An innovative idea for small cinemas will bring the movies to the townships, writes Neil Bierbaum
Ster-Moribo’s purchase this month of a 60-percent share in the Maxi Movies franchise operation has provided it with the growth it has been seeking among black audiences.
Maxi Movies has a new concept for cinemas: a SuperVHS video system, which projects a high-definition video image onto a 5mx4m screen. This makes the establishment of cinemas more affordable and more accessible to people living in the townships.
The franchise operation was established in 1994 by Sven Nothard, who had founded the Nu Metro cinema chain nine years earlier. And it might just be the answer to Ster- Moribo’s dreams.
Ster-Moribo, a joint venture between Interleisure subsidiary Ster-Kinekor and Thebe subsidiary Moribo Investments, was formed in an “attempt to develop cinema complexes in urban areas previously under- serviced by the entertainment industry”.
It ended up with a few run-down cinemas in the Johannesburg CBD, which has experienced a mass exodus of whites and an influx of blacks over the past five years. The cinemas showed mainly karate and action movies at reduced rates.
The high cost of establishing new cinemas restricted the group. The fact that black people had for so long been excluded from cinemas by apartheid laws meant there was no historical experience on which to base the viability of cinemas in the townships. New shopping centres were going up, but cinemas required special high-ceilinged structures and projection rooms which could hold the huge 35mm projectors. The risk was high.
Then came Maxi Movies. The video projector is much cheaper and smaller than a 35mm projector, saving shopping-centre designers from having to make special provision for cinemas. The Maxi Movies unit can be converted back to a normal shop if the cinema is not successful.
But unsuccessful cinemas are the last thing on Nothard’s mind right now. He has already secured several franchisees and expects to have 100 within five years. He has aligned himself with more than 54 planned shopping centres.
Nothard’s approach has also introduced a new aspect to franchising in South Africa. Most franchises have traditionally required that the frachisee put up all the money. But a Maxi Movies franchisee is only required to put in R45 000 of the R350 000 cost. This can be raised by up to three people who would then operate as a consortium. Nothard presents a business plan to a financial institution and secures a loan for the difference.
Maxi Movies’ main backers to date are Nedenterprise, the Small Business Development Corporation and the KwaZulu Finance Corporation.
The franchisee becomes part of a national cinema chain, with all the benefits of the latest releases and combined marketing, as well as access to credit, markets and skills.
Major features will become available to Maxi Movies franchisees three months after the normal cinema circuit release — the usual time for video release.
It is envisaged that the target audience will not have been able to see the movie on the general circuit release — ticket prices are too high and the Maxi Movie cinemas will deliberately be situated in areas where residents have difficulty reaching “first run” cinemas.
But the delay also means that the franchisee can acquire the movies at much cheaper rates than normal cinemas. This cost saving can be passed on to the public as well as to advertisers.
Nothard believes the audience will be mostly male, aged between 16 and 35, with a household income between R2 000 and R2 500 a month. The R7 ticket price will be less than the fast food meals which are available in the same shopping centres. Coca-Cola, Pepsi, Schweppes and JPS have already signed on as advertisers.
The establishment of Maxi Movies is being followed closely by international movie distributors, he says, who see the possibility of applying the concept in other countries — Chile, China, India and Eastern Europe — which have a First and Third World hybrid economy similar to that of South Africa.