Cineplex searching life after Netflix
Company moving from a cinema company to an ‘entertainment destination’
The past decade has been a tricky time for the movie business. Buying tickets or snagging snacks at the concession stand has gotten a lot more expensive, and with the arrival of streaming services and other online entertainment choices, more of us are opting to watch that hot Netflix original or play the latest video game from the comfort of our couch.
That trend has hit Cineplex Inc. hard. Its stock, which topped $50 in early 2017 has since dropped to about $26.
But Ellis Jacob, the company’s chief executive officer, is convinced the future of theatregoing is still bright and bustling, and that the world of entertainment has much more than just movies to offer.
He chatted with the Star about how he’s fending off his rivals and plotting to make Cineplex an “entertainment destination” with its Rec Room and Playdium restaurant arcade complexes and forthcoming Topgolf launch. You just announced your third-quarter earnings and Cineplex’s profits, theatre attendance and box office revenue were all up, even though the industry has faced some rocky times. How do you feel about that?
What happens when you’re building businesses is that it always takes time. The trouble is the Street is impatient and wants instant results, and when you buy a business, it’s a little different than when you actually start a business from the ground up like we did with the Rec Rooms and the Playdium that we built, so we are excited about the whole ecosystem. Cineplex now is moving from a cinema company to an entertainment destination.
You’ve long been outspoken about streaming services and their relationship with theatres. During the Toronto International Film Festival, you refused to let Netflix’s original films, including “the Laundromat,” “the Two Popes” and “Marriage Story,” play at the Scotiabank Theatre the festival rents from you. Why did you do that?
Netflix is in the streaming business and if that’s what’s important to them, they shouldn’t be worrying about movie theatres. If they want to be in the movie theatre business, they should be talking to us and also working, like all of our other partners are, and releasing the movies. Netflix today leaves a lot of money on the table because they don’t go into the movie theatres. It’s not about hey, we don’t like Netflix. We want to work with Netflix. It’s a matter of we need rules that have been followed for a long period of time with our partners, and we want to have the same rules. Netflix seems to be releasing their original films in theatres, but only agreeing to very short runs. Do you feel they’ll eventually be pushed to follow the longer runs traditional distributors and studios have?
That’s a decision they have to make and they have to basically look at how they can partner with exhibition, which to me is the future. You signed a deal with sports entertainment company Topgolf Entertainment Group to bring their tech-savvy driving ranges with microchipped golf balls, music and food to Canada. How are preparations going?
We’re quite excited about the concept. The challenge is always getting the right location, the right piece of real estate and having it become part of our entertainment brand right across Canada. It’s really important that we create that experience. The location is very much like the Roundhouses is to the Rec Room. When do you think we might see doors open?
You’re looking at a year and a half from now because it takes a while. You’ve got to build a building. You’ve got a lot of work. It’s not something that you can just lay out and get started. The Montreal theatre chain Cinémas Guzzo (founded by the father of “Dragons’ Den” star Vince Guzzo) has recently been talking about expanding outside Quebec. The chain mentioned last November that it is eyeing Vancouver and Calgary, strong markets for Cineplex. Are you worried?
I know him very well and he’s a good competitor, but he’s pretty much in the province of Quebec and he is not focused in the other parts of Canada, at least not that I know of. That comment was made over a year ago and I haven’t seen other announcements of him going to other parts of Canada.
Cineplex unveiled an Edmonton pilot for a paid tier of the Scene loyalty program last year. How did the pilot do?
It was successful. It was a great test and we continue to look at opportunities for Scene members. Today we have 10.1 million members. It’s an ongoing process that we are looking at as to what is the best experience that we can give our Scene members. We’ve looked at the different tiers, but it’s a little bit tricky because you don’t want to differentiate people when they come to the cinema, but we need to evolve the experience. What do you foresee coming for theatregoers in the year ahead?
We will continue to evolve the experience. We offer you so many different ways to see movies and as long as the content is good, and there’s some great movies for 2020, people will want to see it. It’s a social experience. I always go back to the Raptors championship run, when 35,000 people came to see a half a dozen games in our theatres. They could have stayed home. They didn’t have to come to our theatres, but they wanted that social experience. They wanted to be together and that’s what movies are about. And some movies you just can’t watch on your phone. It’s not the same experience. We are actually one of the cheapest forms of entertainment. Where else are you going to see a $200-million production for less than it costs you to park your car?