Mr Video vs Nu Metro

Posted: March 11, 2009 in Investigative articles

First Published in The Event – 2008

 ©Astrid Stark

 

 South African filmmakers, distributors and video/DVD store owners often disagree about the reasons behind the many challenges facing the local film industry.  However, they agree that the local DVD retail and rental industry can be a very lucrative revenue stream for the South African film industry with better communication and cooperation between the various role players.

 

Mr Video’s chief operating officer, Andre Grobler recently won the right to appeal the Judge’s ruling in the case between Mr Video and Nu Metro Entertainment. 

 

Earlier this year the Cape Provincial division of the High Court granted and order on behalf of Nu Metro Entertainment preventing Mr Video purchasing DVD’s from unauthorised distributors. 

 

Frustrated by what Andre called Nu Metro’s ‘monopolising of DVD distribution’, Mr Video went and sourced DVD titles from independent overseas distributors which resulted in the court ruling.

 

Andre estimates that the Video shop industry is worth around R1b annually but says there is still no single organisation representing the industry as a whole, “And any past attempts to create such an organisation failed for reasons that we found obvious but can only speculate about.” 

 

He says there is very little cooperation between local distributors and DVD rental stores, “the local distributors only focus on promoting their retail market through their cinemas and only once they have exhausted those revenue avenues will they decide on a release date to the rental market at a much higher price than a retail copy.”

Ronnie Apteker, producer of Footskating 101 and Straight Outta Benoni, says he feels that  DVD sales and rentals could be an important revenue stream for local content, “but locally made  feature films, other than the Leon Schuster titles, don’t really ever stand out.”  

Footskating 101 has taken around R600 000 in DVD sales to date.  However, says Ronnie, “Numbers are not very encouraging when one considers the cost of making the film.”  According to www.imdb.com Footskating 101 had an estimated budget of R1m. 

Nu Metro Home Entertainment handled Footskating 101’s distribution.  According to Ronnie they get a percentage of sales made by the distributor that is calculated along a sliding scale, which is based on the number of units sold.  “It starts at around 30% for fewer than 5000 units.” Says Ronnie.  That is a hefty 30/70 percentage which favours the distributor. 

Ster-Kinekor Home Entertainment handled the local DVD rental and sales distribution of Straight Outta Benoni which has taken around R500 000 in sales. 

The debate about the quality of films like Straight Outta Benoni continues. One visitor commented on www.imdb.com, it’s a ‘cool and charming movie,’ another string of comments call it, ‘The worst movie ever made’, and ‘a disgrace to SA film.’  Says rhaynes1974 on the imdb site, The South Africa film industry really just needs one final nail to be knocked into its already cheaply constructed coffin.”

 

Ronnie Apteker seems sceptical, “I have studied the numbers of all the local films that have come out in the past year and it is uninspiring to say the least. I don’t think we have a real film industry here and hence, I don’t think there is any meaningful data when it comes to DVD sales.” 

Other local producers have enthusiastically taken distribution matters into their own hands.  Byron Taylor of 3Thread Productions says. “The distribution has been fun. I took a whole week to search out contact info worldwide and another week for emailing information about the show.  Incredible feedback has been shown from the US, New Zealand, Australia, France and Ireland.”

 

Byron was a child presenter on SABC 1 for seven years.  After matriculating he bought himself a ticket around the world with his life savings.

 

He filmed this experience in the form of video diaries in front of places like the Taj Mahal and The Statue of Liberty.  Upon his return he collaborated with Touchdown Africa to produce Travelling Unplugged.

 

“We took episode 1 to Sithengi, and a local distributor, Clickboogie, said they wanted to promote the show.” says Byron. “We then landed an awesome deal with Travelling Unplugged being broadcasted in the Netherlands.”

 

Byron has since signed a two year exclusivity deal with an Irish distributor who will be taking the show to Cannes in October this year.

 

Byron agrees that a combined effort between the video and film industry in actively promoting local content could be a big step towards growing the South African film industry.

 

“It’s weird,” Byron remarks, “Here is a South African show produced by a South African.  The show is covered with local flavour, yet it’s taking a while to get broadcasted here. Although MNET, SABC 3 and Telkom Media have shown some interest.”

 

Debbie McCrum is the GM for Nu Metro Films, one of the divisions of Nu Metro.  Debbie acquires all rights for films and handles film distributions.

 

“The relation between the film and video industry in terms of growing local audiences is very linked.” says Debbie.  “I believe that local films are given even more publicity support (both from our side and from the media) than Hollywood films.” 

 

Debbie rationalises that local access to cast and crew increases publicity opportunities, and that together with marketing support, these releases have a greater opportunity to compete against the Hollywood titles.  She believes this has a spill-over effect onto the release for home entertainment.

 

Of interest is that Nu Metro Home Entertainment is partnering with M-Net and KykNet to release some of their locally produced series, as well as older catalogue titles, onto DVD. 

 

This will include titles such as Ella Blue and Geraldina die Tweede.  “It’s a first for South Africa,” says Debbie, “and it follows the international trend in making local TV productions available to own on DVD.” 

 

Debbie says the local industry is still in its infancy. “Blu-Ray is one of the latest developments for home entertainment.  Ever increasing picture and sound quality means a better experience for the consumer.”

 

Nu Metro Home Entertainment released Mr Bones on DVD and VHS and it has sold in excess of 200 000 copies since. 

 

Mario dos Santos, COO of Ster-Kinekor Entertainment, distributed Tsotsi and Gatvol that has each sold in excess of 100 000 DVD units locally. “This translates into around R7million per DVD title”, says Mario’s spokesperson.

 

The Oscar award winning movie, Tsotsi, has illustrated that there is a lucrative international DVD sales market by taking more than $5.2 million in DVD sales in America to date.  

 

According to Ster-Kinekor, Poena is Koning, has taken in excess of R3.5 million in local DVD sales.

 

Filmmaker Frans Cronje remains optimistic about his relationship with his distributors.

“Nu Metro has been great towards us and we’ve had good success through them with Faith like Potatoes.

 

According to Nu Metro, the best selling local releases that they have distributed include Mr. Bones, Mama Jack and Faith Like Potatoes all with DVD sales of around R9million each.


However Nu Metro warns that there are no official industry statistics on local content DVD sales and that these figures are estimates.

 

Nu Metro is also distributing Cronje’s Hansie movie. “We are very impressed with their marketing efforts thus far. I think there is room for the industry leaders to meet annually and discuss cinema and DVD sales.” says Frans Cronje. “There are some obvious things that I think can be done to improve sales and income. The retail market is very healthy, but the rental market needs some changes.”

 

Frans says the public support of the rental market is great but the income stream back to producers puts them at a disadvantage.  Frans originally distributed Faith Like Potatoes through Global Creative Studios and then passed the distribution onto Nu Metro.

 

“DVD retail plays a vital role in recovering a filmmakers production costs,” says Frans, “and hopefully it makes a profit.”

 

Frans expresses concern about the fact that as a filmmaker he cannot monitor how often his film is rented.  “I feel that this is a vital area that needs to be addressed. Personally, I feel that until there is a fairer way for producers to earn income from rental stores, based on income per rental, it is not worthwhile to sell DVDs to rental stores.”

 

©Astrid Stark

 

 

 

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Comments
  1. Garg Unzola says:

    Tsk tsk. Nu Metro and Ster Kinekor have been playing dirty with the rental market for as long as I can remember.

    They extort people like Mr Video. The DVD or video you see on the shelf there does not cost the same price it costs you or I to buy. They have to pay about 4 to 5 times as much for the same thing. If you work at R20 or R30 per day (which is the maximum you can make with the thing), then you’d have to rend a single title a very long time for every single day before you even pay for it.

    That’s before you even start making a profit.

    Nu Metro definitely has a monopoly. I think the main problem is pointed out here:

    “The relation between the film and video industry in terms of growing local audiences is very linked.” says Debbie. “I believe that local films are given even more publicity support (both from our side and from the media) than Hollywood films.”

    Those two industries are definitely not linked if you consider how cult films become hits on rental when they failed to impress at the box office. I think that Nu Metro would just like to have them linked because it means that if a film did well at the box office, they can push it in to the rental market with less risk. It’s to cater for the masses than what it is to cater for specific markets, even though you’d make much more money if you catered for specific markets. But what’s the point when you are the only distributor and you can slap lawsuits on anyone who wants to use someone else to get their films from?

    Besides that, have you seen the printing quality on Nu Metro’s DVDs? It looks like they were busted from a Nigerian smuggling ring and then put back into circulation with an official stamp and a wink of the eye.

    Like

  2. astridstark1 says:

    Garg,

    As always you hit the nail on the head. To make matters worse for smaller rental shops such as Mr Video, the larger distribution companies often hold ‘hostage’ many films coming in to South Africa. We often receive movies months after it has been released in the States because the distributors work on a complex quota catch and release system that will do any rational person’s head in. This directly (or indirectly?) results in people illegally watching copies of films way before they are released, which surely must lead to losses at both the box office and the rental shops?

    As for your suspicions on the Nigerian smuggling ring… Am I the only person who has noticed the “Warning: this movie is not available for rent” on several rented movies? (Names will be witheld for fear of having knee-caps broken)

    Like

  3. Garg Unzola says:

    My spelling was atrocious in that post. My apologies!

    Well, Nu Metro/Ster Kinekor (same thing, really) works on a similar system with how they source their films. We get films late because they wait for it to be a hit overseas. If it’s a hit overseas, they reason it would be a big hit here – both at the box office and in the rental market.

    As we all know, the big guys are doing their best to ignore p2p and other flavours of free marketing because it renders all their marketing snake oil like delaying releases to create a buzz obsolete. They aint never heard of the interwebs and viral marketing, they’re still marketing at people.

    Problem is by the time we get the film here on a well-grainy film, most of us have seen a version of it with dodgy Taiwanese or Russian guys walking in front of the camera in another third world bioscope. Which, in most cases, is still better than the quality you’d get in a local cinema.

    The other problem is it totally ignores the cult market and assumes people only want to rent big box office hits, which is never the case. People tend to rent more risky films than what they would see in the cinema on a Saturday morning with auntie May and the kids. Two different markets! Renting has a big cult market, and not just Cinema Nouveau type foreign films (which does not make it an arthouse film).

    The other aspect is that the big distributors work on a similar system with Nu Metro/Ster Kinekor. They know they’re the big buys who do distribution, so why worry about having films here on time? They can wait and pick it up cheaper later, after the buzz has gone, and try to ride the second wave made by Barry Ronge’s splash. Stone age marketing for the information age.

    The last item on my rant today: google the Twin Peaks DVD box set on Amazon (if it’s still available). That baby came into the country as it is there (only on import, was never printed locally). Guess what they did? They split the complete box set into smaller, incomplete box sets and charged the equivalent of the complete box for each incomplete box.

    Are they screwing customers? No, not at all. We can simply ignore them and do internet shopping. They’re screwing retailers, because these are required by law to get their products from Ster Kinekor/Nu Metro. So, I wish Mr Video all the best in this case!

    Like

  4. sffronx says:

    I all the time used to study post in news papers but now as I am a user of internet therefore from now I am using net for posts, thanks to web.

    Like

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