The benefits will be felt across the Saudi entertainment industry, which recently received a SR10 billion ($2.66 billion) boost from the government-owned Public Investment Fund to develop the sector in line with Vision 2030 ambitions.
Danny Bates, co-founder of streaming site Starz Play, said the reintroduction of cinemas to Saudi life is “a big positive for the video streaming sector” and “another step toward bringing quality entertainment to Saudi Arabia.”
Demand for movie content is growing rapidly in Saudi Arabia, with the Starz Play subscriber base doubling every six months since it launched two and a half years ago in the Kingdom.
“Our highest content consumption rates per month are coming from Saudi customers,” Bates said, identifying action and comedy as the most popular genres among subscribers there.
Vikings is the most popular series on the Saudi site, which receives around 40 million hits per month, with comedy classics including Friends and How I Met Your Mother also among the most-viewed.
Rather than creating competition, the introduction of cinemas is likely to catalyze further growth, raising the profile of film across the country, Bates explained.
“If Fast and the Furious 8 is playing in the cinemas, viewers can then turn to us to watch Fast and the Furious 1 through 7.”
In addition, the cinema is an ideal platform for the company’s advertising campaigns. “We’ve done this successfully in the UAE and Kuwait and would hope to do something similar in Saudi Arabia.”
According to Ravi Rao, CEO of Mindshare MENA, lifting the cinema ban will generate a new market for advertisers in Saudi Arabia, with “international and local brands vying to be there.”
The development will have a significant impact on advertising in the Kingdom, creating additional touch points and opening new channels of communication.
“Brand integration in movies will take a bigger turn when Saudi audiences can be targeted,” Rao said.
Advertising spending in MENA has seen a continuous decline in recent years but while the downturn is forecast to continue elsewhere, Saudi Arabia can anticipate growth in the industry, fueled by ambitious reforms that are creating new opportunities for investors.
“Ad spend in Saudi Arabia (including the PanArab TV spends) is now at under $2 billion from a high of $2.5 billion two years ago. But with all the cultural and economic glasnost that is sweeping the country, one can start expecting double-digit growth by 2020,” said Rao.
Ema Linaker, an executive director of digital at Golin, said the seismic shifts taking place as Saudi Arabia pursues its Vision 2030 targets will draw in advertisers formerly focused elsewhere in the region.
“Just this week, Saudi Arabia unveiled the 2018 budget, the largest in the Kingdom’s history with SR978 billion ($261 billion) public spending. With other markets like the UAE set to contract, a lot of the key advertising groups will be pivoting toward the Kingdom to secure a piece of that investment in 2018.”
More than 50 percent of the Saudi population is under 25 and between 65 and 70 percent are under 30 — demographics that appeal to advertisers anticipating an “abundant fanbase” for film in the Kingdom, Linaker added.
Pointing to a Comic-Con event in Jeddah last February attended by more than 10,000 people, she said: “Cinema looks set to become a national pastime for Saudis, thereby driving up audience figures and increasing the amount of people exposed to cinema advertising.”
Access to Saudi audiences will also have a bearing on how advertisers target consumers, injecting new vigor into the industry.
“From a cultural perspective, the opening up of cinema and entertainment sectors such as music and sports will fuel sponsorships and activation to increase ad spends in the near future,” said Roy M Haddad, director of WPP MENA.
“Brands and agencies will quickly re-invent and adapt to the new social and cultural movement in Saudi. Cinema will act as a trigger for many more changes in brand communication, experience and engagement,” he added.
Like the rest of the region, Saudi advertising is heavily weighted toward television, but with a major uplift across digital platforms, media companies are exploring new ways of engaging MENA audiences online.
“I believe like all Gulf countries we will see Saudi Arabia gradually shift toward digital advertising, driven by its mainly young and tech-savvy population,” said Linaker.
Citing Euromonitor, she said that Saudi Arabia’s advertising industry is anticipated to see flat growth over 2016-2021, as the introduction of VAT and additional taxes on certain commodities dampen private consumption.
Meanwhile, international media agencies will beef up their Saudi teams, creating a larger platform for local talent.
“Ogilvy, Leo Burnett and many other major ad agencies have a local footprint in Riyadh and Jeddah but these tend to be satellite offices and attracting quality ad talent has been a constant challenge,” said Linaker.
“However, we are starting to see young talent coming through the ranks born Saudi, educated in Saudi and passionate about developing a creative culture within the Kingdom.”
“With more investment, talent and opportunities arising, I can see Saudi becoming a hot bed of innovation and creativity quite quickly. It is a huge market and full of opportunity.”