Vista gets best news and worst news for Christmas

This Christmas season has seen the best of news and worst of news for Vista Group — the NZX-listed, Aucklandbased company that dominates the global market for software for managing movie theatres and marketing their wares.

First came news that the first wave of vaccines, from Pfizer, Moderna and AstraZeneca, are effective and just weeks away.

But then came Warner Bros’ announcement that it would offer every new movie on its 2021 slate for streaming at the same time it hit theatres, regardless of how vaccine distribution plays out.

The US studio giant is wary that it will take months, at best, for widespread vaccine distribution. But it will also have had an eye on Disney’s runaway success with its $9.99/month direct-to-the-consumer Disney + service, which now has some 70 million subscribers streaming its content worldwide.

So will vaccines eventually see a return to the same levels of cinema-going as before the pandemic?

Vista chairman Kirk Senior said earlier this year that, ultimately, people are social creatures and will want to return to the communal, bigscreen experience of a multiplex. Or will it be permanently crimped as studios, and punters, become acclimatised to the cheaper, more convenient streaming experience? That’s the $64,000 question (or the billion-dollar question, to give it Vista’s 2019 market cap).

Investors are beginning to accentuate the positive.

While still a long way from their $5.84 pre-Covid high, Vista’s shares recovered from their 96c trough to $1.49 in November ahead of the vaccine news — and have since pepped up to a recent $1.79.

An October 21 market update also helped. Vista said, “At the end of September 2020, between 70 per cent and 75 per cent of cinemas globally were open” and that NZ’s September box office was up 50 per cent over August.

However, Vista conceded that some cinemas were operating on reduced hours amid thin content, or were subject to capacity restrictions. No attendance figures were given — although it noted China had recently enjoyed its secondhighest box-office day on record, only slightly down from its record, set in 2019. Chief executive Kimbal Riley said, at the time, “While it remains hard to predict when the global cinema industry will ‘return to normal’, the rebound of moviegoing in countries where cinemas have reopened supports our belief that the industry will bounce back well during 2021.”

Vista battened down the hatches for a year or more of empty theatres as the coronavirus hit, slashing costs and raising $65m in April.

This past week, it’s taken perhaps its first front-foot step since then, buying the 50 per cent of Cinema Intelligence it did not already own, for an undisclosed sum.

Cinema Intelligence uses “artificial intelligence . . . for forecasting, distributor negotiation, automated scheduling, and business analysis.”

Riley says it will help cinema chains with forecasting, which is “more relevant than ever given the impact of the pandemic on the industry.”

Beyond Cinema Intelligence, Vista is offering new management features such as socially-distanced seating and curbside popcorn collection.

Vista has been cautious in its outlook throughout and, like most tech companies, not offering any guidance.

This week, Riley also urged patience. Investors should not jump to any conclusions about how Warner’s online push and other streaming services would play out.

He certainly wasn’t. From his insider’s view, he could see a pent-up tidal wave of titles from big Hollywood studios, which have been holding back new releases. But when they’ll hit screens he can’t say.

“The availability is fantastic news. It will put a spring in the step of the industry in 2021,” the Vista boss said.

In May, with Vista’s shares wallowing near the $1 mark as the world laid low, Craigs Investment Partners’ analyst Stephen Ridgewell upgraded the stock to overweight.

Yesterday, Ridgewell still had his overweight rating — although with its recent runup, Vista is now nudging his 12-month price target of $1.90.