Lily Kholar's blog : Cineplex slices through Q3 losses as Box Office rebound pulls profit
While we’ve seen predominantly lackluster
results from the financial earnings reports of streaming services, the news on
the box office front has been considerably better. Cineplex reports both
boosted attendance and debt-cutting income from Q3. We turned to entertainment lawyer and industry authority, Blake & Wang P.A’s Brandon Blake for the
details.
Building Box Office Momentum
Cineplex reports boosted attendance (430%, or
8.3M patrons) through Q3, and although it’s not quite back to pre-pandemic
levels, its third-quarter loss has shrunk notably as Canadians vote with their
feet to embrace Hollywood blockbusters once again.
That net loss has dropped by 72% from $121.2M in
2020 to $33.6M as the pandemic-era restrictions become a thing of the past.
Overall revenue came in at $250.4M, against $61M the previous year.
The box office momentum that’s been built by a
string of successful tentpoles is widely predicted to continue into 2022, at
least provided we see no surprises from the virus itself and Hollywood
pipelines continue in a strong vein. This leaves Cineplex hopeful that this
positive growth trend will continue, perhaps even carrying them into the black
in the next quarter or two.
Echoing domestic trends
This willingness of patrons to return to the theaters
echoes the rally we’ve seen across the US, with a similar demographic pattern
emerging as well. First to venture back into theaters has been younger
demographics, with older theater-goers still a little concerned about remaining
virus risk. Yet the latest Bond installment, No Time to Die, proved
enough to kick off an older market appeal, and cinema chains are optimistic
that momentum can be built on with time, especially with both House of Gucci
and the remake of West Side Story appealing to older viewers.
Now that many areas are voting to allow children
to receive the vaccine, we should also see the re-entry of families to the
theatrical sphere, just in time for the family-friendly festive fare, too.
Provided Hollywood can keep up with enticing content for a range of
demographics, that is.
Much of the last quarter
growth was powered up by must-see pictures like Shang-Chi and The Legend of
The Ten Rings and Free Guy opting to return to a
theatrical-exclusive window, albeit truncated to 45-days. Yet many of the major
studios are still noticeably reluctant to commit to theatrical exclusive
windows once again, despite the recovery. Perhaps it’s simply a reluctance to
lose control of the sweet (and unshared) revenue simultaneous streaming brings
them.
This overall positive
quarterly earnings report also saw Cineplex post positive quarterly adjusted
EBITDA over all segments of the business for the first time post-pandemic, with
the average monthly cash loss dropped to $2.9M, from $24M in Q2. Where to from here?
It’s a little too early to tell, but Cineplex itself has reason to celebrate a
remarkable recovery, that’s for sure. All in all, we will be watching further
theatrical developments with interest as they progress.
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