Cineplex is digging itself out from the pandemic ashes

The entertainment brand is trying to bounce back as consumers return to cinematic and live experiences.

Cineplex
By Will Novosedlik

With COVID restrictions easing, studios are releasing films again in theatres. This summer, highly-anticipated titles such as Minions: The Rise of Gru and Top Gun: Maverick finally made it to the big screen. Both were originally set to be released well over a year ago.

That is a welcome relief for Cineplex, though the theatre chain still has a pandemic-size hole to dig itself out of. In 2020, total revenues were 74.9% lower than the year prior due to the closure of its theatres and other entertainment venues, like the Rec Room arcades. Things improved slightly in 2021, thanks to some brief reopenings and business pivots, but revenues were still roughly 39% of what they had been pre-pandemic.

But the company is feeling optimistic about recovery. In the first six months of 2022, the company earned $578 million in total revenue, nearly surpassing its earnings for all of 2021 and putting it on pace to hit 70% of its pre-pandemic revenue – though that doesn’t include some of this summer’s big blockbusters, and does include some closures and visitor hesitancy that lingered for the first few months of the year.

It also doesn’t account for a lighter Hollywood slate than usual for the rest of the year, thanks to after-effects of pandemic production delays, as well as an increasing number of what would be audience draws getting sent straight to the likes of Disney+ and Netflix.

But those are hurdles Cineplex feels it now has the momentum to clear (and isn’t burning through cash). So strategy spoke with CMO Sara Moore to get a more detailed look at how things are developing on the road to recovery and the big opportunities it sees to invite people along for the ride.

How is the current quarter trending in terms of audiences coming back?

When we look at our attendance, because of the volatility right now, we’re benchmarking to 2019. It was the last time we were open everywhere.

In April, we had about 56% of the 2019 audience and that went up to 72% in May and 89% in June. So that’s about 20% of our audience every month coming back for the first time. And that continued into July, when we had about 85% of the 2019 audience. That’s leading to record-breaking concession numbers. People are really indulging themselves in the experience of returning to the cinema. There is growth in premium formats as well, with about 42% of our audience coming to VIP or AVX or Screen X.

What are your biggest growth opportunities?

I think there are still people that we can identify and bring back through the Scene+ program. We have an opportunity to target those people who haven’t been back, find out what movies they want to see and what format they love to see them in. We can talk one-to-one with them. We will continue to do that through programs like CineClub, where we have the opportunity to really drive the number of visits per person. And we are seeing better-than-forecast results in terms of people who are joining, number of visits and size of spend.

From a marketing perspective, how are you going to drive attendance and increase frequency?

A lot of it is underpinned by the great data that we have. Having started the Scene program with Scotiabank many years ago, and seeing it turbocharged over the last year with Scotia Rewards coming into it, the wealth of data and the wealth of movie lovers within that is an exceptional marketing tool for us. We leverage new digital channels to get to customers at the right time and understand what they want. We’re going to continue to do that.

We’ve also been able to introduce international titles, a lot of Bollywood, and from China. With some of those titles, we are capturing almost 70% of the North American box office. It’s about understanding content, understanding what’s available, understanding our audience, then bringing it in, marketing it to the right people and putting it in the right theatres.

There are many more streaming services than there were two years ago. How is this affecting your recovery and how are you responding to the threat?

We have a great digital cinematic product of our own called the Cineplex Store. With that, we offered great at-home viewing before and throughout the pandemic. As the biggest entertainment provider in Canada, we want to be able to provide multiple ways for people to enjoy our titles, whether at home or in one of our theatres (Ed. note: Cineplex Store subscriptions increased by 10% to 2.2 million members in Q2).

Does that mean that any title that you have in the theatre, customers can access at home?

Not at the same time, but yes. For instance, you can go to the Cineplex Store now and see Top Gun: Maverick. But we also have a catalog of 10,000 titles. We have a great on-demand service. If there’s that one movie that you can’t find anywhere, you can very likely find it in the Cineplex Store. This year, we also curated selections of films to celebrate Pride Month, and partnered with ImagiNATIVE to curate Indigenous screen content.

How about your amusement solutions and location-based entertainment: what are you seeing there?

Our second quarter results show that they also had a record-setting quarter for EBITDA. Delivering on that vision of a strong and diversified business is of incredible importance to us. We’ve always had great gaming and great food and great content in our movie theatres. We have found a new and unique way of delivering in these fantastic new formats. Rec Room is this fantastic adult playground, and coming out of the pandemic, people want to experience things together. From karaoke to drag brunch, to K-pop bands, to trivia leagues and bowling leagues, we are booking hundreds and hundreds of live events in our Rec Room every year.