Ster Kinekor goes from zero to hero

Ster Kinekor has experienced its biggest-ever opening weekend and a record-breaking attendance in its IMAX cinemas, signalling a turnaround for the cinema chain.

This is refreshing news for the company, which has suffered numerous financial challenges, including entering business rescue in January 2021.

Ster Kinekor has been the victim of South Africa’s slow economic growth, household financial pressure, and shifting consumer trends.

The rise of home entertainment and the aggressive pricing from streaming services like Netflix and Amazon Prime Video was the first nail in the coffin.

The cost of a night at the movies, amid a faltering South African economy, dealt another blow to the company.

By the time the Covid lockdowns came around, Ster Kinekor was in serious trouble. In January 2021, it entered voluntary business rescue.

It emerged from business rescue in November 2022 after securing an R250 million investment from Blantyre Capital and Greenpoint Specialised Lending.

However, since then, it has still been a struggle. It had to cut poor-performing cinemas, and load-shedding stopped people from going to the movies.

In February 2024, Ster-Kinekor served staff with a section 189(3) notice as part of a process to cut 236 of its 728 employees.

However, over the last few months, things have started to look much better for the company as blockbuster movies have attracted South Africans back to cinemas.

Last month, Ster-Kinekor revealed that the opening of The Odyssey across its 9 IMAX sites achieved record-breaking attendance.

Shortly afterwards, Spider-Man: Brand New Day achieved the biggest opening weekend in South African cinema history, with a box-office take of R44 million.

“Ster-Kinekor reported sold-out shows all weekend, with 90% occupancy for its screens nationally on Saturday,” the company said.

Ster-Kinekor chief marketing officer Lynne Wylie said the strong performance of these two movies built on an already great season for cinema.

“Audiences are again embracing the unique experience of watching the biggest titles on the big screen, and we’re thrilled to see that momentum building,” she said.

Expert opinion about Ster Kinekor’s resurgence

Entertainment expert Thinus Ferreira told The Money Show that the strong performances of Spider-Man and The Odyssey show that people still love cinema.

“Although it is impossible to sustain this level indefinitely, it is very good for South African cinema, exhibitors, films, shopping malls, and consumers,” he said.

He said that the combination of quality movies and the cinema experience helped Ster Kinekor achieve record-breaking attendance.

“While content is king, the format is also vital. For The Odyssey, Christopher Nolan and the studio made it clear that it was the first film shot 100% for IMAX,” he said.

“If you do not watch the 70mm IMAX experience, you lose out when it eventually moves to streaming or Blu-ray, as parts of the frame will be cut off.”

He explained that the same applies to Spider-Man. “Audiences knew what to expect. It is the start of a new trilogy following the previous Tom Holland series,” he said.

“The filmmakers ensured that cinema-goers understood this was a worthwhile experience that had to be seen in the cinema format.”

He said that the marketing behind the movies ensured people knew that it was worth paying for parking, the movie, and the popcorn for a cinematic experience.

Ferreira said there is a trend of using existing brands, such as Toy Story, Spider-Man, and the Avengers, to build loyal supporters.

“There is a trend of strong intellectual property (IP) congregating in cinemas, which feels as though the stars are aligning for the industry,” he said.

This is not luck. Movie studios are spending large sums to build strong franchises and promote their movies globally.

“Many people do not realise that studios often spend an amount equal to the production budget on marketing,” said Ferreira.

“They typically need to earn double their production costs at the box office to avoid being considered a flop.”

However, when a studio has built a strong brand, a movie’s performance becomes more predictable.

He cited Spider-Man, which has created generations of loyal fans. “When a big spectacle arrives, you draw in all those generations,” he said.