Market Insight

South Korean exhibitor CGV sets foot in Europe

November 06, 2017

Pablo Carrera Pablo Carrera Principal Research Analyst, Cinema
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CJ CGV has recently invested approx $21.7M in the Hong Kong-based joint venture with Russian ADG Group, a real estate developer. ADG acquired 39 old multiplexes in Moscow to convert into Neighbourhood Centres, a new concept of commercial premises. The new cinemas operated by the JV will be the anchor tenant in those centres, the first one of which will open in 2018 towards a total of 33 sites with 160 screens that will be ready in 2020.

CJ CGV is the largest exhibitor in South Korea with 1,031 screens in 139 theaters and in the last decade it has expanded internationally to reach 2,002 screens in 262 sites abroad, a larger footprint than it now enjoys domestically. CJ CGV is the cinema exhibition subsidiary of CJ Corporation, a South Korean group that has interests in food, home shopping and pharma in addition to media and entertainment, including 4D and VR technology.

Our analysis

CJ CGV started to branch out of South Korea in 2006 as a result of the increasing domestic competition. That year it started operations in close neighbour China, where it now counts 81 cinemas and 363 screens (Q1 2017). The US followed in 2010 although it only operates 2 sites there. And then it was Vietnam in 2011, Indonesia in 2013, Myanmar in 2014 and finally Turkey in 2016.

Although CJ CGV has been expanding for over a decade, the pace has increased in the last two years. Since the opening of its 100th site, in China in October 2015, it has more than doubled the number of its screens internationally. Additionally, whilst the main focus had always been Eastern Asian territories (with the exception of its two sites in the US) it shifted focus in 2016 with the acquisition of MARS in Turkey, giving its international expansion a new direction.

This deal in Russia continues that trend by setting foot in a European market for the first time as a cinema exhibitor. It will help however that CJ Group’s cinema interests already have a presence in Europe through its 4D solution for cinemas. 4DX is available in 16 territories, the two with the highest number of cinemas being Russia and the UK, with 9 sites each.

This new door to Europe has been opened in the course of CGV’s reported target of 10,000 screens by 2020. Although an extremely ambitious goal from organic growth given that CGV only controls a third of that number at this time, it is likely that more acquisitions are on the horizon and possibly in Europe. This would follow 18 months of M&A activity in the cinema exhibition market led by Wanda’s acquisition of Odeon and UCI first and then Nordic Cinema Group in Europe via AMC, which had also acquired Carmike, and also includes Belgian Kinepolis’ acquisition of Landmark Cinemas in Canada.

CGV’s deal with ADG will have an impact in Russia’s cinema industry with the addition of 160 new modern screens to Moscow’s market, which already accounts for 26% of Russia’s screens. The Russian market enjoys a low level of concentration (the top 5 exhibitors accumulate only around 30% of all screens) which means the new JV would rank fourth in number of cinemas in today’s market – although 2020 will be a different landscape.

Finally, another effect of the internationalisation of cinema exhibitors is the nature of the cinema-going experience they export with them. In 2016, CGV launched its concept of Culturplex, a ‘cultural playground’ and a more immersive and premium experience than traditional multiplexes. It has already set up one of its US cinemas as a Cultureplex and it remains to be seen whether the concept continues attached to the international expansion.  


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