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Minister of Culture and Information Awwad bin Saleh Alawwad said in a statement that the industry regulator, the General Commission for Audiovisual Media, had started the process, reports Xinhua news agency.
He said the first cinema was expected to open in March 2018.
The move is part of a series of reforms as part of the 2030 economic vision that also includes a war on corruption.
The changes are also intended to gain up to a quarter of the $20 billion currently spent overseas by Saudis, who are accustomed to travelling abroad to see shows and visit amusement parks.
Saudi Arabia in recent months has organised concerts, a Comic-Con pop culture festival and a mixed-gender national day celebration that saw people dancing on the streets to electronic music for the first time.