Cineplex management is doubling its efforts in the arcade sector. The company seeks to increase its revenues amid an uncertain return of audiences to cinemas
Box office revenue for 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 overall industry North American markets 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 the Playdium, The Rec Room and Junxion chains, 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, Mr. 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.
A “good avenue” for growth
Such an expansion could double the adjusted annual profit from these entertainment sites to around $75 million, Mr. 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.
LBE segment revenue 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.
International experiences and films
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, such as Warning 2one of the many Punjabi hits of the quarter.
But the biggest attraction for the public was Dune: part twofollowed by Kung Fu Panda 4leading to a 0.5% increase in cinema attendance.
For the quarter ended March 31, Cineplex’s revenue totaled $294.8 million, up from $291.4 million for the same period last year.
Per customer, box office revenue increased to $12.74 from $12.63 a year earlier, while concession revenue per customer averaged $8.95, up from $8. $.85 last year.