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Blitz plexes Indonesia: exhibitor ready to develop market.

HONG KONG For the world's fourth most populous nation, Indonesia has a small movie sector. If decent figures existed--and they don't--they would probably show nationwide annual B.O. of $40 million-$50 million, less than Singapore, its city-state neighbor with only 6 million inhabitants.

A new company, Blitz, aims to change that. It is opening Indonesia's first true multiplexes in a market largely comprising single-screeners and three-or fore-theater cineplexes. Blitz is challenging a company that holds a neat-monopoly in exhibition and distribution, and a status quo that has suited local and foreign companies for more than a decade.

Country's cinematic immaturity stands in contrast to other parts of a booming economy. Downtown Jakarta challenges any notion that Indonesia is a developing country. The capital is crammed with shopping malls of spiraling grandeur, linked by toll roads choked with powerful SUVs and Korean-made taxis.

Moreover, despite Indonesia's political instability and highly visible security, country's consumer economy is taking off. Malls are stuffed with stores repping the world's most upmarket brands. Country's mobile phone sophistication means Indonesia is often a launch territory for latest models by the likes of Nokia.

Blitz believes this makes the country ripe for a new movie model and will open its first nine-plex in a mall in Bandung, a university town of 5 million inhabitants 110 miles from Jakarta. That will be followed in November by an 11-screener in an upscale Jakarta mall. Two plexes are skedded for the following 15 months.

Company is headed by local businessmen Ananda Siregar and David Hilman, who have backgrounds in banking, architecture and the civil service. They have put about $12 million of their own coin into the project, topped up with $3 million of bank finance.

"We are only going to build complexes of eight screens or more, and only in key locations," says Hilman. Blitz's complexes will come with entertainment options such as pool tables and restaurants to make its cinemas destinations where youngsters will spend lengthy periods and plenty of cash.

"We are establishing links within the creative community and are betting heavily on the success of local films," says Siregan "In a nine-screen complex we can offer four screens to the (Hollywood) majors with the remaining five programmed with a mix of local and foreign independent films."

Blitz's 11-screener with 3,100 seats in the Grand Indonesia mall also expects to host part of December's Jakarta Film Festival (Jiffy).

"What we are doing is nothing new, it's been done elsewhere," says Siregar, who points to modern complexes in Thailand, boasting combinations of regular and luxury theaters. Blitz is using Malaysia's Golden Screen as its technical consultant. "It is just that the incumbent doesn't feel it necessary to do it, because the people come anyway."

The country's main exhib, 21 Group, was founded in 1987 and became a private sector operator after the fall of the Suharto military regime ten years later.

But it retains some aspects of state control. It operates over 300 screens at 75 locations or approximately 90% of the country's commercial cinema screens. It is also the dominant distributor operating under three labels; Camila and Satrya, which handle Hollywood product, and Amero Mitra, which acquires foreign indie titles.

Local titles are often released on distribution-only terms, which see producers handling marketing and P&A costs. On a recent visit, the most prominent film outdoor advertising was for a producer-promoted film "Berbak suami" (aka "Love for Share"), while newspaper ads were largely of the simplest "playing now" variety.

No surprise, 21 Group argues that it is doing most to develop the market. "Last year we opened seven sites with 30 screens. So far this year we have opened four sites with 16 screens. We plan to open nine more sites this year," says CEO Harris Lasmana by email. "This year we expect to have more than 40 (Indonesian) titles for theatrical release."

There is little doubt that the movie industry in Indonesia could do better. M.M. Bakri, government director of film, says the import quota of 160 films per year and other internal restrictions were removed in 1997. But the number of films being released has barely budged since.

"Because nearly all the cinemas are owned by 21 Group, there are still limited opportunities for release," he says. "It is not the government's job to make the distribution choices, but it is clear that there are not enough cinemas."

And with the theatrical market restricted, consumers have turned to home entertainment and pirate discs.

Lasmana puts the ball back in Bakri's court on this issue. "I believe the Indonesian market will grow if the government can control the rampage of piracy."

It seems logical that the Hollywood studios would applaud Blitz's attempts to grow the market. This has been the case with MegaStar, the new entrant in nearby Vietnam. But Blitz admits the majors have been "lukewarm."

Explanation may lie in Indonesia's geography, ethnic mix and politics, all of which are fractured and difficult to maneuver. "In a country where corruption is predominant, 21 Group is a reliable partner with solid reporting structure. Obviously we don't want to do anything to damage that," says a senior Asia executive of one of the majors

"On the other hand, I can't see anyone allowing state-of-the-art multiplexes to stand empty for want of prints. I'm sure Harris will have to supply them."

Another difference between the two cases is that MegaStar is under the wing of Hollywood veterans Ted Shugrue and Tony Manne.

Blitz admits that many are waiting to see how the concept is executed.

"We can hardly wait to open for business," says Siregar. "That way, we hope to convince film suppliers and the private equity investors that have been circling, but not yet committed."

Achieving that may take a willingness to embrace not only exhibition, but also distribution. For that, Blitz has turned to San Fu Maltha, a former PolyGram exec who until this year co-owned A-Film, the largest distributor in the Netherlands. "Indonesia has a lot of potential, and I've been very impressed with Blitz, their ideas and their business plan," says Maltha.

Maltha and L.A.-based scout Mirjam Wertheim of Orange Entertainment are looking for single- and multiterritory acquisitions that could span other parts of Southeast Asia. The Cannes market is expected to see their first deals.
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Author:Frater, Patrick
Geographic Code:9INDO
Date:May 15, 2006
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