Nu Metro blinks first in ticket price war
This suggests that moviegoers will again have to reach deeper into their pockets to buy tickets — a strategy that could backfire on Nu Metro if it loses customers to rival Ster Kinekor, which is sticking with its plan to keep prices low at certain cinemas.
Johncom’s decision comes after two years of a low-price strategy which appears to have failed to push cinema attendance figures up markedly from the 26-million tickets sold in 2005.
Yesterday’s decision by the company to abandon the battlefield reflects Johncom’s increasing focus on profits in its various businesses now that its biggest money spinner, its stake in M-Net, is being sold to rival Naspers.
Speaking at a packed results presentation, Johncom CEO Prakash Desai said there was “no merit in a pricing tug-of-war” which would erode the value of the products.
“Average ticket prices have been restored to the prices they were before the price war,” he said.
Desai also said Johncom had ended its partnership with Edgars, which allowed members of the Edgars Club to buy tickets at Nu Metro cinema s for R16 each.
“We decided we could not afford what was on the table,” said Desai.
In March 2005, when the first skirmishes in price war began, Ster Kinekor slashed its prices by more than half from R37 to R14 at its Junxion cinema s in a bid to attract cinemagoers.
Nu Metro reluctantly followed suit by cutting prices to R12 a seat.
One analyst described Johncom’s decision as strange, given that the company said yesterday it would also be establishing “budget cinema s”, presumably to cater for lower-end consumers with cheaper ticket prices.
Primedia, which owns Ster Kinekor, has no plans to follow Johncom’s lead.
Primedia head of content Ferdi Gazendam said Ster Kinekor would not raise prices. “We recognise the realities of SA, and we want to make cinema affordable and accessible,” he said.
Gazendam said that the decision to slash prices in its 26 Junxion cinema s had paid dividends, “as that side of our business is growing steadily”.
Underlining the dip in the higher-priced cinema s, Gazendam said “there has been a steady decline in attendance figures at our Classic cinema s”. These cater for wealthier customers.
Primedia figures show that while ticket sales at its Classic cinema s had fallen 15% in the six months to December, sales at the lower price Junction cinema s had grown 16%. Since 2002, the percentage of Ster Kinekor’s black clientele had grown from 5% to nearly 35%.
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