ENTERTAINMENT
Cineplex's 3-D push proves profitable
GRANT ROBERTSON
May 9, 2009
North American box offices are raking in more cash these days in spite of an economic downturn, but it's Canadian moviegoers who are driving the biggest increase in ticket sales - particularly at 3-D theatres.
So far this year, box office returns across North America are up a recession-defying 15 per cent, but in Canada that number is higher, tracking 17 per cent ahead of last year.
Ellis Jacob, chief executive officer of Canada's largest movie exhibitor, Cineplex Galaxy Income Fund CGX.UN-T, told analysts yesterday that the company is seeing its 3-D theatres sell as many as four times the tickets as its regular theatres.
Of particular surprise is that moviegoers have been willing to pay an extra few dollars per ticket to see a movie using the updated 3-D technology that Cineplex has been installing at many locations.
"We were actually very surprised at the strength and resilience of 3-D, given that our premium was $3 a ticket. We had very little resistance from the perspective of the consumer," Mr. Jacob told analysts on a conference call yesterday, noting the strong performance of the 3-D film Monsters vs. Aliens.
"You are going to see this continuing to help our revenue and bottom line. ... I think 3-D is here to stay, and it's basically what I would call a major game changer for our business going forward."
The company reported a 9-per-cent increase in attendance for the first quarter, totalling 16 million tickets, which was fuelled by new theatres opening across Canada. Revenue rose 11 per cent to $211-million, while Cineplex swung to a $3.7-million profit, after reporting a $2.3-million loss a year ago.
Other trends helped the increased box office numbers, including a heavier slate of films, concerts and opera showings aimed at adults between January and March, which led to more tickets being sold at higher prices. The average box office return per customer climbed to $8.16 from $7.98 in the quarter.
However, 3-D was the biggest force behind that growth. Analyst Ben Mogil of Thomas Weisel Partners told clients in a research note that 3-D contributed 78 per cent of the growth in average ticket price.
Cineplex has been installing 3-D theatres across the country and will have 122 of them operating by the end of this month, among the most of any exhibitor in North America. The newer 3-D theatres use plastic glasses that moviegoers pick up on the way into the theatre and deposit on their way out, rather than the old red and blue cardboard glasses the technology is known for.
Mr. Jacob said the third quarter, from July to the end of September, could be referred to as a "3-D quarter." That period will see the release of several popular titles, including Ice Age 3 and Final Destination: Death Trip
