Nigeria’s Cinemart sets out to conquer the continent with a new business model for cinemas

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The African cinema sector seems to be coming out of its Rip Van Winkle slumber at last. A Nigerian cinema chain has set its sights on becoming a pan-continental player by offering a different business model. Russell Southwood spoke recently to Cinemart’s Dayo Ogunyemi.

In Europe, cinemas went into a deep trough in the 1970s but emerged with renewed investment that boosted audience figures in successive decades. In Africa, cinema went into the doldrums at about the same time but a renewed investment wave at the bottom of market just never happened. In some countries, civil war and the conversion of cinemas into evangelical churches has robbed audiences of the chance to see films together. Pirated films have meant it was meant cheaper to view them at home or in video booths, bars showing pirated material.

The first stirrings of the new cinema investment wave were the purchase of South Africa’s Nu Metro cinemas outside of Southern Africa by Nigerian media company Silverbird in 2008. Silverbird had built one of the first multiplexes in Nigeria on Lagos’ Victoria Island.

It bought four state-of-the-art Cineplexes in Kenya, with a total of 18 screens, and two media stores selling the latest books, music, Apple computer products and filmed entertainment products, while in Ghana, Silverbird established the country's first-ever Cineplex with five screens fully equipped to international standards and with Dolby digital surround sound and contiguous with a media store.

In addition, Silverbird had cinemas in Abuja, Uyo, Port Harcourt, Jos, Owerri, Awka and Yenagoa. On this basis,  the Silverbird Group, claimed at the time that it was  “positioned as the third largest entertainment conglomerate in Africa”. But these cinemas were primarily aimed at the country’s emerging middle class that can afford the ticket prices.

The new challenger is Cinemart, a cinema chain that has eight cinemas across Nigeria, 2 purpose-built and the rest conversions (150-400 seats). It may be small but it has ambitious plans to roll-out across the continent. According to Cinemart’s Dayo Ogunyemi:”We’re looking to put an emphasis on standard 400 seaters and build multiplexes with 4-6 screens.”

The cinemas it builds will be in three tiers: Tier 1 (about 5-10% of its cinemas) will be aimed at middle class and lower middle class viewers; tier 2 will be aimed at students in higher education institutions; and tier 3 (60-70% of all its screens) will be broadly aimed at anyone who can afford the ticket price.

”We want to get as many screens up for as lower CAPEX as possible and start with more single screeners. No-one can say what the occupancy rates will be at this stage. But we also need the flexibility of multiple screens in the lower tier. We don’t want to follow the Indian example where the move to multiplexes meant largely middle class, Top of the Pyramid audiences. We want single and double screens for Bottom of the Pyramid audiences but more multiplexes as investors become more comfortable that the business model works.”

Its current Tier 3 cinemas in Nigeria are not necessarily representative of what they will build elsewhere. They are fairly basic rectangular boxes with benches or plastic chairs and air cooling with fans:”Air conditioning costs US$30,000 to install and US$20,000 in OPEX,” says Ogunyemi:”These cinemas are fairly energy light but they are more comfortable than video halls and have a 20 feet plus screen and good sound. The video halls have only a 19” television and the sound is not good.”

The idea is that once each locations proves itself, we will quickly upgrade it. Once we’re regularly getting a certain percentage, we can put in more comfortable seating and air conditioning. So it’s start basic and upgrade.”

The basic ticket price is N50 with prices of N100-150 in peak times in the evening and at weekends. Programming will include Nollywood releases and live sports programming:”We’re working with stakeholders from the Nollywood production community. We want to create an exhibition window before the film inevitably goes into its pirate DVD version. This exhibition window will improve producers’s revenues, lower the number of pirate DVDs and improve movie quality. There will be a big increase in word-of-mouth and you will get a publicity trail.”

“If you put in cinemas in proximity to large numbers of people and price affordably, you will get a boost. If you have to pay to travel for an hour to get to the movie, that’s part of the cost of the movie. We also intend to use content that works better with the audiences we’re aiming at.”

“With the number of screens we’re planning across Africa, it will be a game changer. By the end of the first full year of operation in July 2011, we intend to have 100 cinemas across Africa. There’s a minimum scale of 25-30 cinemas per country so we’re planning 50 screens in Nigeria and 25 apiece in Kenya and South Africa. The bottom 80% of audiences in South Africa have the same purchasing power as their equivalents in Kenya and Nigeria. We want to create high-end cinemas for low-end audiences in South Africa, giving a similar experience to what you find in Sandton in the townships. And we’ll not just be offering Nollywood but also talking to local players. A relatively tiny percentage of movies make it out into commercial release.”

“In most African countries, there are few existing cinemas for sale so we’ll be building new ones. Through partnerships with financial services companies and grocery stores, we’ll be creating ‘mini-malls’.”

Ogunyemi has been beating a path to potential investors and says that there are both interested DFIs and “sizeable local investors, the majority of whom are in South Africa but even in Kenya we’ve been getting a good response.”

Meanwhile the continent has seen the launch of its second art house cinema – the Biosphere - in Johannesburg’s downtown area as part of a cultural complex that includes a hotel. One of its founders Darryl Els told us that they set up the cinema to provide “something other than Nu Metro and Ster Kinekor (South Africa’s two main cinema chains), so that there was diversity of content.” The cinema has 68 seats and runs programming from Tuesday to Sunday. Tickets cost R35-50 a screening and audiences have been as few as ten to a full house. It is one of first African member of the global Confederation of Art House Cinemas (CICAE). There is second cinema in South Africa, the Labia in Cape Town, that also shows art-house films.

The cinema’s programme has included international films like Tales from a Golden Age and a retrospective of South African cinema over the last 16 years. Els also intends to work with the Ethiopian and Congolese diaspora communities in Yeoville to put on screenings of films from both countries.

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