being Syriana (2005) and The Kingdom (2007). Both films were shot in various Middle Eastern locations, including Morocco, Abu Dhabi and Oman.
There have also been a number of stillborn attempts of international producers attempting to film in the region. The most notable example of this was the multi-million dollar Sex and the City 2 film. According to various sources, scenes of the film were originally going to be filmed in Dubai, but ultimately approvals were not granted. Instead, the desert scenes from the film were shot in Morocco, which were referenced as Abu Dhabi.
"What Dubai has been holding out for is the right film to promote the city...they've always wanted the James Bond-type film to be associated with Brand Dubai," says Tim Smythe, who produced maiden Emirati feature film City of Life after much difficulty. "That's one of the main reasons Dubai has really held back on permissions for a lot of films, because they didn't feel the calibre or the exposure would be big enough."
Smythe, who is also chief executive and executive producer at Dubai's Filmworks, estimates that the international exposure a film like Sex and the City 2 generates would be worth at least $100 million in above-the-line promotion.
Capital film investment
Abu Dhabi's tilt at building a film industry in the UAE, ImageNation, has gradually gathered momentum since it launched two years ago. A well-funded initiative entirely owned by the UAE capital's media giant, Abu Dhabi Media Company, has the raison d'etre of working with directors and producers to boost both locally-produced and international film production in the emirate.
ImageNation's first project was announced at the end of May, during the Cannes Film Festival. This is an Emirati film called Sea Shadow, from directorial debutante Nawaf Al Janahi. A coming-of-age story, it revolves around two friends growing up together in a small village, and it is due to shoot in October/November 2010.
According to Stefano Brunner, chief operating officer, ImageNation, their two-pronged approach is weighted towards encouraging the grass roots growth of local films, but it will also look to bring more foreign, independent films to Abu Dhabi. "Everything we do, we do with generating revenue in mind," he says, but stresses that the cultural imperative to build a local film industry is a driving force.
"We're doing this through co-investments with international production companies in Los Angeles, but also India and Singapore. Through this, we're looking at increasing the exposure of those industries in this region, paired with local talent," says Brunner.
"We take our responsibility to focus on the local film-making industry very seriously, so we try to maximise those local elements and pair them, where necessary, with the international expertise we've acquired through our partnerships."
Through this approach, he says they are looking to facilitate three or four locally-made movies per year, and six to eight international productions. He stresses that they aren't looking at big-scale Hollywood productions, instead eyeing mid-sized, independent films, "but if we can help bring parts of production into the region, and produce them here, we're happy to do so. Very often, we're just looking at the commercial side of these projects. Sometimes it makes sense, sometimes it doesn't."
© Gulf Business 2010
