The rise of streaming and decline of cinemas in South Africa

 ·2 Jun 2024

Over the last decade, South Africa has undergone significant changes in both its cinema and streaming landscapes.

Recent years have seen a wave of cinema closures and layoffs, contrasting sharply with the increasing popularity of online streaming platforms and the global cinema boom.

South Africa’s cinema sector

The country’s cinema sector has been experiencing a decline in its prominence as a primary provider of entertainment. While this is due to numerous, interconnected factors, the rise in the prevalence of streaming services has not done much to help it.

Although sporting unique experiences that streaming platforms cannot compete with, cracks have been starting to show in the sector.

In April, Ster-Kinekor, a prominent player in the country’s cinema industry, made headlines with plans to reduce its workforce by 236 employees and close up to nine cinemas in key regions like Gauteng, KwaZulu-Natal, and the Western Cape.

This decision was said to be part of a strategic restructuring effort in response to dwindling attendance figures (last reported at around 50%), citing factors such as the challenging economic climate, power outages, and disruptions in Hollywood production due to strikes to the decline in cinema patronage.

Mark Sardi, the CEO of Ster-Kinekor had previously said that he doubts that any other cinema companies in the country have been immune to this.

In contrast, the global cinema market is growing.

According to Statista Market Insights, global cinema revenue is expected to hit US$85.16 billion in 2024 and grow at a 5% annual rate to US$109.40 billion by 2029.

Cinema viewership is also projected to reach 1.9 billion by 2029, highlighting the industry’s global growth.

Despite efforts to enhance the cinema experience with luxury amenities, interactive events, and aggressive social media campaigns like their global peers, movie theaters in South Africa are struggling to overcome local challenges.

These include load-shedding and consumer spending constraints amidst the country’s struggling economy.

Streaming services in South Africa

On the other hand, streaming platforms in the country are having a very different experience to cinemas.

South Africa’s over-the-top (OTT) streaming industry, encompassing video, television, and film content accessible via the internet, stands as the largest on the continent.

According to estimates by PricewaterhouseCoopers (PwC), the sector generated an impressive R4.3 billion in revenue in 202, R5.2 billion in 2023 and a predicted R5.8 billion in 2024.

This stands in stark contrast to the cinema industry, which saw around R1.46 billion in revenue in 2023.

Why the shift?

As previously mentioned, South African cinemas are struggling to overcome local challenges such as load-shedding and consumer spending constraints amidst the country’s struggling economy.

In addition to this, PwC and a recent Harris Poll Entertainment Industry survey highlighted how shifting consumer habits, innovative offerings, and economic factors are among some of the many factors that have underpinned the shift.

Firstly, consumers are seen to increasingly favour the convenience and diversity offered by streaming platforms, posing significant challenges to traditional cinemas in South Africa.

The appeal of convenience is the first point noted: streaming allows viewers to enjoy movies and TV shows at their leisure without the need to visit cinemas. Streaming services offer diverse content libraries catering to a wide range of preferences and tastes.

Additionally, the cost is a significant factor, with subscription packages often proving more economical than frequent cinema visits, which have proven increasingly pricy.

“Services like Netflix are appealing due to the amount of content they bring into a single place for a relatively affordable subscription fee,” said PwC.

Exclusive releases are another draw, as streaming services secure the rights to distribute high-profile content directly to viewers.

The COVID-19 pandemic accelerated this shift, as lockdowns made streaming platforms the primary source of entertainment, with most cinema companies in the space taking a commercial beating.

Read: DStv vs Netflix vs Amazon Prime and more in South Africa

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