Diversified offerings boosting Cineplex

TORONTO — Canada’s largest movie theatre chain touted the success of its diversification into e-sports and other businesses as it reported an increase in profits despite a decline in theatre attendance and box office sales.

Cineplex Inc. said Tuesday it earned $23 million (37 cents per share) in the first three months of 2017, up from $21.5 million in the comparable quarter of last year.

The results came as firstquarter revenue went up four per cent to $394.2 million, although box office revenue slipped 1.7 per cent and attendance fell 4.8 per cent due to a weaker selection of films.

Gains came from revenue from food services which added 1.7 per cent, while media revenue gained 2.6 per cent and revenue from Cineplex’s amusements business climbed 58.9 per cent, due in large part to two acquisitions completed in the fourth quarter.

“This was the first time where we really saw the impact of (our diversification) and the benefits in the long-term,” said CEO Ellis Jacob, adding it will be a slow and steady process to grow the company’s other entertainment ventures.

Cineplex opened its first Rec Room, a 60,000-square-foot space for gaming, live entertainment and dining, in Edmonton last September.

The location added $2.1 million in food service and $2.0 million in amusement revenue in the most recent quarter.

Three more locations are under construction: in Calgary, Edmonton and Toronto, but aren’t scheduled to open until the fall.

As part of its e-sports business, Cineplex and WorldGaming hosted the “Call of Duty: Infinite Warfare” tournament final in late March where spectators watched teams battle each other in the video game on the big screen.

“It’s not to say that we are giving up on movies,” Jacob said, “because we aren’t.”

Cineplex also continues to upgrade its theatres to provide a better viewing experience.

By the end of the year, 15 theatres in total will have been retrofitted with large, leather reclining seats, he said, an upgrade the company started making in select theatres late last year.

The company also plans to open at least three to five more VIP theatres over the next 18 months, he said. Currently, Cineplex has 17 such locations, which offer luxury seating and serve alcohol.

Jacob said he’s expecting attendance to pick up this quarter with a strong lineup of movies coming, including “Guardians of the Galaxy: Volume 2,” “Bon Cop Bad Cop 2” and “Cars 3.”

Despite the strong lineup, Jacob said it is important for Cineplex to be diversified for quarters when the movies don’t deliver.

“There’s so much disruption taking place,” he said.

“When I started in business you had a five-year plan and it was, you know, good for five years.”

“Now, a five-year plan is good for about three months.”