With the recent move to level 1 lockdown restrictions and Hollywood rolling out a string of blockbusters such as the new James Bond movie No Time to Die, SA’s battered cinema operators have some cause to feel optimistic about their prospects for recovery over the next few months.
However, the threat of a fourth wave in December is overshadowing this rising confidence.
All Weather Capital fund manager Chris Reddy says that much like the tourism sector, which is seeing hotels being booked up ahead of the December holidays, it is understandable that people are going back to cinemas as they are “tired of being cooped up at home”.
“My concern is, if we do start seeing a fourth wave coming through, it is going to be very difficult to get people to want to go into enclosed environments such as cinemas,” he says.
He adds that another challenge for movie theatres is that while there will continue to be a place for them in the market, the sector will become smaller as “more and more content moves online”.
Ster-Kinekor CEO Motheo Matsau says he too is concerned about the possibility of a fourth wave in December and the lockdown restrictions it may bring. But he is also hopeful it won't be as big as the second or third waves due to the vaccine programme being ramped up and the possibility that herd immunity may be greater now than it was in previous waves.
For now though, things are looking decidedly brighter for cinemas than they have for a while, considering the latest figures from the new Bond movie and the fact that there are string of blockbusters coming to circuit, including the Marvel movies Venom: Let There Be Carnage and Spider-Man: No Way Home.
Stefan Rheeder, marketing manager for United International Pictures (UIP) in SA, says the new Bond film, which UIP is marketing in SA, has had two “brilliant weekends” since opening, taking R5.13m at the box office on the first weekend, followed by R4.04m on the second.
Rheeder says that combined with special previews, where cinemas are booked out by corporate customers, box office receipts for the movie total nearly R12m.
Most encouraging for him is that there was only a minimal drop of about 20% in box office takings on the second weekend, which he says is a positive outcome as usually the dip that follows opening weekends can be as high as 40 or 50%.
Though pre-Covid the box office potential of a big blockbuster in SA was anywhere between R10m and R20m, these latest numbers make him optimistic about a recovery.
Rheeder says the industry has been helped by President Cyril Ramaphosa moving the country to level 1 restrictions, which has resulted not only in an increase in the number of people allowed indoors, but also provided a psychological boost by making people feel it is safer to go out again.
Matsau says that after Fast & Furious 9, which was released in June, No Time To Die’s opening weekend was the group’s biggest weekend since the pandemic began.
Though Ster-Kinekor does not disclose its individual box office numbers, Matsau says “the James Bond release was a few hundred shy of that Fast & Furious 9 opening weekend for us”.
“Both movies gave us the biggest two weekends in terms of attendance and general revenue generated that we’ve seen since the beginning of Covid.”
This is welcome news for the group, which was forced to enter business rescue at the end of January due to the fallout from the pandemic, which saw all cinemas closed in the initial hard lockdown and big Hollywood studios delaying the release of blockbusters that could have drawn crowds.
Watching a movie at home versus going to cinema is similar to comparing dining out at a restaurant versus ordering takeaways from the same establishment
— Chantelle Burrows, marketing and content executive at Nu Metro Cinemas
Matsau says the company’s business rescue practitioner, Stefan Smyth, put out a notice to affected parties two weeks ago asking for an extension to the business rescue process until the end of November and that there is every intention of completing it by then.
In the same notice it was revealed that Ster-Kinekor is in talks with an interested party, which has indicated its “indicative proposed investment into the business”.
Matsau says he cannot say at this stage whether this would result in the company, or part of it, being bought.
He adds he is “optimistic” about a recovery for the cinema industry, saying that the performance of the new Bond movie shows “people are still willing to come to cinemas as long as the content is right”.
“We think the future of cinema is going to hinge on these big releases and that there are going to be fewer and fewer mid- to lower-tier films making it to the cinema screen.”
He says the large film studios make 40%-50% of the lifetime revenues of a movie from its run on the cinema circuit and that the film industry’s business model globally depends on cinemas, especially for “these big tent-pole movies where hundreds of millions of dollars are spent making the film”.
Chantelle Burrows, marketing and content executive at Nu Metro Cinemas, says most film studios are now also moving away from the hybrid release models that were implemented at the height of the pandemic, with titles released simultaneously online and in cinemas.
She says most new releases are being “released exclusively” in cinemas ahead of online or streaming release dates, and that most international film studios have also committed to a minimum 45-day release window for movies to be shown exclusively in cinemas, “illustrating studios’ confidence in cinemas generating effective revenues through attendances as well as the future sustainability of the industry”.
Burrows says Nu Metro does not view streaming services as a threat “but rather as parallel media platforms to consume content on”.
“Watching a movie at home versus going to a cinema is similar to comparing dining out at a restaurant versus ordering takeaways from the same establishment.”
She says Nu Metro has also seen a “steady week-on-week increase in cinema attendances for the past month”.
