Arcade game business drives Cineplex profit

Entertainment centres offset flat box-office returns

The head of Cineplex Inc. is doubling down on arcades as he looks to top up revenues amid the unsteady return of audiences to theatres.

Box office revenue at the country’s largest cinema owner rose one per cent year-over-year to $125.1 million in its latest quarter, even as industry-wide North American box office sales dropped by more than five per cent.

CEO Ellis Jacob has targeted “location-based entertainment” (LBE) — on-site experiences such as arcades and virtual reality attractions as well as old-fashioned bowling and restaurant options — as a way to diversify the company’s income stream.

Cineplex runs 13 such venues across the country via chains such as Playdium, The Rec Room and Junxion, with three more slated to launch in the fourth quarter. A Playdium arcade centre will open at Toronto’s Fairview Mall adjacent to a Cineplex location, and two new

Rec Rooms will take root in downtown Vancouver and Montreal’s Royalmount mega-mall complex, Jacob said.

“Given the success of our LBE business, we believe there is an opportunity to grow to 30 locations across Canada,” he told analysts on a conference call Thursday.

Such an expansion could double annual adjusted earnings from location-based entertainment to about $75 million, Jacob said.

“We have good runway to further grow in a highly accretive, highmargin business and strengthen our position as a leading entertainment destination for Canadians.”

The company’s investment in arcades and other entertainment options comes despite its recent sale of arcade game distributor Player One Amusement Group.

Cineplex recorded a $67.3 million gain on the deal, swinging its profit to $5.2 million for the first quarter compared with a loss of $30.2 million in the first three months of 2023.

‘‘ Given the success of our LBE (games) business, we believe there is an opportunity to grow to 30 locations across Canada.

ELLIS JACOB CINEPLEX CEO