Korean CGV’s parent company CJ Group has announced plans to invest USD $500 million in the Vietnamese market, including plans to expand its cinema footprint. The move comes a week after Wanda’s AMC announced a USD $1.1 billion take-over of Carmike, putting it on course to beat CGV to become the world’s first 10,000+ cinema screen operator. Wanda’s move will likely force CGV to accelerate its acquisition plans and look wider for suitable targets.
CGV announced its intention last November for it to become the “world’s largest cinema chain” with 10,000 screens by 2020 through a combination of acquisitions and organic growth. It already has a major presence in Vietnam (178 screens), Indonesia (118 screens) and China (456 screens), as well as its native Korea (971 screens) and elsewhere (9 in Myanmar and 3 in the USA) for a total of 1,735.
Chang Bok Sang, CEO of CGV Vietnam’s parent company CJ Group Vietnam, said that the company’s business has grown an average of 26.73% per year between 2011 and 2015. The company has already invested USD $400 million in he country over the past 20 years. CJ Group now plans to make Vietnam its second largest overseas market after China with a USD $500 million investment this year.
As well as cinemas, CJ Group owns agriculture, food, film production, real estate, communication and logistics businesses in Vietnam and is looking to enter retail with local partners.
Cinema has been a key components of its international expansion strategy since CJ acquired the Megastar Media Company multiplex cinema chain in Vietnam from BVI-based Envoy Media Partners for USD $73.6 million in 2011 and re-branded it CGV. Korean rival Lotte had earlier entered the Vietnamese cinema business when it acquired Diamond Cinema Joint Venture Company (DMC) in 2008, but has not expanded as rapidly as CGV since.
CGV has stated plans to acquire 3,500 screens through mergers and acquisitions globally, the rest through organic growth or partnerships. It had previously tried and failed to buy Sundance Cinemas, which was instead bought by Carmike, which is now being swallowed up by Wanda’s AMC. With Carmike no longer available (assuming no counter-bid emerges), this limits the acquisition choices for CGV in North America.
Regal with its 7,334 screens is most likely too big even for the mighty CJ Group. Buying Cinemark would achieve the twin aims of a US cinema chain and a presence in the emerging markets of Latin America. But with over 5,700 screens it too could prove to be too big. This leaves smaller chains like Marcus or Canada’s Cineplex, which would make CGV a distant second to Wanda’s AMC and Carmike in the Americas.
Alternatively it could look to Europe (Odeon & UCI) or the Middle East (Turkey’s Mars). Until this happens CGV is likely to double down on expanding in its core Asian overseas territories of Vietnam, Indonesia and Myanmar. Just because Wanda is likely to reach the magic 10,000 screen mark first does not mean that CGV has given up on its ambition to do the same by 2020. If not sooner.
- Cinema of the Month: Gloria Palast – Munich, Germany - August 31, 2020
- French Cinemas Are Closing (Again) - August 5, 2020
- Cinema of the Month: Kino Teatr – St. Leonards-on-Sea, UK - July 16, 2020