NOLLYWOOD: Tapping Into Nigeria’s $1b Cinema Industry


The cinema industry’s value chain is huge. From cinema building to ticket sales, food, sponsorships, renting of space and advertising, among others, the industry is conservatively estimated at $1 billion. Yet, this potential gold mine, according to experts, has remained untapped due to lack of knowledge and awareness of its investment opportunities. But, a returnee London-trained architect and industrialist, Prince Tikare, is pushing to change the narrative, by offering services across the industry’s supply chain, Assistant Editor CHIKODI OKEREOCHA reports.

Lagos, Nigeria’s commercial capital, with estimated 23 million people, has only about 10 cinemas. In all, Nigeria, Africa’s largest and most populous economy, has about 45 cinemas serving an estimated 200 million people.

London alone, with a population of just nine million, boasts 100 cinemas. Birmingham Star City, which is said to be the biggest cinema in the United Kingdom (UK), with 392,000 square feet (36,400 m2) of leisure space, has 30 screens.

Now, what this shows is that despite a few pioneer cinema brands in Nigeria such as Silverbird Cinemas, Filmhouse Cinemas and Genesis Deluxe Cinema, the country is still scratching the surface of the burgeoning big screen business as the cinema industry is called.

More importantly, it also confirms the position of knowledgeable industry experts that the demand for cinemas in Nigeria is high, but the supply is low; that the cinema industry is a potential gold mine waiting to be tapped by discerning investors.

It is easy to see why the demand for cinemas in Nigeria is on the upswing. For one, there has been noticeable improvement, over the years, in the quality of films produced in the film industry, more popularly called Nollywood.

Most producers now seem to prefer using film premieres in cinemas, which is a common practice in developed climes. For the local film producers, the fear of piracy is the beginning of wisdom. Film premiere is their strategy to beat the menace of piracy.

Also, most Nigerian movies released in recent times, it was learnt, are high-budget films, with producers appearing to have an edge on their counterparts in other African countries, especially in the use of exotic locations for movie productions as well as in good storylines.

With such massive investments in quality film productions, movie premieres are becoming increasingly popular as visitors throng cinema houses across the country to see such films.

However, the huge investment opportunities this trend has thrown up have not been matched with significant investments to put the cinema industry on a steady growth path.

Tikare said:

“The cinema industry is slow because of lack of knowledge and awareness of its dynamics. It’s about people understanding what it takes to invest in building a brand. The fear of not getting return on investment is hindering people from delving into it.

“If the cinema industry is well managed, it is a very exquisite commercial asset. The opportunities are endless. It’s about how you market your product. It’s also about changing your business model.”

He estimated the value of the film/cinema industry at about $1 billion. “I put them together because film industry and cinema are connected. It’s the fastest growing sector of the economy. It’s competing with oil, he told The Nation in an interview in Lagos, last week.

Tikare should know. As an architect, he has carved a niche for himself building cinemas for American entertainment conglomerate Warner Bros International, and through freelancing across Europe for about three years, in Germany, Spain, Portugal and also in parts of Asia, such as China.

“Freelance gave me more money. I freelanced for about three years,” he said, noting that within his almost four year’s stint at Warner Bros, he built Birmingham Star City, the biggest cinema in England, with 30 screens.

Back in Nigeria, where he has thrown his hat into the cinema building ring since 2006, Tikare has also been busy with a couple of major cinema projects, such as Genesis Cinema in Woji, Port Harcourt. It was his first project.

He also did The Palms Lekki, Lagos. He was given 12 weeks to deliver The Palms, which eventually opened in late 2009.

Other major projects under his belt include Filmhouse Calabar, Filmhouse Asaba, Filmhouse Ibadan, Filmhouse Kano, Filmhouse Port Harcourt, Filmhouse Apapa, and Filmhouse Surulere.

In all, Tikare said he had done nine cinemas in Nigeria, with about five other major projects in the making. Noting that “In Nigeria, there is demand for cinemas, but the supply is low,” he, said despite the high cost of building cinema, investors could recoup their investments between 18 and 24 months.

“Building cinemas is expensive. Your Capital Expenditure (CAPEX) is high at the outset, but that shouldn’t be a deterrent; what you should look at is where you are going to break even. Typically in Europe, you are looking at breaking even between three and five years.

“This is because you are only relying on two sources of revenue, which is cinema tickets and foods. Whereas in Nigeria your revenue streams are different. You are not relying so much on tickets, because you cannot charge so much on tickets; you are relying on food, sponsorships, renting your space out for events, churches. You will break even much quicker, between 18 and 24 months,” he said.

Tikare said it costs between 80, 000 and 100, 000 pounds on the average to build a cinema (that is one auditorium). The actual cinema room is called a screen. “Building a cinema is a lot of money, but you need to look at the long term; the Return on Investment (RoI) in the business is high,” he emphasised.

Compelling value proposition
Aware of the growing demand for cinemas in Nigeria amid low supply, Tikare has, upon his return to Nigeria, strategically positioned himself to help fill the gap.

The dearth of professionals with relevant skills in the local cinema building industry may have also helped pave the way for Tikare to corner a chunk of Nigeria’s $1 billion film/cinema industry.

Listen to him: “There are not many professionals like me around. I worked with Warner Brothers for about four years. I know cinemas like the back of my hand. I understand the dynamics of the business, the whole supply chain.”

Perhaps, because he has been in the industry for so long and has garnered sufficient hands-on experience in cinema building and management, Tikare said he is offering bespoke services to would-be investors willing to take advantage of the high RoI in the cinema industry.

Again, he explained: “I am the only architect who does what I call a five dimensional service. I offer you design, construction, procurement, business planning (that is how to make your business work). We also help you manage the business, may be for two years, and train your staff.There are not many architects that offer that kind of service.”

For Tikare, the decision to look towards home and contribute his quota in changing the cinema industry’s narrative wasn’t just a mere business decision; it was also a long term emotional attachment to Africa, particularly Nigeria, where, according to him, he needed to bring his wealth of knowledge and expertise to bear on the local scene.

Explaining how it all started, he said: “I used to do a lot of business in China, and in some parts of China, which were even less developed than Nigeria, I saw the growth, the energy, and I said, ‘if they can go through this and grow, why not Nigeria’?

“And I said, ‘I have this body of knowledge, why don’t I get involved in transferring the technology to Africa so that it can grow. I also asked myself where is going to be the next china? It’s Africa, because it’s got the population, the resources and I have connections there because I am an African.

“I want to be part of the African success story. So, when the cinema thing came up, it was a massive opportunity for me to show that commitment. And. The emotional commitment is what drives me. I like the fact that a lot of people I trained go ahead and do more sophisticated work.”

Although Tikare has delivered nine cinemas in Nigeria, with five other projects in the works, he said in line with his plan to be part of the African success story, he also has his eyes on other African countries including Ghana, Senegal, Rwanda, Kenya, Namibia and Zambia.

According to him, a lot of people want to delve into cinema, but they don’t know what to do. “I want to make it simpler,” he declared, adding that the value chain in the cinema industry is endless, particularly in Nigeria.

Citing popcorn, for instance, he said there is plenty of corn in Nigeria. “Somebody can start making popcorn for the cinemas. That’s one huge industry that can employ lots of people, because what they will do is to invest in the type or breed of corn for quality popcorn,” he said.

Interestingly, the huge opportunities in the industry are not lost on the Federal Government. This was why it identified the industry as one of the priority sectors in its Economic Recovery and Growth Plan (ERGP) with a planned $1 billion in export revenue this year.

Although Tikare has positioned himself to take advantage of this huge, but largely untapped market, he is not relying only on expertise garnered over the years working full time in reputable global cinema building firms, as well as freelancing to succeed.

His enthusiasm and confidence also stemmed from his deep knowledge of the market, where, as CEO/Co-Founder, Smoodypod Group International (SGI), his fruit juice factory in Opebi, Ikeja, Lagos, rolled out premium Smoody drinks made of a blend of mango, banana, orange and ginger.

Although the industrialist started making juice commercially in 2006 in the UK, he brought the business home in 2010, underscoring his avowed commitment to be part of the African success story.