Canada’s largest entertainment and media company suffered a $3.3 million decrease in box office sales during the first three months of its most recent fiscal year compared with the same period last year. The figures are contained in Cineplex’s 2017 first quarter report.
According to the statement, Cineplex gained $195.4 M through box office in the first three months in its fiscal year. There is a 1.7 per cent decrease from $198.6 M in 2016.
Cineplex considers that the decrease is due to films. On the statement of Management’s Discussion and Analysis, Cineplex says because of “a weak film slate,” its attendance decreased 4.8 per cent from 20.6 M in 2016 to 19.6 M in the first quarter of 2017.
Cineplex by mckied on TradingView.com
Cineplex’s stock prices have been decreasing.
Cineplex used the same reason to explain the significant increase in 2016. When box office in the first quarter increase 23.5 per cent from $156.0 M in 2015, Cineplex contributed that change to “an all-time quarterly attendance.”
James Power, a business professor at Dalhousie University, thinks this phenomenon is normal in theatre industry. “The change from 2015 to 2016 was because of some all-time high attendance in 2016. And yet in 2017, that continuation of increased attendance didn’t continue, it dropped a bit in 2017. So probably 2016 was an exceptional year,” Power says.
Despite the lower lower box-office sales, Cineplex gained revenue in other areas, which means that, overall, the company still had a 4.0 per cent increase in revenue: $394.2 M in 2017 compared to $378.9 M in 2016.
Cineplex’s first quarter amusement revenues in 2017 are $41.4 M, an increase of 37.2 per cent over the prior year period. The majority of the significant increase is from Tricorp and SAW, which were acquired in the fourth quarter of 2016. Tricorp is a provider of interactive video and amusement game services in the United States. And SAW is a provider of coin-operated rides.
“What companies are always looking for is, as far as I know, a new source of revenue. They are always looking something new that will allow them to get new sources of revenues,” Power says. “Because of revenue patterns, companies can’t always grow so much.”
Power also points out Cineplex’s food service revenues have an “interesting increase” from $33.1 M in 2016 to $ 33.9 M in 2017. “It goes against what you would expect, because the box office revenue is decreased. That means Cineplex might increase their selling prices. And on the other hand, the cost of selling might decrease.”
Cineplex doesn’t reply to its food services revenue yet.