Cinema price war benefits public as Nu Metro slashes to R12

The new prices from Nu Metro will also apply from today, Friday, said Sanjay Seeth, Operations Director of Nu Metro.

In a bold move to ensure future sustainability and profit, Ster-Kinekor on Wednesday, 16 March 2005, announced price cuts of over 50% to R14 a ticket for its rebranded affordable cinema chain, 'Ster-Kinekor Junction' which will see 70% of current sites rebranded by this long weekend. CEO, Ferdi Gazendam, expects cinema attendance to increase from 16.5 million to a staggering 26 million over the next financial year as a result (2005/2006, ending-June).

A more exclusive, 'Ster-Kinekor Classic', "First Class" option will be created at seven existing sites in upmarket centres nationwide - retaining the current R35 ticket price. The exclusive branded cinemas will be created at: Brooklyn, Pretoria; Cavendish, Cape Town; Cresta, Randburg; Eastgate, Johannesburg East; Gateway, Durban; Sandton City, Gauteng; and Tygervalley, Cape.

And the changeover all happens this Friday, 18 March 2005, with Ster-Kinekor expecting a box office record as a result of the dramatic change in strategy - just in time for the long weekend and Easter holidays.

Whilst attendances at competitor cinemas had declined in the last six months, attendances at Nu Metro cinemas had increased by 1.9% for the same period, he emphasised. "Thus, as an initial competitive strategy, we're cutting our price to R12 for all shows in all our cinemas."

Prakash Desai, Group Operations and Finance Director of Johnnic Communications, which owns Nu Metro, said Nu Metro had no intention of losing the market share it had gained in recent months to other players.

Desai said that there were more factors than just price to movie attendances.

"Cinema attendances have certainly been flat for the last several years, at about 26 million attendances a year. We believe attendances for 2004 were 0.4% down on 2003. But attendances at Nu Metro grew 6.9% during the same period, which clearly indicates that price is not the only factor."

"We will thus be focusing on a range of marketing and in-cinema activities. In addition to the price cuts, Nu Metro's goal is to deliver a superior overall entertainment experience to movie-goers," he said.

This included initiatives to develop movie attendances in the emerging market. "This is often more a case of location than price," said Desai.

Nu Metro's Seeth cautioned that unlike Ster-Kinekor's radical shift in strategy, Nu Metro did not believe that the price cuts to these levels were sustainable in the long-term. "The price of movie tickets is a complex issue. Like the price of all products and services, they have to be properly priced, for both the consumer and for suppliers to maintain a viable business model," said Seeth.

Nu Metro was thus in discussion with the major film distributors to seek alternative solutions.

The "paramount" shift in strategy by their opposition, according to Ster-Kinekor CEO, Gazendam, is to tap into the "emerging black market", after consistent declines in the sector of 6% annually of the more "traditional, white", audience, and the continuing lack of access by the population at large to this medium. Research had also showed, that moviegoers, consistently, thought that ticket prices were too expensive (42%).

The solution was to open up new strategic avenues to access new markets, according to Ster-Kinekor.