Speaking at the Echelon Wealth Partners Digital Media and Technology Conference in Toronto this morning, Cineplex Inc. (TSX:CGX) chief financial officer Gord Nelson and vice president of Communications for Investor Relations Pat Marshall made the case for the continued relevance of the theatrical experience in a new digital media landscape.
Named Canadian CFO of the Year for 2016, Mr. Nelson oversees the finance, purchasing, communications, risk management and business development areas of Cineplex, in addition to overseeing recent acquisition WorldGaming.
Known primarily as a theatrical motion picture circuit operating 136 theatres with 1,454 screens serving about 74 million viewers annually, the theatre circuit is actually one of three pieces of Cineplex’s business, the other two being media in the form of digital signage as well as gaming, aka. eSports.
Nelson told the crowd that Cineplex’s box office revenues are up 23% in 2015.
Partnering with new clients like Dairy Queen and A&W, the media business, which includes both in-theatre media and on-site clients like Tim Horton’s, McDonald’s and RBC, among others, is up 5% in Q1 2016 and up 32% for 2015, despite a very challenging advertising market.
Cineplex Inc. is the parent company for Cineplex Media, Cineplex Digital Solutions, Cineplex Digital Networks, CineplexStore.com and SCENE, Canada’s largest entertainment loyalty program.
2009 began a five-year string of acquisitions for Cineplex, starting with Calgary’s Onsite Media Network Inc., and followed by the July 2010 acquisition of Waterloo’s Digital Display and Communications Inc., and then EK3 Technologies Inc., of London, Ontario, in August 2013.
On the gaming and eSports front, last September Cineplex announced that it would acquire WorldGaming, formerly known as Virgin Gaming, for US$15 million, a move that leveraged Cineplex’s existing touchpoints to engage with a new customer base involved with the world of competitive online gaming, also known as eSports.
In January, Cineplex and WorldGaming entered into an agreement with Sony Computer Entertainment Canada to present the ‘Cineplex WorldGaming Canadian Tournament Presented by PlayStation’ at Cineplex theatres across Canada.
These location-based gaming events seem to affirm that gamers, contrary to reputation, actually enjoy a social environment and the experiencing of playing with others.
For their “League of Legends” event, Cineplex claims a viewership of 34 million.
Cineplex Digital Solutions, the digital signage agency operating under the Cineplex Inc. banner, specializes in digital signage and “experiential” digital displays, installing and developing digital signage for companies across Canada, including banks, shopping malls and public outdoor spaces.
Last October, Cineplex Digital Solutions introduced their Digital Hoarding offering, a plug-and-play digital signage initiative that compels customers to engage with what would normally have been a blank “under construction” barrier in front of vacant retail properties, with a pilot project deployed at the Cadillac Fairview Markville shopping centre in Markham, Ontario.
Using large touch and gesture enabled screens to engage with customers via their mobile device, the Digital Hoarding offering has photo capture capabilities, social media connectivity, participant data capturing, a couponing function and content manipulation technologies, the objective of which is to get customers interested in a retail space’s future by creating a dialogue between the customer and retailers, brands and the shopping centre.
Cineplex has also been rolling out its premium, luxury VIP cinemas across the country, in an effort to lure moviegoers back to the cinema with plush seats, food, liquor and comfort.
While Cineplex derives revenue from food and beverage service and advertising through its VIP theatres and upcoming Rec Room spaces, Nelson makes it clear that VIP is challenging to retrofit into an existing space.
The Rec Room, a dining, amusement gaming and live entertainment experience in a standalone facility with a 40,000-60,000 square-foot footprint, is what Nelson refers to as a “no-risk” entertainment zone, located at the historic John Street Roundhouse in Toronto, at the foot of the CN Tower, nearby Ripley’s Aquarium and the Rogers Centre.
The rationale for developing digital media and eSports aspects of their business, along with novel approaches to their movie chain, is clear enough.
“We don’t want to end up like the newspaper business,” said Cineplex CEO Ellis Jacob to Canadian Business, who named him “Most Innovative CEO” of 2013. “We want to continue to thrive despite the challenges ahead. It’s a business not directly dependent on movies, but it allows us to use our infrastructure to innovate. Even though we’re a large company with more than $1 billion in sales, we still see ourselves as entrepreneurial.”