I am full of admiration for the management team at Cinexplex Galaxy Income Fund.
Background: Ten years ago I invested in a home theatre. Times were good, I had some spare dollars to burn, and I’ve always been a fan of the movies. But I really didn’t like the boxy little multiplex movie theatres of the day. So I built a 61 inch rear projection HDTV and sound system into the walls and ceiling of a specially constructed room in our home, and we’ve been enjoying it ever since. In fact, we largely stopped going to movie theatres because we preferred the home experience – better quality sound, a nice big picture, and the ability to pause the movie any time you needed a break.
In the last year, however, I’ve spent more money at movie theatres, specifically Cineplex theatres, than I have in years. There are three reasons:
- Events. Cineplex has realized that they can use their venues for more than just movies. For example, if you were unable to make it to Vancouver for the Olympics, Cineplex offered a 12 day Olympic pass to let you see the games on the big screen. In our case, Janice and I are opera and theatre fans. We’ve seen shows broadcast Live from the Met, and from Stratford’s Shakespeare Festival at Cineplex theatres in the last 12 months. At between $20 and $25 per ticket, the prices are a fraction of the cost of the live event, and arguably the experience might even be a little better. These shows are popular, they sell out every time, and they bring Cineplex double or more the ticket price of a regular movie.
- UltraAVX. A new category of cinema, the Cinexplex UltraAVX delivers massive screens, incredible sound, comfortable reclining seats with extra legroom, and allows you to reserve your seat in advance. Over the weekend, we took in Harry Potter and the Deathly Hallows at one of these new venues. It’s as if you had taken the old-fashioned theatres of my childhood and updated them with today’s technology. Immersive, spectacular, and worth every penny of the $3.00 premium Cineplex charges for an UltraAVX movie. UltraAVX brings the magic back to the movie-going experience.
- Online Rentals and Sales. Cineplex is using its brand to go head to head with Apple and Amazon. For between $3 and $5 you can rent a movie, or for $20 and up, you can buy the movie. Download it immediately. Or, if you prefer, have a disc shipped to you. Rather than fight the trend to watch at home, Cineplex is embracing it.
The company continues to experiment. A classic cinema series in the fall allowed patrons to buy a pass to see classics like Casablance on the big screen. In the new year, a “Digital Film Festival” will air in theatres across the country. And of course, 3D films, led by Avatar, have been a huge money maker for them.
What this all adds up to is increased attendance, new revenues, and the highest profits in Cinexplex’ history. It’s a textbook example of paying attention to your customers’ needs, and then changing your business to align with them.
And, frankly, it’s refreshing to see this kind of innovation happening in the entertainment industry. So often the stories told are of an industry in decline, fearful of new technology, and shell shocked by the impact of digital media. Management at Cineplex have apparently decided to embrace the future and that the story of decline won’t be the Cineplex story.
- Cineplex to unveil movie download service (theglobeandmail.com)