Reduced disposable income, disruption caused by streaming services and a slow recovery from the impact of Covid-19 lockdowns have been cited as some of the factors affecting the South African cinema industry.
This comes as the country's leading cinema house, Ster-Kinekor, recently gave notice that it planned to lay off more than 200 employees, while a private cinema house is dishing out grocery discounts to lure moviegoers.
Cinemas have struggled to recover from the Covid-19 lockdown, which had led to the growing popularity of online streaming services such as Netflix, Showmax and Prime Video.
AB Moosa, CEO of independent South African cinema house Avalon Group/CineCentre Cinemas, said the situation provided an opportunity for innovation in the industry.
Moosa said the cinema industry's current scenario was “broadly influenced by external economic factors and the evolving landscape of entertainment consumption”.
Having been part of providing the cinema experience for decades, there have been instances of the obituary of cinema having been written and rewritten many times and yet we have seen cinema prove this assumption wrong
— AB Moosa, CEO of Avalon Group/CineCentre Cinemas
“Our company’s approach to mitigating these challenges involves leveraging our competitive pricing and our innovative rewards programme that enhances the value of every cinema visit,” Moosa said.
Moosa said the programme was not only about offering discounts, but was more about providing tangible added value to CineCentre Cinemas' patrons.
“Each ticket and refreshment purchase at our cinemas instantly includes discount rewards for a wide range of daily essentials and luxuries, from groceries and clothing to leisure and travel,” Moosa said.
CineCentre Cinemas is celebrating its 85th anniversary this year with its roots stretching back to 1939 in Durban.
He said the rewards were aimed at not only extending the cinema experience beyond the theatre but offering benefits that resonate with their patrons' everyday needs and interests, and would exceed the value of the purchase.
“The temporary delays of certain film releases, a consequence of the Hollywood actors and writers strike, also impacted multiple platforms of cinema, streaming and television,” Moosa said.
He said his company was not planning to lay off workers as it believed that in the next months the industry would “gain momentum which will continue to entice audiences to the enchantment of the cinema”.
Moosa said innovation and adaptation were critical especially “in an era characterised by disruption and constant change”.
“Having been part of providing the cinema experience for decades, there have been instances of the obituary of cinema having been written and rewritten many times and yet we have seen cinema prove this assumption wrong,” Moosa said.
He said “the notion that fewer people are visiting movie theatres in South Africa today doesn't capture the full picture”.
“The current scenario can be attributed to the recent economic downturn, marked by inflation directly affecting disposable incomes, leading to conscientious spending. This isn't uniquely affecting cinemas but rather a reflection of broader economic conditions,” he said.
Last month, TimesLIVE's sister publication Business Day reported that Ster-Kinekor may close nine cinemas in Gauteng, KwaZulu-Natal and Western Cape as it battled with a drop in attendance.
In a presentation seen by Business Day, Ster-Kinekor outlined plans to rightsize the business, saying the moribund economy and the business’s financial position required it to restructure.
Ster-Kinekor, now managed by UK-based Blantyre Capital and Greenpoint Capital, announced plans to retrench staff, citing global and domestic factors.
The company also said the Hollywood actors and writers strike had affected the film industry globally, resulting in limited film releases.
Prolonged and intense load-shedding had also affected the performance of its cinemas on top of low attendance as cash-strapped consumers cut out luxuries. Streaming options and online subscription video-on-demand services have become popular since the lockdowns, also trimming down foot traffic.
Bronwyn Williams, a futurist, economist and business trend analyst, said going to the movies has become expensive.
The average middle-class South African family is, after inflation, R10,000 poorer in real terms than they were eight years ago.
— Bronwyn Williams, futurist, economist and business trend analyst
“Movies are expensive — and increasingly so — but no longer offer scarcity or value; the price difference between one movie and all you can binge Netflix,” Williams said.
She said consumer trends also showed there's a spending shift from on-location shopping and entertainment to e-commerce at home since the Covid-19 lockdown.
“The cost-of-living crisis is just cleaning up the tail-end of the long-running trends. Consumers are seeking value and are more price-sensitive than we have been in 10 years — the average middle-class South African family is, after inflation, R10,000 poorer in real terms than they were eight years ago,” Williams said.
She said even though the movie industry was not going anywhere, content distribution has shifted to other platforms.
“Content distribution has, and is, shifting to the small screen for the masses. Movie houses will remain but more in art house [form] rather than the middle-class mass market staple form of entertainment,” Williams said.
Meanwhile, the FinMark Trust's annual “FinScope Consumer South Africa” report for 2023, released last month, found that nearly half of South African adults are struggling to afford food and electricity, highlighting the pressing financial challenges consumers are facing.
The report said 40% of adults are resorting to borrowing money to buy food and 20-million adults have gone without electricity because they could not afford it in the past 12 months.
Living expenses, which include groceries, energy, transportation and communication, account for about 85% of monthly income. Of this, groceries make up 30.4% of expenses, energy 11.5%, transportation 9.1%, communication 8.8% and routine household maintenance, rental and rates 8.5%.
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