Nu-Metro wants minimum payment regardless of ticket price
JOHANNESBURG — The cinema price battle in South Africa has turned into an all-out war, with exhibitor Ster-Kinekor accusing rival exhibitor/distributor Nu Metro of trying to sabotage its recently-launched ticket price cutting strategy by unfairly increasing prices for international releases.
Ster-Kinekor, which made the move to counter the public’s perception that ticket prices were too high, cut prices in mid-March by more than 50% at most of its cinemas to R14 ($2.20), retaining the old price of $5.90 at only seven rebranded “luxury” Ster-Kinekor Classic cinemas.
Nu-Metro Theatres, the country’s second biggest exhib, responded cautiously a few days later by slashing prices at all its cinemas to just $2 (R12) but made it clear that it was doing it as an “initial competitive strategy” to protect its market share.
Now Nu-Metro Distribution, local distrib for Warner and Fox, wants a minimum payment for each seat, regardless of the ticket price.
Ster Kinekor chief executive Ferdi Gazendam says a distributor should never determine the price that should be charged to the end consumer, and Nu Metro had not raised any objections during the testing period.
Nu-Metro had defended its action as “necessary to protect its revenues.”
Ster-Kinekor, which has around 65% of the total annual cinema aud, was hoping to raise its auds from the present 16.5-million to at least 26-million for the 2005/2006 financial year based on its research results, and issued a strong statement that despite the setback it would not be changing its new business plan.
“The R14 ticket price at our value Ster-Kinekor Junction cinemas is here to stay. The only difference is that we won’t be able to show you some movies at the Ster-Kinekor Junction cinemas because the distributor of those movies doesn’t allow us to sell the tickets for R14.”
Fred Withers, managing director of Nu Metro Theatres, says “Nu Metro’s view is that margins on ticket sales are already slim and that reduced ticket prices do not result in long-term increases in attendances. Rather, we believe that the long-term sustainability of the cinema industry will be driven by strong marketing that embraces the challenge of developing new markets and altering existing consumer behavior.”