Russia’s Largest Cinemas Merge
In less than a week the Russian billionaire and banker Alexander Mamut acquired not one, but two of the largest cinema chains in Russia. The tycoon’s investment company, A&NN Investments, first acquired Cinema Park, known as the biggest cinema chain in Russia, and then also bought Formula Kino – the second-largest cinema chain. These purchases are thought to be driven by the recent excellent performance of a variety of local productions, and the movie ‘Viking’, which grossed US$27 million. Although the value of the transaction was not made public, it is estimated to be around US$160 million.
Industry Game Changer
For many years competition in the cinema industry in Russia was a tight race with no clear indication of who is in the lead. Cinema Park consists of around 40 cinemas located across Russia and was previously owned by Russian billionaire Said Kerimov, Suleyman Kerimov’s son, who also expressed interest in acquiring Formula Kino in later years. Formula Kino chain consists of 35 movie houses spread out across Russia. Both chains are considered to be highly successful with an established following. By consolidating Cinema Park and Formula Kino, Mamut is creating Russia’s biggest chain by far. With 75 theatres and a total of over 600 screens across the country, it is set to make lasting change in the industry. And brick and mortar cinema is only part of the billionaire’s venture into the realm of entertainment.
Making History Come Alive
Purchasing cinemas is not the billionaire’s first foray into the entertainment sector. In 2008 Mamut bought and renovated the iconic Pioner Cinema in Moscow and transformed it into Russia’s foremost destination for art house movies. In late 2016 he started renting Khudozhestvenny, yet another historic movie theater from the government. The deal was that he would invest around US$17.5 million into renovating it into its former glory.
Beyond Traditional Cinema
In typical super-rich Russian style, owning the largest theatrical network in Russia and making his mark in historic entertainment venues is not enough for Alexander Mamut. He also has plans to expand his entertainment empire to include the digital realm. The intrepid entrepreneur’s Internet company, Rambler & Co., is planning to launch its own online cinema. According to internal sources the company is investigating whether this is a viable option going forward. Considering the company’s growing portfolio of pro-digital assets, this may be the way to go.
A Solid Foundation Already in Place
In May 2017 Rambler & Co. acquired a substantial stake in Dalton Media, a company that developed a platform form managing Eagle Platform’s video content. Owning this platform would reduce the cost of creating an online cinema. Rambler & Co. also has a pre-existing audience used to consuming video content. Should the company expand into offering online cinema as a service, this audience would massively reduce the cost of marketing when the cinema is launched. According to Mediascope, the all-Russian audience of Afisha.ru was at 135,000 per day by September 2017. TMT Consulting stated that the domestic market for online video services has been steadily increasing by a minimum of 30% a year since 2015. In a rapidly growing industry, a foothold that is already in place is indeed valuable.