Will there be price wars in the future?

- It's rational to have special promotions from time to time, but these are not price wars; it's only a form of promotion. We take part in price wars only if we have to. Cutting prices is not a solution that will save a weak cinema with low standards. Viewers want comfortable seats and excellent sound effects, and when they're waiting for the movie to start they like to spend the time in a nice restaurant or coffee shop. By definition Cinema City is a high standard cinema, because of the level of service which is supposed to be the highest. Our viewers don't expect tickets to cost PLN 10.

CCI is planning expansion in Russia and India, which are huge markets. Will the entry strategy for those markets be different? The effect of scale may be intriguing, but presumably the risks are also different, such as the effects of low per capita GDP?

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- Closer on the horizon are Ukraine and Serbia. Those two markets are already "on the consideration table." There aren't any contracts yet; we are just analyzing the market situation and our chances.

The second option is the eastward direction, particularly Russia and India. India is a special case, because they have a long movie-going tradition and good cinema infrastructure, but it's such a large country that surely there is room on the market. Just to be clear, we haven't done any business yet on these markets, which would be new for us. The task of the CCI management is to seek out directions for growth. There are various important types of risk associated with each of these markets. In some of the markets it is a political risk, on others it is the very high value of real estate, and elsewhere it is low per capita GDP. And we shouldn't forget that geographical distance is important. In the course of a few hours I can leave my office in Tel Aviv and be in Warsaw or Budapest. To reach India in 3-4 hours - it's a problem. That is enough to force changes in the organizational structure for CCI in such market. We also take such factors into account when we consider expansion. The ability to supervise at a distance is also one of the risk factors associated with investments.

One of CCI's resources is its relationships with developers who build the big shopping malls. Since we are talking right now in our office inTel Aviv let's just imagine that the telephone rings right now, and I get information from an international developer whom we've been working with for years that they have just found three great sites for shopping malls in Ukraine inquiring if we will go in these projects with our cinemas? I would answer: Yes, we'll go in with you but before we will of course analyze project by project . We know that large investors thoroughly analyze the opportunities for realizing the project; if they propose participation in the deal, it has been reliably prepared. We'd go there with them, for example for the India market, where our relations with developers are favorable for us.

We are analyzing new markets. There are 45,8 million people living in Ukraine. There are perhaps a hundred cinema screens. That's nothing. In Russia there are 160 million people, and how many new multiplexes? India has 13,000 to 14,000 cinema screens, but the population is 1.2 billion. Many of them can't afford the cinema, but that's just for now, because India is very rapidly developing. The dilemma is obvious: a gigantic market, and the categories of risk that entails. What's crucial is when to take the risk, when to enter such a large market.

If we had entered Poland in 1995, that would have been too early, again because of the Poles' income levels, but in 2005 it would have been too late; there wouldn't have been free space on the market. There were firms from Australia and South Africa who were looking for markets for expansion, and they were interested in Poland. UCI, which belongs to Paramount Pictures and Universal Studio, was already a partner of Multikino. The largest cinema chain in the world, Cineplex Odeon, was also looking for new markets for expansion. They were in Poland, but then they withdrew. We are not withdrawing, because we made the right investment decisions in the right time.

It was surprising when you announced in Budapest in January that CCI's expansion plans extend also to Western Europe.

- All I said in Budapest is that we are analyzing the possibility. That's not a decision! Of course, it is a very interesting region, with a market of 370 million viewers who go the movies frequently. What I told the journalists is that these are only things I am thinking about. I presented the company's philosophy. If we want to be the number one player in Europe, we must enter new countries, increasing our territory of expansion to include countries where there are conditions that are promising for growth. Six years ago we didn't dream of Western Europe, but the the duty that CCI's top management has to the stockholders is to demonstrate the capacity to analyze market conditions all the time, very frequently investigating opportunities and directions for the growth and by this increasing its value for investors. I think we have a great opportunity before us, although there are already many cinemas in Western Europe. But most of them were built 20 years ago or in the early 1990s. In Germany and the UK it is similar. But film technology has changed a lot, and people are always looking for interesting new attractions for entertainment. Something fresh. We are constantly checking out new possibilities. We don't confine ourselves to market analyses from several years ago. We are always seeking out new trends. It is possible that India is more attractive for investment than Western Europe. But this is not certain, so we keep analyzing the situation again and again which is the on-going duty of the CCI managers.

When will the analyses be ready?

- We are checking many issues, and the market is changing quickly. I can't give a firm date. However, we are approaching a decision on Ukraine, and we are only waiting for the opportunities with the developers. In the case of each country we are analyzing our advantages over the competition.

Dodona Research predicts that by 2010 movie-going in Central Europe will grow by as much as 40%, but in Western Europe the growth will be small.

- But you can look at the markets of those countries differently. There the multiplexes are generally older, and there's a chance for something fresh and new. Movie-goers love technical innovations.

What is CCI's competitive advantage that allows it to consider expansion into Western Europe?

- We are very precise and quick in making decisions. Our investment decisions have been correct, and we haven't withdrawn from any market we have entered. We know how to build cinemas with developers who are building shopping malls. Our cinemas are the most up-to-date, and we use the latest technologies.