CEO CGV Indonesia: Cinema is More Than Just Watching Movies

marketeers article

Despite being the largest economy in Southeast Asia, Indonesia has long been a sleeping giant in terms of cinema. For such a populous country, it has a low number of cinema screens and therefore a low number of movie visitors.

Home to 250 million people, Indonesian has only about 1,100 movie screens and on average, people go to cinemas less than once a year. In comparison, South Korea, with a population one-fifth that of Indonesia’s, has 2,400 screens and saw movie goers reaching almost 220 million in 2015.

However, opening up of the movie industry for foreign investors is whetting the appetite of overseas firms such as South Korea’s CJ CGV Co Ltd, which operates Indonesia’s second-largest movie theatre chain, CGV Blitz.

CGV Blitz operates 27 theaters with 186 screens in Indonesia, accounting for up to 15% market share. This only puts them behind Cinema XXI, which has seen its share drop from 88% in 2012 to 74% today.

CGV plans to continue expanding business in Indonesia, offering a wide variety of new screening options, including 4DX, ScreenX, SphereX and Starium, as well as the company’s innovative idea – the so-called “Cultureplex”.

Saviq Bachdar from Marketeers spoke to Jeff Lim, Director of CGV Cinemas Indonesia to find out what make CGV Cinemas different and how do they plan to achieve their expansion target.

As Director of CGV Indonesia, do you have a short and long-term strategy in mind to make your expansion goal achievable?

We are looking to open at least around 300 screens in more than 40 locations in 2017, from there we are aiming to open approximately 1000 screens in at least 100 locations as part our expansion plan. CGV will keep on expanding and opening more screens all across Indonesia.

Not only aiming at the big cities but also the second- or third-tier cities. With these many number of movie screens, we hope we can contribute to the cultural experience of the people in Indonesia and also make CGV Cinemas the number 1 Cultureplex in the country, while supporting the global goal of CJ CGV.

How do you see the prospect of movie theatre business in Indonesia? How do you ascertain growth in the movie industry?

The prospects of movie theatre business in Indonesia are very promising. We can see there is an improvement in the standards of living of people in Indonesia which means that there is a positive change of income. Also, the growth of young generation in Indonesia also looks quite positive in the future.

We can see Indonesia now has only 1200 screens, which is 4.8 screens per 1 million people. (Meanwhile in Korea, 50 screens per 1 million people, and China, 30 screens per 1 million people)

As Indonesian people turn more prosperous, they are more willing to spend their money not only on products but also on experience. Especially, an entertaining experience. Since 2016, the number of cinemas in Indonesia has been expanding and that is also hugely impacting the expansion of Indonesia film industry.

I am very sure about the growth in Indonesia’s movie industry because the Indonesian film makers are more eager in creating various contents suitable for different groups of audiences.

The audience is also becoming more and more critical about the quality of movies they watch in the cinemas. Especially the local movies scene where they’re looking for more variations, options and are more open to new kinds of contents. For example, the audience of WARKOP DKI Reborn Part 1 has reached almost 8 million viewers.

This goes on to show that Indonesian audience is highly appreciative of local creations with exceptional quality and great values (in this case, legendary and nostalgic feels of comedy). If more movies are produced following such ideas, I believe Indonesian movie industries can grow bigger and better in no time.

If we look at Korea or China, production and reception of local films are one of the important aspects of their film industry. With rapid increase in the number of cinemas, Indonesian movies can produce greater impact, as we can see from 10 Indonesian movies which have released recently, these movies have managed to gross more than 1 million admissions per movie. This hints at the positive growth in Indonesia movie industry.

What do you see as the challenges for the Indonesia’s cinema industry in the coming years and do any of them also represent opportunities? What about competition?

Since May 2016, Daftar Negatif Investasi (Negative Investment List) has been released, and thus I can expect there will be more cinema players entering this industry.

The competition will be very hard, and this could lead to cinema players increasing the cost of operations and differentiating their service and facilities, which could represent an additional challenge for cinema players.

To some extent, the cinema industry relies on leveraging good connections with shopping mall industry, therefore in big cities, it’s very hard to open new cinemas in a mall, which makes it less likely for us to open new cinema screens in the big cities.

However, since commercial real estate developers are also expanding in second- and third-tier cities, we can hope to expand to those locations as well. This is our opportunity to grab bigger markets.

Can you talk about the concept behind the “cultureplex” that you plan to offer to Indonesian moviegoers?

Cultureplex is a term from CGV which is combination of Culture and Multiplex. Our Cultureplex concept is a way for us to express that CGV Cinemas are evolving beyond movies. Cultureplex is our vision, for the next generation of movie goers, especially here in Indonesia.

We want people to come to our cinemas to not only watch movies but also enjoy lifestyle activities, such as eating, listening, purchasing, hanging out and do more with their time while they are in the cinema.

CGV Cinemas Grand Indonesia, Jakarta

They could meet their friends, do some shopping and even enjoy live performances at our CGV Cinemas locations. We plan to enliven this concept through engaging with community and also local talents all across Indonesia, so people would love to spend their time longer at our cinemas and not being intimidated with the overall ambiance. This Cultureplex concept should make them feel happy and involved in social interactions both in real life and online.

If I am not mistaken, CJ-CGV holds more than 50% of PT Graha Layar Prima shares. Any plan to increase your stake in the operator of blitz this year?

Currently CGV holds 51%. As of now, we have no plan to increase our stake in CGV Indonesia.

A moratorium on mall construction in Jakarta is making it difficult for retailers to expand their retail. Do you find it hard to locate right spots especially in Jakarta?

Yes, the moratorium does not permit for new malls to be built in the capital city, except in areas with fewer shopping centers like in East Jakarta. To find the right spots to expand especially in Jakarta is quite challenging because we want our presence to be different as well.

Our strategy is to find the right partner to open in the most strategic location across Indonesia. With a right partnership not only in Jakarta, but also all across Indonesia.

This year, we are partnering with the retail and media conglomerate Trans Corp to open movie theaters in their commercial complexes Transmart across Indonesia. We will open cinemas in eight Transmart centers in Java and Sumatera. Each cinema will have five screens.

In terms of big cities, we have to look at a missing market, like in Green Pramuka Center in East Jakarta which is not considered as a big mall, but they have ten apartment towers. With a target segment of more than 6,000 families, I think the market is there. So, we recommended them to open the cinema soon.

Moviegoers here tend to prefer foreign films more than locally produced films. What can be done to support local filmmakers?

Big local movies are very important for local cinema industry, therefore we support local filmmakers to create more better-quality movie contents. To support local filmmakers, we are helping through opening new sites in small cities, and help these local movie makers to share their movies to larger group of audience.

Other than providing a bigger platform to existing movie makers, we are also trying to help many aspiring movie makers, who are mostly still in high school, to come and join our movie-making workshop in collaboration with TOTO.

Toto Film Making Class, as part of CGV Cinemas Company Shared Value (CSV) activity has been conducted in Jakarta, Bandung and Jogjakarta to find the best of talents and aspiring movie makers who can build Indonesia cinemas industry in the future.

Technology offers opportunities for people to watch movies wherever they want with streaming services like Netflix, HOOQ, Iflix, YouTube, or even Torrent. Do you consider that a threat? According to you, what’s the future of cinema in the on-demand age?

Of course I cannot say those are not threating us, but first, I think cinema is a place where the customer comes for a special experience all at one place. Secondly, in order for the cinema to survive they must evolve in technology, service, ambiance, and marketing to approach customers.

We also keep giving our best effort to satisfy our customers with Cultureplex concept, so people could get a better experience, more than just watching movies.