South African cinemas in deep trouble

Although cinemas are seeing increased demand globally, many South African theatre businesses are struggling to stay afloat, going to extra lengths to fill seats and keep the lights on.

Since the 2020 and 2021 lockdowns caused by the Covid-19 outbreak, cinemas in South Africa have struggled to attract the turnout they once did.

In addition, load-shedding has also deterred customers from going to the movies, as not all cineplexes have backup power.

One example is cinema giant Ster-Kinekor, which entered business rescue following the Covid-19 period.

“Last year, despite miraculous periods of no load-shedding, we probably had the most intense period of load-shedding between April and September of last year, and that impacts consumer behaviour,” Ster-Kenikor CEO Mark Sardi told 702.

“If you got onto the drug of watching a streaming service at home, and you’re worried about travelling through traffic lights that don’t work, to a cinema that may, or may not be on, it does become a bit of a disincentive to go,” he added.

The Writer’s Guild of America strike also hit the film industry in 2023, halting the production of multiple films.

“The impact of the strikes was to halt production of movies and create a 12 to 18-month delay in releasing titles originally scheduled for release in 2024,” Sardi said.

While these issues negatively impacted the moviegoing public, players like Ster-Kinekor still attract a sizeable audience.

According to The Market Research Foundation’s MAPS data overview for 2021 to 2023, roughly 619,000 South Africans regularly visit a movie theatre once or twice every two or three months.

It noted that cinema penetration in South Africa is low at just 2%. It split the results into six categories as follows:

• Very frequently (at least two monthly visits): 7% of respondents.
• Frequently (at least once a month): 16% of respondents.
• Regularly (once every two to three months): 27% of respondents.
• Occasionally (once every four to six months): 17% of respondents.
• Less often: 21% of respondents.
• Seldom (around once per year): 11% of respondents.

One million respondents visit Ster-Kinekor most often, while 818,000 prefer Nu Metro. Smaller cinema chains, Movies@ and Cinecentre, are favoured by 207,000 and 90,000 respondents, respectively.

The report suggests that pricing is also a major factor, preventing consumers from frequenting cinemas, as the average price per outing was R433.69.

Business rescue

Due to the economic obstacles, Ster-Kinekor completed its Section 189 and restructuring processes at the end of May.

Sardi said the company reduced its costs and headcount by around 20 to 25%, retrenching 52 employees — largely head-office based — instead of 226 as announced in April.

In contrast to Ster-Kinekor, the Avalon Group, which owns the Cinecentre cinema chain, is confident in the industry’s future in South Africa despite the country’s challenging trading conditions.

CEO AB Moosa said that Ster-Kinekor’s restructuring and job cuts are company-specific and do not apply to Cinecentre.

How cinemas are staying afloat

Moosa said Cinecentre’s resilience was due to the cinema’s highly competitive pricing and various deals included in its ticket prices.

“Included with each movie ticket and each refreshment purchase are a variety of discounts for everyday essentials like food, groceries, clothing, leisure activities, educational platforms, travel, and many more,” he said.

Moosa said Cinecentre’s reward discounts far exceed the value of a ticket or of snacks and drinks at its movie theatres.

“This is available to anyone; the moment you buy you win — no membership subscription to us or any third party is required,” added Moosa.

Ster-Kinekor, on the other hand, is screening throwback films to appeal to an older crowd that may relish the nostalgia of 20th-century cinema.

The company’s “Throwback Cinema” promotion screens old blockbusters such as Back to the Future, Notting Hill, and Braveheart for R50 a ticket.

This was announced at the beginning of May, and due to its success, the promotion has been extended for another month until the end of July, with four new classics hitting cinemas.