Industry Analysis from an Outsider, #3 � Movies
This is the third in an ongoing series that takes the view of a complete outsider into certain industries. Without in any way even attempting to understand the operational constraints and the concepts within an industry, this particular series of articles has a look from a customer and connection economy perspective at certain industries with which we interact on a daily basis. And purely from a customer perspective aims to ask a few critical questions. These questions may be helpful to industry insiders as they plan how to make the next evolution (or quantum shift) in their businesses.

It’s Oscar fever in Benoni. Home town girl, Charlize Theron, is hot favourite to win one of golden statuettes. By the time you read this, you’ll know if she did it or not. Having already garnered a Golden Globe, a BAFTA and a Screen Actor Guild award, she’s the hot favourite for an Oscar for leading female actress. This for her role in her latest movie ‚Monster‛, based on the life of serial killer Aileen Wuornos, who was executed in 2002, after being found guilty of murdering at least six Florida men while working as a prostitute..Having won so many awards for this movie, Charlize has really put South Africa back onto the movie map. This is a great reward for her decade or so of long hard slog in Hollywood and signals the arrival of the newest South African entertainment superstar.
Of course, no one is prouder than the people of her hometown, Benoni, a city to the east of Johannesburg, South Africa. As Charlize, an Afrikaans ‚meisie‛, has been interviewed over the past few weeks by South African radio and TV stations, she’s been asked to say a few words in her home language, and there have even been big debates in Benoni about whether she still has a genuine Afrikaans accent or whether they can detect the American accent she has learnt in Hollywood. Whatever the outcome of these discussions, one thing is clear � the people of Benoni are thrilled at the success of ‚their girl‛ � and why shouldn’t they be?
With all of this hype and with the massive ‚proudly South African‛ home team feeling about Charlize at the moment, it must come as a tremendous surprise and shock to discover that NuMetro Theatres, a South African company that owns and manages cinema complexes around the country, have made a decision not to show the movie ‚Monster‛ in the Benoni NuMetro cinema complex (to be fair, Ster Kinekor, the other South African cinema operator is not releasing ‚Monster‛ at its closest complex to Benoni, either). ‚Monster‛ is, as the industry calls it, a limited release movie. Being quite graphic in nature and having a lesbian serial killer as its main theme, one would guess that this is not a movie that would appeal to everybody. It’s not quite an art movie reserved for the art house cinema complexes like Cinema Nouveau, but it is the type of movie that is only usually put in the major cinema complexes. Benoni is certainly not one of those.
Here is another example of an industry that is locked into rules and systems that take no account of the customer. When interviewed on Radio 702’s The John Robbie Show, the day of the limited release of this movie and the Friday before the Oscars were announced, Mark Harris, the product manager of Nu Metro Theatres simply reiterated what the rules and policies were regarding this type of movie. He explained that these decisions were made months in advance and that he was in no position to make any changes, even though the citizens of Benoni were actually up in arms about the decision, and even though the movie had received massive hype, with Charlize’s face on the cover of almost every magazine in the country, with the movie being released on the same weekend as the Oscar ceremony. You would think this was a dream come true for Nu Metro, and that they’d do everything in their power to bring this movie to the market, especially to Benoni, the star’s hometown.
When pushed for further reasons behind their seemingly incomprehensible decision, Mark Harris indicated that the decision was in any case not his, but rather rested with the distribution company who would have to purchase extra reels of the movie if they wanted to show it in a different movie house at this stage. When asked which company this was, so that the people of Benoni (and elsewhere) could phone this distribution company and request them to bring more reels into the country, Mark indicated that it was Nu Metro Distribution Company. When there was a stony silence from John Robbie, and an incredulous question as to why the two Nu Metro companies couldn’t talk to each other and sort this issue out and get a movie reel to Benoni, Mark hastily indicated that Nu Metro distribution was a ‚totally separate company‛ and ‚made its own decisions‛.
This type of thinking completely confounds the public and beggars belief in a company that is meant to be on the cutting edge of consumer behaviour in terms of entertainment and understanding of consumer preferences. Clearly they are not!
Who or what bureaucracy made such a ludicrous decision as this, is beyond comprehension and certainly is an opportunity missed. And now, as the residents of Benoni are literally demanding the right to spend money watching this movie, Nu Metro still doesn’t jump to attention and deliver the product. The fact that the company feels confident to defend its decision is even more astounding and is an indication of an industry that is certainly lost somewhere very far away from its customers.
Elsewhere, at the same time‌
While we’re talking about cinemas and their not being linked to customers, there are two other issues that may be worth pointing out.
The first is that movie tickets have dramatically increased in price over the past few years as movie houses have become bigger, more ostentatious and put in higher quality equipment in order to get the best experience out of the big screen. Now, at one level, this was an entirely necessary upgrade that movie theatres had to go through in order to compete with home theatre systems and the advent of the video machine and video rentals. Customers are being sold a better experience, and at one level expect to pay for that. Movie ticket prices have soared in the past few years. That in itself would not have been a problem, except that a number of companies have linked into movie houses and offer cheap movie tickets to some of their more loyal customers. For example Edgars, a South African clothing and lifestyle goods retail company has linked up with Nu Metro to allow an Edgars customer and 3 of their friends to see movies for nearly one third of the average ticket price. The same has happened with Discovery Health, a medical aid and lifestyle management company, who have linked up with Ster Kinekor to offer a similar deal through that movie company.
There are specially cordoned off queues for these people in addition to the ridiculously low prices of the tickets in comparison to the average selling price. There is little doubt that the average movie goer has worked out that the ‚normal‛ price of the tickets right now is not so much to pay off the capital expenditure of the movie theatres, but rather to subsidise and cover the cost of low price tickets.
This seems an exceptionally stupid marketing tactic which is self defeating in the long run. It amounts to a price war, as everyone is likely to go out and get Edgars and Discovery packages (the former is even free!) and only go to movies at the cheap ticket price, or will simply boycott the movies because of the high prices.
If that were not enough, the second issue is even worse. We all know that the real way to make money in cinema complexes is to have what the Americans call a concession stall. This is the popcorn, sweets and drinks that are sold by the movie houses themselves. They sell a very limited range of popcorn, machine-generated fizzy (sometimes) colddrinks and sweets at the world’s highest margins for these particular products. Anyone expecting to buy these kinds of sweets and products at a movie house must also expect to have to max out their credit card in order to get them, especially if attending with a reasonably sized family. Ster Kinekor has, in particular, in the last few months gone on the offensive against people who attempt to bring food and drinks, bought outside the cinema complex, into the cinema. Ster Kinekor have put an actual physical ban on this happening.
When they first started doing this, the rationale that they gave customers and the advertising around this particular approach, indicated that they expected you to make a mess on the seats if you brought your own food in. Of course this just defies any sort of logic. Its as if the wrappers, cartons and drinks cups of Ster Kinekor’s outlets have some special devise in them which stops them actually messing up the seats and that the popcorn bought inside the movie complex somehow was spill-proof. Of course the real reason was simply that you were undermining the one profit centre still left to the cinema industry.
The one problem with this particular approach was, simply, that they were lying to their customers. And any customer with half a brain would be able to work out that the reason given to them was certainly not the reality. That’s no way to treat intelligent customers � especially ones you’re ripping off anyway.
The second problem with this approach is one that my wife has personally encountered. The cinema complexes do not sell hot drinks – teas and coffees and so on, and if they did would probably sell a very cheap and nasty version anyway. My wife enjoys a nice latte with a movie and as most cinema complexes have a very helpfully placed coffee shop nearby, she’s always keen on getting a nice tall take away skinny latte so that she can go and enjoy it while watching a movie. Of course she is not allowed to take this into the cinema complex. Some poor rule-abiding security person at the door of the cinema complex, who has been given no people training – just ‚rule and procedure training‛ – has been instructed to tell her not to bring that into the complex. It makes no difference that this particular product is not sold within the concession stalls at the cinema complex. It makes no difference that I would stand in line to purchase a coolddrink and popcorn for myself. It makes no difference that my wife would not want to drink anything that is available inside. It makes no difference that they do not search the bags of others entering the cinema to look for elicit sweets and cans of drinks. All of these arguments fall on deaf ears and the latte is invariably either drunk very quickly or thrown into nearby a dustbin.
All of this defies belief. It is certainly not customer-centric and leaves us confounded and scratching our heads and certainly desirous of going out and purchasing a very descent home theatre system and ensuring that we are able to get the big screen at home.
What lessons can we draw from this for other businesses? Well, simply, when your business principles and procedures take you so far away from your customers that you actually begin to irritate, upset, ignore and confuse your customers, surely you have gone too far with your principles and procedures. When in order to protect a profit centre in your organisation, you need to actually lie to your customers, you have indeed gone too far. Customers are not stupid, they can work these things out, and putting people at the customer interface level who have absolutely no people skills, do not understand the thinking behind the procedures and simply follow the rules and procedures to the letter, goes a long way to alienating customers. Simply because you have an effective monopoly, or because customers currently have no choices available, is no excuse to continue such habits. When customers do have a choice or the monopoly ends, customers will abandon you in droves and will never come back again. This is the danger that the cinema industry now faces.

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