Alejandro Ramirez Magaña is CEO of Cinépolis, the Mexican exhibition giant that operates 6,777 screens worldwide across 19 countries including Mexico, Brazil, Argentina, Spain, the UAE, Saudi Arabia, India, Indonesia and the US.
While the privately held company does not disclose financials, Ramirez asserts Cinépolis is in a strong position going into summer 2023. At time of writing, its pre-sales in Mexico for The Super Mario Bros. Movie, which opened on April 5, were one of the highest the company had ever seen for an animation film.
Cinépolis’s distribution arm typically releases 15 mostly local titles each year in Mexican cinemas, complemented by international titles such as Parasite in 2019. Across Central America it releases mostly Latin American films from regional buyers, and distributes for Sony.
In the run-up to CinemaCon (April 24-27), Ramirez — whose industry roles include chair of the Global Cinema Federation and Morelia International Film Festival — talked to Screen International about the opportunities and challenges for exhibition, dynamic ticket pricing, alternative content… and surprise hit The Whale.
The pandemic is in the rear-view mirror. How is the company’s financial health?
We’re financially sound. We already had positive EBITDA in 2021, and in 2022 we had positive EBITDA and operating income after interest payments and taxes. We only had to shut down eight complexes in Mexico during the pandemic and two in the US, and a handful of others around the world. Those were cinemas that were not doing great before the pandemic. In Mexico, if you’re forced to shut down for over three months due to a government order you can terminate the lease, so we exited eight sites and they were struggling prior to the pandemic. We are still operating 6,777 screens worldwide.
How do you feel about the state of cinemagoing?
I’m optimistic. The industry is on a sustained recovery path. We had a very good closing of 2022 — December was strong with Avatar: The Way Of Water doing great numbers for weeks. We’ve had a very positive start to 2023, especially compared to a year ago when we still had [Covid-19 variant] omicron in January and February 2022 and we had shutdowns. It was only 12 months ago that we had countries like India close, most of Indonesia, all of Peru and Chile at the beginning of 2022. So it’s looking very good compared to 2022 but also in general in 2023 we’re seeing great results.
Having enough content and seeing that we’re performing above our budget for the first few months of the year makes us optimistic for the year ahead, because we see there’s going to be sustained content throughout the year, much more than we had in 2022, and approaching similar levels to what we had in 2019. We still don’t have full visibility for 2023, but we have enough to make us confident it’s going to be a very good year. This applies throughout most of the territories in which we have a presence.
Give an example of strong early box-office performance.
We ended February at 95% of the box office of February 2019 — and 2019 was a record year. The reason is firstly that the pandemic is further behind us now and everybody’s resuming their lives, and secondly — and this is very important — we have content. In the last couple of weeks, all the titles were strong enough and gave enough diversity to the box office. We had Creed III and Scream VI performing well.
The Whale, starring Oscar winner Brendan Fraser, has been a hit in Mexico.
The Whale is still in the top 10 at the box office after seven weeks. It opened on February 9 through the Mexican distributor Supra. It’s a niche movie but in Mexico it’s earned $9.2m and sold 2.6 million tickets. It’s the best performing territory in the world outside the US. It’s an interesting case because you wouldn’t have expected it to play so well in a country like Mexico, where audiences usually like action films and family films.
What are the opportunities for exhibition?
We’ve proven that people want to get out of their homes and experience a movie in a communal setting on a big screen with other people. The opportunity is to continue to enrich the moviegoing experience and analyse what are the drivers that entice people to go to the cinemas. We need to give our patrons the best technology, the best facilities, the best service, the best products in the concession stand to differentiate [the experience] from what they get at home.
What they cannot get at home is a 20-metre screen. They probably have a nice sofa but our recliners are probably better than most home sofas. The best sound too is difficult to replicate at home. 3D has come back with Avatar: The Way Of Water — we sold overwhelmingly a large amount of tickets on 3D. It varies by country but overall 3D did very well and many more films are coming out in 3D this year.
Another opportunity is to continue to invest in technology that makes the experience frictionless: buying your ticket, reserving your seat, buying your food at the concession stand — using technology is very important. People don’t like to stand in lines.
How have your premium-format screens performed?
Our premium format sites were the first to show signs of recovery. We have more than 640 luxury screens worldwide. You get waiter service to your seat in our premium formats, but even if you don’t have waiter service you can still expect good food and [drinks]. When you go out to the movies, it’s a night of indulgence.
How do you feel about shorter exclusive theatrical windows after the pre-pandemic 90 days?
I would say the minimum window in any country in Latin America is 45 days. We believe that 45 days is a healthy enough window that allows us to do good business and people know [titles] won’t be available two weeks down the road on a streaming platform. Some studios and distributors use longer windows depending on the success of the film. If you want to watch the movie that everybody’s talking about at the moment, you have to see it in the movie theatre.
Does Cinépolis experiment with ticket pricing?
In some auditoriums we have rows with better seats like recliner seats, and that’s very common in India. In some markets you differentiate not only by the location in the auditorium but also by the type of seat because the location in the auditorium sometimes creates consumer backlash — they don’t understand why we’re charging more if they’re sitting a little bit more to the centre. What is easier for the customer to understand is that it’s a better seat and it also happens to be located in the best spot in the auditorium.
We have dynamic pricing throughout the week. We’ve experimented with dynamic pricing throughout the year, depending on high or low season, but we’re careful not to irritate the customer.
Cinépolis has a large global footprint. What was the opportunity to operate in markets outside of Mexico?
Indonesia is the fourth most-populated country on Earth and it was under-screened so we thought it would be an interesting market to explore. They have a local film industry that’s vibrant and dynamic like India, where we’ve had a very good experience. Similarly with the Gulf states — the UAE, Oman and Bahrain — and we wanted to be ready for when Saudi Arabia opened up.
How is your business doing in Saudi Arabia?
Saudi hasn’t been as good a market as we expected originally: way too many players entered at the same time, there’s a high cinema tax and they went from having very few entertainment options to having a lot, including live concerts, city festivals, football league, Formula 1 and all the streaming services. The Saudis don’t have the deeply rooted moviegoing culture that the Indians have. For instance, Arabic movies work well, but there are not that many, and while some Hollywood films have been successful, others haven’t. Another concern is censorship. Many important movies were not released due to censorship. That has limited the variety and the amount of content that we have, so it’s not been the easiest market.
Are there further plans for international expansion?
Not for the moment. We’re trying to get back on our feet in every territory and consolidate or strengthen our operations in every market.
What are your views on screening movies from the streaming platforms in Cinépolis venues?
We’re happy to show content from the streaming services. We will show Air from Amazon; it’s got a strong marketing campaign and they’re putting a lot of thought behind the launch. We know our friends at Apple are also thinking of releasing in theatres some important titles this year. We’re excited about that.
Did you show Alejandro G Iñárritú’s Netflix film Bardo?
We did as they had a healthy window in Mexico. Bardo was released in Mexico with a 49-day window, seven weeks, so for an artsy film it did quite well in Mexico. After seven weeks of having it in theatres, by the time it premiered on Netflix it was still playing in 63 multiplexes in our circuit.
Are you confident that older audiences will return to theatres?
I would say most of them, yes. We’re seeing that older audiences have started to come back. We were lacking a lot of the dramas and the comedies they like — the older audiences don’t go for the big action movies or animated movies — and now with all the Oscar movies, we’ve seen a lot of the older audience have been reactivated. I’ve talked about the success of The Whale. They’ve taken longer to come back, but they are coming back and it’s just a matter of reaching out with content that is relevant to them.
Have they come back in all of your territories?
In most countries we are seeing that it’s starting, but they have been slower to come back. In some markets like Mexico they’re coming back faster than in others. Mexico has started to recover faster for every demographic.
How is your alternative content business under the sub-brand Cinépolis + Que Cine?
We’ve had very good results with alternative content, like the feature Demon Slayer: To The Swordsmith Village [anime is not traditional content in Mexico, so Cinépolis designates it ‘alternative’]. It is going to sell over a million tickets in Mexico. Anime is quite big in Mexico.
We also had the BTS concert event BTS: Yet To Come. I believe for the last concert we sold 400,000 tickets in four days just in Mexico, and 500,000 tickets in all of Latin America. Mexico was the second-largest market in the world for BTS, just after Japan.
What keeps you up at night when you think about the future of the business?
We need to ensure we have enough content throughout the year without gaps like we had in autumn 2022. That’s the number one [priority] and we’ve shown that when there’s good films, people come to theatres. That’s why I’m optimistic, because I’m seeing that we will have enough content in 2023.
Some of the studios are producing fewer but bigger films, and that’s being complemented with independent films. Local films are also very important, especially in countries like India where we’ve had a faster recovery than in other markets. India is not Hollywood-dependent, but dependent on Bollywood, Tollywood [Telugu films], Kollywood [Tamil films] and other local film industries.
Number two would be securing a healthy window to ensure people have us top of mind and don’t lose the moviegoing habit. That is critical. If people think that after 12 days or 17 days they can watch the movie at home, they have much less of an incentive to go and watch it in a cinema.
Everybody seems to be converging on a 45-day window internationally, not in the US because the US was the market most severely disrupted by the pandemic and by [the rise of] the streaming platforms. That window is important, and if we don’t have it, that would become a challenge.
The other thing is that we need to keep a good moviegoing experience because we have more competition from home entertainment than we had before the pandemic. We need to remember that, despite the fact we were all financially hurt by [Covid‑19]. We have to give people a reason to [leave] their home and pay for a ticket. It has to be a great experience with good seats, fantastic facilities, superb technology, excellent service and products, and exceptional content. So that’s the other thing we need to take care of, because of course we have had less money for maintenance and new equipment and refurbishing our theatres.