Bad news for Ster-Kinekor — and other cinemas in South Africa

Ster-Kinekor is slashing jobs and closing cinemas in South Africa because of the country’s struggling economy. This is out of sync with global trends, where cinemas are growing.

Last month, Ster-Kinekor announced plans to retrench 236 employees in a restructuring effort in the face of declining attendance numbers.

It blamed the challenging economic environment, load-shedding, and the impact of the Hollywood strikes for substantially lower cinema attendance.

Many South Africans avoid going to the movies because of the risk of load-shedding, which can interrupt their entertainment.

Ster-Kinekor further explained that the Hollywood strikes resulted in many titles scheduled for release in 2023 and 2024 being moved out to 2025.

It said these factors, which are mostly outside its control, will likely endure for some time.

“Ster-Kinekor Theatres has had to review its cost structure to ensure the continued survival and sustainability of its business,” the company said.

The company also revealed plans to shutter up to nine cinemas in South Africa’s most populous provinces.

In the Western Cape, only Bayside is in the firing line. In Gauteng, it will close Cedar Square, Maponya, Matlosana, Southgate, and the iconic Sterland.

Ster-Kinekor aims to close its Boardwalk and Shelly Beach cinemas in KwaZulu-Natal, and Mimosa in the Free State.

These closures will happen gradually over the next six months. It is also reviewing plans to close another eight cinemas.

The potential closures include Secunda, Wonderpark, Bedfordview, Cradlestone, Mooi River, N1 City, Rosebank Nouveau, and Rustenburg.

South Africa versus global trends

Although cinemas globally face increased competition from online streaming and improved home theatre systems, the market is still growing.

The latest estimates suggest that the revenue in the global cinema market is projected to reach US$85.16 billion in 2024, Statista Market Insights reports.

The growth is expected to continue at 5% per year, reaching a projected market size of US$109.40 billion by 2029.

The number of cinema viewers is expected to reach 1.9 billion by 2029. This means the cinema industry is thriving globally.

This growth is fuelled by a changing business model, where cinemas are focussing on premium experiences.

Movie theatres are attracting clients by offering them luxury recliners, in-seat dining, and personalized services.

Many cinemas are also diversifying into interactive events and engaging in aggressive social media campaigns to enhance the overall experience.

Going to the cinema still offers an unmatched immersive experience to movie lovers, which cannot be replicated at home.

Local cinemas, including Ster-Kinekor, have also dabbled in these strategies to try and save their business.

However, it has been unable to overcome local challenges like load-shedding and pressure on consumer spending.

South African households are under pressure, and most people do not have money for a premium cinema experience.

Therefore, like many other businesses, Ster-Kinekor and other cinemas are victims of South Africa’s struggling economy and poor electricity supply.

The chart below, courtesy of Statista Market Insights, shows the expected global cinema revenue growth for the next five years.