(Photo: The Canadian Press)
Cineplex management is doubling its efforts in the arcade sector as the company seeks to increase revenue amid an unsteady return of audiences to movie theaters.
Box office revenue at Canada’s largest theater owner rose 1% year over year to $125.1 million in the latest quarter, even as box office sales for the whole of the North American industry fell by more than 5%.
To diversify the company’s revenue streams, President and CEO Ellis Jacob has targeted “location-based entertainment” (LBE) as a means, i.e. sites offering, for example, arcades and virtual reality attractions as well as dining and bowling options.
Cineplex operates 13 such theaters across the country through chains including Playdium, The Rec Room and Junxion, with three more expected to launch in the fourth quarter. A Playdium arcade center will open at Toronto’s Fairview Mall, next to a Cineplex location, and two new arcades will take root in downtown Vancouver and at the Royalmount shopping megacomplex in Montreal, said Ellis Jacob .
“Given the success of our LBE business, we believe there is an opportunity to grow to 30 locations across Canada,” he told analysts during a conference call Thursday.
Such an expansion could double the adjusted annual profit of location-based entertainment to around $75 million, Ellis Jacob said.
“We have a strong runway to continue our growth in a highly accretive, high-margin business and strengthen our position as a leading entertainment destination for Canadians,” he said.
The company’s investment in arcades and other entertainment options comes despite the recent sale of arcade game distributor Player One Amusement Group.
Cineplex recorded a gain of $67.3 million on the transaction, bringing its profit to $5.2 million for the first quarter, compared to a loss of $30.2 million in the first three months of 2023.
Revenue from the location-based entertainment segment actually fell nearly 2% year over year to $34.5 million last quarter, but executives attributed that figure to bad weather earlier in the year that forced some locations to temporarily close.
Box office, which remains Cineplex’s main Source of revenue, has relied more on “premium experiences” and international films this year.
About 42% of box office sales came from IMAX and VIP screens, the company said. Another 13% came from foreign language films like “Warning 2,” one of the quarter’s many Punjabi hits.
But the biggest draw for audiences was “Dune: Part Two,” followed by “Kung Fu Panda 4,” leading to a 0.5 percent increase in movie theater attendance.
“Dune” director Denis Villeneuve organized a media tour in Quebec in February for the Canadian premiere of the film’s sequel.
“The theater where he did it — the Scotiabank in downtown Montreal with the IMAX experience — the first weekend the film came out, that theater was the most profitable in North America,” he said. emphasized Ellis Jacob.
The windfall is welcome as Cineplex seeks to repay long-term debt of $731.5 million, a 15% drop from the previous year, thanks in part to the sale of the arcade game distributor.
Revenue for the quarter ended March 31 totaled $294.8 million, up from $291.4 million for the same period last year.
Box office revenue per customer increased to $12.74, from $12.63 a year earlier, while concession revenue per customer averaged $8.95, up from $8.85.
