Multiplex operators expect strong returns, despite plethora of theaters
Poland has some 700 movie screens, according to the Central Statistical Office (GUS). With one screen per 56,000 Poles, the country is far behind the U.S. market with a screen per 9,000 people. It also lags behind Western Europe, which has one movie screen per 20,000 people, said Frank Stork, managing director of Silver Screen World Cinemas, the future operator of movie theaters being developed by its sister company, Portico Development.
"Poland has a way to go," Stork said.
According to Portico's own research, as many as 16 international cinema companies are either considering or already developing their own cinema circuits here with plans to roll out more than 70 projects throughout Poland over the next decade. That number could easily more than double the number of existing screens.
Portico and Silver Screen are just one of many investors either already breaking ground here or still looking for future sites. Loews Cineplex Entertainment (LCE) is negotiating six locations for multiplexes (see the WBJ, Oct. 26-Nov. 1, 1998), and other investors rumored to be looking at Poland include Australia's Hoyts Cinemas, France's Pathe, a Polish-Australian venture called Cinestar, the U.S.'s Village Warner and Israeli Cinema.
While most of the projects are mired in paperwork, permits or land acquisition delays, a few are moving ahead quickly. Industry executives estimate 5-10 new multiplexes should open in the next two years.
"And the market will boom after that," Stork said.
Right now, only one multiplex exists in the country - Multikino's eight-screen cinema in Poznan. But three new projects in Warsaw planned to open this year will expand the offering. The first to open will most likely be a 12-screen multiplex located in the suburb of Ursynow that will be operated by the Polish-American venture Multikino.
Slated to be ready by the end of August, the cinema will house a total of 3,000 seats. It will also be typical of what Multikino wants to do in other areas of the country. The company intends to locate its potential 15 multiplexes, which should cost about $15 million each, in densely populated areas, said Aldona Szostakowska, deputy president of the company.
A joint venture between United Cinemas International (UCI) and media group ITI Holding, Multikino invested approximately $11 million in its Poznan multiplex, which opened last July.
Szostakowska refused to disclose how many people visited the 2,300-seat complex in Poznan last year, saying the figures would be "too helpful" to competitors on the still undeveloped market. But she said attendance figures were encouraging enough for the company to push forward with its development plans.
In its six-month report last year, Poland-based ITI said the Poznan multiplex attracted 18,000-20,000 viewers a week during its first month of operation.
According to projections put together by London-based ICE Securities, Multikino's multiplex operations in Poland could reach $66.7 million in annual revenue by 2005.
That projection assumed that each screen in Multikino's eight-theater complex attracts 130,000 viewers annually, and that ticket prices rise from the current $3.50 to $5.43 by the year 2005.
With those estimates, ICE expected Multikino to earn $9.4 million by the end of 2000, and to hit net profit of $23 million by the end of 2001.
That scenario, however, is based on Multikino's original plan of establishing 10 multiplexes with a total of 106 screens. But since that time, the company has decided to expand its potential presence from 10 multiplexes to as many as 15. Those 15 multiplexes are expected to be either under construction or up and running by the end of 2003. Ultimately, the company hopes to grab as much as 25% of the multiplex market.
Multikino isn't alone in that objective.
"It's a race for market share now," said Vinton Frost, chief executive officer for Portico Development. "But it's all about market timers (new entrants) vs. long-term solutions."
Portico Development said last week it had some $200 million in its coffers ready to plow into new multiplexes in the next three years.
"We are in no way market timers," Frost said. "We are here to stay."
The company is just about to break ground on its first independent multiplex project in Gdynia. The complex will offer an eight-screen movie complex plus approximately 8,000 square meters of retail, dining and entertainment space facing out onto the Baltic Sea.
That $20 million project is slated for completion next summer. Portico wants the complex to be the first in a series of urban-entertainment centers. The company plans to do similar projects in downtown-locations in Wroclaw and Gdansk next year.
However, before it starts operating its own centers, Portico will first become the second operator of a Warsaw-based multiplex. In September, the company will take over management of a possible five to seven-screen multiplex in the yet uncompleted Europlex center, which is quickly mushrooming up next to the Pulawska Financial Center.
The building will also house a bi-level underground movie theater with a capacity of 1,059 seats, accompanied by underground parking for 200 cars, said Kinomax President Jerzy Olsienkiewicz.
The third and possibly last multiplex to open in the city by the end of this year will be a 14-screen complex scheduled to open this October in Warsaw's Promenada mall. Ster-Kinekor, the company that will operate the 3,200-seat cinema, plans to pour $4 million into the venture, most of which will go to setting up operations since the structure will already be provided, said Mike Ross, general manager of Ster-Kinekor.
The same month the company also expects to open the doors on its nine-screen multiplex in Wroclaw. An additional 14-screen complex will open next April in Warsaw's Galeria Mokotow mall, developed by Globe Trade Center. Another seven projects are also in the works. According to Ross, the company plans to open a total of 10 multiplexes, investing some $35 million over the next few years.
"It's a relatively unkempt market here that can offer a good return on the investment," Ross said last week.
"Poland has a way to go," Stork said.
According to Portico's own research, as many as 16 international cinema companies are either considering or already developing their own cinema circuits here with plans to roll out more than 70 projects throughout Poland over the next decade. That number could easily more than double the number of existing screens.
Portico and Silver Screen are just one of many investors either already breaking ground here or still looking for future sites. Loews Cineplex Entertainment (LCE) is negotiating six locations for multiplexes (see the WBJ, Oct. 26-Nov. 1, 1998), and other investors rumored to be looking at Poland include Australia's Hoyts Cinemas, France's Pathe, a Polish-Australian venture called Cinestar, the U.S.'s Village Warner and Israeli Cinema.
While most of the projects are mired in paperwork, permits or land acquisition delays, a few are moving ahead quickly. Industry executives estimate 5-10 new multiplexes should open in the next two years.
"And the market will boom after that," Stork said.
Right now, only one multiplex exists in the country - Multikino's eight-screen cinema in Poznan. But three new projects in Warsaw planned to open this year will expand the offering. The first to open will most likely be a 12-screen multiplex located in the suburb of Ursynow that will be operated by the Polish-American venture Multikino.
Slated to be ready by the end of August, the cinema will house a total of 3,000 seats. It will also be typical of what Multikino wants to do in other areas of the country. The company intends to locate its potential 15 multiplexes, which should cost about $15 million each, in densely populated areas, said Aldona Szostakowska, deputy president of the company.
A joint venture between United Cinemas International (UCI) and media group ITI Holding, Multikino invested approximately $11 million in its Poznan multiplex, which opened last July.
Szostakowska refused to disclose how many people visited the 2,300-seat complex in Poznan last year, saying the figures would be "too helpful" to competitors on the still undeveloped market. But she said attendance figures were encouraging enough for the company to push forward with its development plans.
In its six-month report last year, Poland-based ITI said the Poznan multiplex attracted 18,000-20,000 viewers a week during its first month of operation.
According to projections put together by London-based ICE Securities, Multikino's multiplex operations in Poland could reach $66.7 million in annual revenue by 2005.
That projection assumed that each screen in Multikino's eight-theater complex attracts 130,000 viewers annually, and that ticket prices rise from the current $3.50 to $5.43 by the year 2005.
With those estimates, ICE expected Multikino to earn $9.4 million by the end of 2000, and to hit net profit of $23 million by the end of 2001.
That scenario, however, is based on Multikino's original plan of establishing 10 multiplexes with a total of 106 screens. But since that time, the company has decided to expand its potential presence from 10 multiplexes to as many as 15. Those 15 multiplexes are expected to be either under construction or up and running by the end of 2003. Ultimately, the company hopes to grab as much as 25% of the multiplex market.
Multikino isn't alone in that objective.
"It's a race for market share now," said Vinton Frost, chief executive officer for Portico Development. "But it's all about market timers (new entrants) vs. long-term solutions."
Portico Development said last week it had some $200 million in its coffers ready to plow into new multiplexes in the next three years.
"We are in no way market timers," Frost said. "We are here to stay."
The company is just about to break ground on its first independent multiplex project in Gdynia. The complex will offer an eight-screen movie complex plus approximately 8,000 square meters of retail, dining and entertainment space facing out onto the Baltic Sea.
That $20 million project is slated for completion next summer. Portico wants the complex to be the first in a series of urban-entertainment centers. The company plans to do similar projects in downtown-locations in Wroclaw and Gdansk next year.
However, before it starts operating its own centers, Portico will first become the second operator of a Warsaw-based multiplex. In September, the company will take over management of a possible five to seven-screen multiplex in the yet uncompleted Europlex center, which is quickly mushrooming up next to the Pulawska Financial Center.
The building will also house a bi-level underground movie theater with a capacity of 1,059 seats, accompanied by underground parking for 200 cars, said Kinomax President Jerzy Olsienkiewicz.
The third and possibly last multiplex to open in the city by the end of this year will be a 14-screen complex scheduled to open this October in Warsaw's Promenada mall. Ster-Kinekor, the company that will operate the 3,200-seat cinema, plans to pour $4 million into the venture, most of which will go to setting up operations since the structure will already be provided, said Mike Ross, general manager of Ster-Kinekor.
The same month the company also expects to open the doors on its nine-screen multiplex in Wroclaw. An additional 14-screen complex will open next April in Warsaw's Galeria Mokotow mall, developed by Globe Trade Center. Another seven projects are also in the works. According to Ross, the company plans to open a total of 10 multiplexes, investing some $35 million over the next few years.
"It's a relatively unkempt market here that can offer a good return on the investment," Ross said last week.
