A suc­cess­ful slate of block­buster movies boosts rev­enue for Cineplex


This time last year, the sil­ver screen was look­ing a bit tar­nished. The tepid ap­peal of Hol­ly­wood’s spring re­leases led to weaker-than-ex­pected box of­fice re­turns for Cineplex Inc. This time around, how­ever, it ap­pears that even a batch of re­cy­cled su­per­heroes are still ca­pa­ble of pro­vid­ing some pol­ish.

On Friday, Cineplex re­ported record quar­terly rev­enue of $409.1-mil­lion. The lat­est in­stal­ments in the Dead­pool and Avengers fran­chises and the end of a 14-year hia­tus for the In­cred­i­bles clan were ma­jor con­trib­u­tors in draw­ing 17.3 mil­lion peo­ple to Cineplex’s movie theatres in the quar­ter ended June 30. Box-of­fice rev­enue rose 4.4 per cent a pa­tron, com­pared with the same time last year, and con­ces­sion spend­ing was up 9.3 per cent a vis­i­tor. In-show ad­ver­tis­ing also rose 12.3 per cent to $26.9-mil­lion.

“When the pic­tures are there, peo­ple come,” Cineplex chief ex­ec­u­tive El­lis Jacob said. “They love the the­atri­cal ex­pe­ri­ence. We like rain. But even with the great weather we’ve had, we’ve still done ex­tremely well.”

Mr. Jacob is also op­ti­mistic about con­tin­ued strong per­for­mance for Mis­sion: Im­pos­si­ble – Fall­out and com­ing re­leases, par­tic­u­larly Crazy Rich Asians, a movie based on the best­selling novel, which he ex­pects to do par­tic­u­larly well in Canada. How­ever, that does not change the fact that, long term, the movie ex­hi­bi­tion busi­ness is some­what un­cer­tain. Cineplex’s strat­egy con­tin­ues to be to di­ver­sify its busi­ness so that when the box of­fice dips, its bot­tom line is shored up with other en­ter­tain­ment of­fer­ings.

By the end of next year, the com­pany will have nine Rec Room lo­ca­tions across Canada, com­plexes that of­fer gam­ing ex­pe­ri­ences along with bar and restau­rant ser­vices. Cineplex will soon an­nounce its first lo­ca­tion for Top­golf, an en­ter­tain­ment com­plex of­fer­ing vir­tual golf games as well as food and drink.

The Rec Room busi­ness brought in $15.7-mil­lion in rev­enue in the sec­ond quar­ter, which was lower than ex­pected. The Ed­mon­ton lo­ca­tion did not per­form as well it was fore­cast to, Mr. Jacob said, and the com­pany did not re­act quickly enough to con­trol costs. He re­it­er­ated, how­ever, that the com­pany will con­tinue to look for new op­por­tuni- ties for the en­ter­tain­ment side of its busi­ness.

Last month, Cineplex an­nounced an ex­pan­sion of its agree­ment with The Void LLC to open at least five more of its vir­tual-real­ity at­trac­tions, both in Cineplex-owned prop­er­ties and else­where. Un­like vir­tual-real­ity games that func­tion via gog­gles that par­tic­i­pants wear, The Void op­er­ates in a space peo­ple can walk through, us­ing a com­bi­na­tion of vir­tual real­ity and other ef­fects such as sound and smell to pro­vide at­trac­tions based on pop­u­lar movie fran­chises, such as Ghost­busters and Star Wars.

As mall own­ers face a chal­lenge in at­tract­ing shop­pers to brick-and-mor­tar lo­ca­tions, for ex­am­ple, Mr. Jacob said that he sees an op­por­tu­nity to po­ten­tially strike deals to aug­ment those spa­ces with these types of en­ter­tain­ment of­fer­ings, which Cineplex could op­er­ate.

“We’ll con­tinue to look at op­por­tu­ni­ties be­yond theatres and Rec Rooms,” he said.

The com­pany is also look­ing at con­trol­ling costs, and fore­casts $25-mil­lion in an­nu­al­ized cost sav­ings this year.

Cineplex’s net in­come rose 1,670 per cent to $24.4-mil­lion or 38 cents a share, in the sec­ond quar­ter, com­pared with $1.4-mil­lion or 2 cents a share dur­ing the same pe­riod last year.

While grow­ing com­pe­ti­tion from dig­i­tal ser­vices makes the home en­ter­tain­ment en­vi­ron­ment more at­trac­tive than ever, Mr. Jacob said he does not be­lieve Net­flix is a mor­tal threat to movie theatres and other en­ter­tain­ment of­fer­ings in which the com­pany is in­vest­ing.

“Peo­ple want to get out of their homes,” he said.


Cineplex’s CEO ex­pects com­ing sum­mer movie hits will keep the com­pany on a win­ning streak.

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