Move part of a major rebranding exercise
JOHANNESBURG — Ster-Kinekor has cut cinema prices by more than 50% at most of its cinemas in a new business strategy to increase stagnant audience numbers.
The move is part of a major rebranding exercise in which the country’s leading exhibitor has divided its cinemas into two divisions — an affordable brand called Ster Kinekor Junction with reduced pricing, to operate at more than 80% of its cinemas, and an exclusive Ster-Kinekor Classic division with higher prices but better facilities and services.
Announcing the rebranding, Ster-Kinekor chief excutive Ferdi Gazendam said audience figures had remained static over the past 18 months with a consistent decline of 6% annually in the “traditional, white” audience. It was clear that a radical shift in strategy was necessary to access new markets, such as the emerging black market, and ensure future sustainability and profit.
Extensive research had indicated that ticket prices were widely seen as too high to make regular visits to the cinema possible and last year the group began testing lower pricing structures at loss-making and marginal cinemas, with huge success, he says.
“Where Ster-Kinekor did testing with a lower priced ticket option at loss-making and marginal cinema sites, success was instant, turning the cinema sites into profitable sites as well as reviving some of the businesses around the cinema sites in or near the declining inner city malls.”
This had prompted the branding and price restructuring, says Gazendam, which he expected to drastically increase auds from the present 16.5-million to at least 26-million for the 2005/2006 financial year based on research results.
In terms of the new business model, ticket prices would remain at R35 ($5.90) at seven selected Ster-Kinekor Classic cinemas in upmarket centres but would be reduced to $2.20 at the 30 Ster Kinekor Junction venues, allowing customers to choose a “value” or “luxury” cinemagoing experience.
Seating at Ster Kinekor Junction venues would be unreserved but reserved at Classic cinemas, which would also offer more luxurious foyer lounges, new catering lines and quality service.
Gazendam said the group did not expect to be put out of pocket with the rebranding or increase in staff needed with the upgrade of the Classic options. “Yes, there will be an increase in costs, but we will be better off at the box office.”
New advertising revenue streams had also been created through the introduction of plasma screens in the foyers, and several big brand advertisers such as soft drink manufacturers and cellphone companies which had expressed an interest in targeting groups that would be captive audiences at the Junction sites.
As yet, there has been no official response to Ster Kinekor’s move from rival exhibitors Videovision and Nu Metro, whose ticket prices have been on a par with Ster Kinekor’s, but sources said they were concerned about the possible effect on their business and were looking at their options.