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|Multi-screen complexes with ample parking, security, and other shopping-mall amenities are drawing crowds--some 15 million visits last year--to Puerto Rico's movie theatres. Ticket sales, almost $50 million in 1999, are expected to continue increasing.||
Shop, Eat, And Go To The Movies!
|Shopping centers play principal role in expanding movie audiences, side benefit is increased traffic to stores and foods courts; new theaters planned.|
March 1, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.
Whether it's Humphrey Bogart and Ingrid Bergman in Casablanca, Vivian Leigh in Gone with the Wind, or even the lovable alien in E.T., movies are magical. A huge screen, great sound, popcorn and goodies on hand--movies have the power to transport people into the past or future, make them laugh, cry, or jump out of their seats with fear. People live their fantasies through movies. For some, it's entertainment, for others, therapy.
"People just love to go to the movies," says CineVista general manager Eduardo Llauger. Industry experts estimate that local movie theaters receive about 13 to 14 million visits a year. That's a weekly average of 259,000 people visiting 225 local movie theaters.
"The industry has been greatly growing in recent years, we've almost doubled in revenue since the early 1990's," says Paulo Simoes, general manager of movie distribution house Columbia TriStar. "A lot of it has had to do with the new multiplexes' [theaters with multiple screens] improved sound quality and upgraded facilities, which have enhanced the whole theater experience."
In 1999, movie ticket sales alone almost reached $50 million, a 78% jump from ticket sales in 1993, which were about $28 million, according to industry data (See table). The Puerto Rico Department of Treasury (Hacienda) gets 10%, of this sum, as required by Section 2052 of the Internal Revenue Code, which taxes public shows.
This growth mirrors the booming development of movie theater chains in the 1990s. A decade ago, the two main local theater chains, Caribbean Cinemas and CineVista, had 61 screens between them. Today, they have 221 screens combined (Caribbean Cinemas, 165; Cine Vista, 56) and employ about 1,500 people.
Meanwhile, because of changes in the industry and inability to keep up, independent movie theaters have been closing doors. There are about four independent theaters operating today, down from almost 180 in the late 1970s.
But still, Puerto Rico has less than half the number of screens per capita than the U.S. mainland. The island has one screen for every 17,000 people while the U.S., with 33, 418 screens--according to the National Association of Theater Owners 1999-2000 Encyclopedia--has one screen for every 8,000 people.
Congruent with the thriving construction of shopping centers in Puerto Rico, movie theaters complexes keep growing. More than 40 movie screens are in construction at the moment, and, with more in planning stages, the industry keeps growing. "I believe the industry will continue growing during the next few years. Then, the growth will start slowing down," says Simoes.
Shopping centers spur growth
In the past decade, Puerto Rico has experienced a retail revolution. About half of the island's largest shopping centers were built in the 1990s, adding some six million square feet of retail space.
The new, modern multiplexes have been built hand-in-hand with shopping centers. "The reason we are usually in shopping centers is that in the States, land is a lot less inexpensive and more available, while in Puerto Rico, land is more costly and more limited in supply," says Robert Carrady, executive vice-president of Caribbean Cinemas, which besides the screens it has in Puerto Rico, also has 10 in St. Thomas, and 40 in the Dominican Republic.
"Parking is a key factor for service in movie theaters. And the only way for us to open these big 14-theater complexes and have at least 2,000 parking spaces is in shopping centers," he continued.
"The development of new shopping centers triggered the expansion of movie theaters in Puerto Rico," said Llauger. "As developers were offering the availability of new malls, the industry started growing."
As more movie houses go up in convenient shopping malls, more people go to the movies, and go more often. Shopping mall movie houses offer convenience of parking, safety, and a full entertainment experience not available in the old, stand-alone theaters.
Malls that opened doors in the 1990s include Plaza Vega Baja (1990), Plaza Juana Diaz (1991), Plaza del Caribe in Ponce (1992), Plaza del Norte in Hatillo (1992), Plaza Guayama Mall (1992), Aguadilla Mall (1993), Montehiedra Town Center in Rio Piedras (1994), Western Plaza (1994), Los Colobos in Carolina (1994), Plaza Isabela (1994), Humacao Plaza Shopping Center (1994), Plaza Palma Real in Humacao (1995), Las Catalinas Mall in Caguas (1997), and Plaza del Sol in Bayamon (1998).
Most of these were mall movie complexes, which added a total of 94 screens. Meanwhile, other existing movie theaters were being remodeled, adding more screens in older malls like Plaza Las Americas, Plaza Carolina, and San Patricio Plaza.
"A multiplex is the ideal compliment to any shopping center," says Mike Nolla, senior vice president of Manley-Berenson Associates Puerto Rico, operators of Rio Hondo, and Montehiedra Town Center, among others. "While the family visits a shopping center, some can go shopping, others catch a movie, and all can meet later to eat. Or they can all shop, eat, and go to the movies together."
Dinner and a movieand some shopping
Local residents love shopping. The island's shopping centers are home to many stateside chains' top-revenue-earning stores including retailers JCPenney and Sears and fast-food locales Taco Maker and Baskin Robbins.
Shopping centers are also one of the main hangouts for local teenagers. And since movies are a relatively inexpensive form of entertainment, they are a favorite pastime for teenagers. It is estimated that 60% to 65% of moviegoers in Puerto Rico are teenagers.
"Most of the advertising shown in movie theaters targets a younger audience, since teenagers visit shopping malls with more frequency," says Salvador Rivera, media research manager at McCann-Erickson. According to a McCann-Erickson inside probe--a research study the agency conducts for inside information-46.7% of moviegoers are 12 to 24 years old, 1.3% are 11years old or younger, and 52% are between 25 and 49 years old.
Movie theater complexes can also attract additional revenue for shopping- center food courts.
Take the case of San Patricio Plaza in Guaynabo, which experienced major remodeling and the opening of a food court in 1994. Two years later, the mall opened the doors to a nine-screen multiplex.
"When the movie theaters opened, sales at food court establishments increased at least 30%, with some locations increasing 100%," says Miguel Gonzalez, operations manager of Caparra Centers Associates, owners and operators of San Patricio Plaza. "During the night, sales basically increased from zero to 100%," adds Roberto Gonzalez, the company's vice president.
"Movie theaters make the shopping center more well-rounded," says Caribbean Cinema's Carrady. "In general, food and movies makes shopping centers more e-commerce proof."
From single screen to multiplex
The movie industry in Puerto Rico was not born, but rather transformed by the advent of numerous shopping centers with state-of-the-art multiplexes. The local industry was once made up of numerous single and twin-screen theaters all over the island.
"Thirty years ago the standard of the industry was single screen theaters with anywhere from 600 to 800 seats. Then came twins theaters," says Carrady. "There were cinemas all over. I mean, at one time Cabo Rojo had three theaters."
The trend later became multiscreen theaters giving exhibitors the ability to show many movies under the same roof without having to select the ones they thought would become hits. For instance, 1998's Titanic, which was considered a white elephant by the industry, became the highest grossing film of all time.
Another factor that transformed the movie industry was the videocassette industry. By 1985, the video business in Puerto Rico was fully established, noted Carrady. "For the first time, people were having their own screening room in their living room, which became a real fad," he said.
Did it affect the movie business? "It had a big effect, which also contributed to the industry retooling. We had to make our theaters more comfortable, become more service-oriented and user-friendly so that people would not stay home and watch movies in their living rooms," he continued.
"It was significant in that there were 180 single-screen and twin-screen cinemas in Puerto Rico as recently as 1979, and most of them are not around today," Carrady said.
"In the early 1990s, we met with independent movie owners to prepare them for the coming industry changes," said Llauger. "Many of them were not interested, others didn't have the money," he said.
Independent theaters operating today include the Roosevelt Theater in Hato Rey, the Puerto Rico in Fajardo, the Municipal Theater in Guayama, Teatro Juventud in Lajas, and the only drive-in operating in Puerto Rico, Auto Cine Santana in Arecibo.
To improve the theater experience even more, local movie theater complexes began upgrading sound quality and facilities, taking the island to the era of stadium seating.
Movie theaters have made tremendous investments in sound quality. "Before it was all mono, newer complexes changed to stereo, and now to digital," said Llauger. "Sound quality has really enhanced the movie-going experience," added Carrady.
"Although the local movie theater industry is considered small by international standards, it is ahead of most places in Latin America in terms of quality of sound and facilities," said Simoes.
While Caribbean Cinemas introduced the first local six-plex in Rio Hondo in 1986, CineVista was first to bring the stadium-seating concept, which is sort of an auditorium style featuring increased legroom and comfortable seats, as first opened at Mayaguez Mall theaters in 1998. "We introduced the concept according to the stateside trend, However, stadium-seating theaters cost almost twice as much as normal seating," said Llauger. Most recently, CineVista opened a 12-plex, all-stadium-seating theater in Plaza Carolina, now one of the most modern in Puerto Rico.
Meanwhile, Caribbean Cinemas has yet to open a multiplex with all stadium seating. "We feel that combining normal theaters with stadium seating is working very well for us. Not everyone likes stadium seating," explained Carrady. Caribbean Cinemas offers multiplexes with some stadium seating screens in Plaza del Sol, Plaza Escorial, and Western Plaza in Mayaguez.
The show must go on
As more shopping centers are being built in Puerto Rico, more movie theaters are also under development. However, experts predict future growth will concentrate mostly outside the metro area.
"San Juan is getting to a point where there are too many movie theaters. As more movie theaters open, the pie is divided into smaller and smaller slices," said Llauger. "Developers approach us constantly, but we try to stay away from the smaller malls. But there is still room to grow in other areas."
"In terms of population, we are under-screened, but land is limited," adds Carrady. "Nevertheless, there are many towns that still don't have theaters, and we will continue to add some more."
"We need the support of the public because it's very expensive to operate movie theaters, especially because of electricity costs," added Llauger.
But as long as studios make good movies,
people will watch them.
This Caribbean Business article appears courtesy of Casiano Communications.
For further information please contact www.casiano.com