Category Archives: ReportingMethods2022_3

Cineplex looks to bring back customers with new experiences – but experts aren’t so optimistic

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With pandemic restrictions lifting in Canada, Cineplex Inc. – decimated by two years of lockdowns and financial losses, is looking ahead to change the way customers interact with the movies.

VIP sections, alcohol services, arcades and cushioned recliners are all part of their strategy to bring back these customers who are growing accustomed to streaming from the comfort of their homes.

“Cineplex has implemented in-theatre initiatives to improve the overall entertainment experience, including increased premium offerings, enhanced in-theatre services, alternative pricing strategies,” said Cineplex’s Q3 management, discussion and analysis report.

“The ultimate goal of these in-theatre customer service initiatives is to maximize revenue per patron and increase the frequency of movie-going at Cineplex’s theatres.”

While the company looks to change the theatre experience, one expert is not convinced the company’s initiative will prevent further losses.

“The overall number of tickets sold, and tickets per person, in the U.S. and Canada have been falling for a couple decades,” said Gene Del Vecchio, an adjunct professor at the University of Southern California and an expert in the entertainment industry.

“Even before the pandemic, theaters had been trying to entice audiences back into movie theaters with better seating, enhanced sound and picture quality, upgraded food and beverage, loyalty programs, and showing live performances of operas. But that mostly served to raise movie theater costs which led to lower profits.”

Del Vecchio says that streaming platforms owned by large studios, notably Disney+, have cut into the profits of movie theatres.

The move to renew the theatre experience comes after the most difficult years for Cineplex to date because of the pandemic and a costly lawsuit against Cineworld Group.

While the Ontario Superior Court of Justice ruled in favour of Cineplex, the ruling is being appealed and resulted in an additional loss of $11.4 million in 2021 because of litigation expenses.

According to Cineplex’s Q3 financial statements, the company had a net loss of $624 million in 2020. This represented a loss of 149.2 per cent of total sales.

The company recovered in 2021 but was still underwater with a projected loss of $248.7 million – attributed to continued shutdowns because of the Omicron variant.

The company has been receiving the Canada Emergency Wage Subsidy (CEWS) since the pandemic began, reducing its payroll costs by $3.1 million in 2020.

Some promising figures for Cineplex have been found through the success of films such as Marvel’s Spider-Man: No-Way Home, which despite COVID-19 lockdowns was the second highest-grossing opening weekend of all time, earning $735.9 million in North America and $1.7 billion globally.

Cineplex did not respond in time for comment but said in a press release it is optimistic that easing restrictions will allow the company to recover this year.


“We know the industry is recovering and our guests are coming back to our theatres and entertainment venues,” said Ellis Jacob, president and CEO of Cineplex Inc.

“Our team has proven that we can safely operate during the pandemic, and we have laid the groundwork to take us through the recovery period and beyond.”

Not everyone is as optimistic.

Shareholders have not regained their confidence in Cineplex’s growth, with the company’s stock price remaining stagnant since its deep dive in March 2020.

The pandemic only added to the underlying uncertainty faced by the industry with the popularity of streaming platforms, which cut into their profits during the last two years of lockdowns.

“I suspect that in the next few years we will see the movie theater business contract. There will be fewer companies, fewer locations, and they will be reserved primarily for the biggest blockbusters that are worth seeing in theaters,” said Del Vecchio.

“What can theaters do? Not much.”