Cineplex, Popcorn Prices and Surviving Covid

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Bringing a friend to the theatre in Canada is expensive; assuming we both get food and buy

premium tickets, the price comes out to nearly a hundred dollars. A hundred dollars for a two

hour experience? That’s ridiculous! That same amount of money can buy access to unlimited

content on a streaming service like Netflix for an entire year.

Full disclosure: I’m a Canadian content creator and, more recently, a Cineplex shareholder- so I guess it’s fair to say I’ve got a bit of skin in the game here. Obvious biases aside however, my main reason for wanting the theatre industry to thrive in a post-Covid era is on a much more personal level; more than a shareholder or even a content creator, I am first and foremost a lover of the movie theatre experience. Before the onset of Covid-19, theatres were already in decline- left behind in the wake of companies like Apple, Amazon, and Disney who have all jumped onto the SVOD (Subscription Video On Demand) bandwagon.

If Cineplex and other theatres want to survive in a post-Covid era, I recommend it make a few strategic changes:

1. Increase Value Offering and Stabilize Revenues.

To accomplish this, Cineplex could implement a $29.99/month subscription service which allows movie goers unlimited access to theatres and an online streaming service. To optimize uptake of subscription service, Cineplex should make the first month cheaper than the cost of an individual movie ticket. Who wouldn’t want to get a month of unlimited theatre access PLUS an at-home streaming service all for less money than a single ticket?

For this, Cineplex would have to negotiate with content providers on a royalty basis to reflect

their new business model; the upside here is that Cineplex could export a streaming-only

service to global subscribers, thus expanding their potential clients. It could do all this while

maintaining their current business model of individual ticket sales.

If 12.9% of Canadians subscribed to this service at a $29.99 price point, Cineplex would receive more than 1.7B CAD in revenue, surpassing their total 2019 revenue. It’s also very likely that people would visit theatres more often if they were on an unlimited subscription service, thus increasing concession sales simultaneously.

2. Create a Pipeline of Original Content.

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Being a Canadian company, Cineplex could invest in Canadian content creators and use

Canada’s wealth of talent and preferable tax breaks to reduce the cost of production. This could be an essential part of a government-backed bailout, where Cineplex would invest in Canadian production companies and purchase a pipeline of content. By producing their own content, Cineplex would no longer be at the mercy of larger studios and streaming services, ones that may opt for streaming first releases and mitigating their theatrical premieres altogether. By producing their own content, Cineplex would be creating a potentially new revenue stream, selling and licensing their content to other distributors and streamers around the world. In terms of the actual content it should produce, my recommendation for the time being would be animated movies, as they can be produced remotely in the event of another global pandemic, and can leverage new animated fantasy universes into episodic sagas for their streaming and licensing expansion.

3. The Theatre Experience Must Increase in Value.

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Obviously the big screen and sound experience of a movie theatre is better than even the most luxurious home theatres, but if my couch and home food options are any better, then leaving the comfort of my house is going to be a stretch. Not only would I spend more money at the theatre, but there is also travel time and the cost of transport to consider, not to mention the fear of contracting Covid-19. Offering couples different seating options such as larger lounge couches will play a great part in both increasing guests’ comfort and facilitating social distancing. Food that is not only fresh but also healthy will go a long way in giving customers the restaurant experience that Cineplex has already been gravitating towards. This is not to say that theatres should abolish the popcorn and chairs altogether, but could at least work towards phasing out old seating and giving us a newer seating and couch set up.

Oma Cinema recently revealed a new theatre layout which includes an elaborate booth system. The booths both facilitate social distancing and further immerse the audience, this could be something worth exploring as well. The bottom line is that theatres must be able to provide a better experience than what we can get at home.

If Cineplex can use this Covid-19 era as an opportunity to rework their business model, then a Cineworld takeover still may be in the cards. Perhaps a coordinated Canadian and UK

government backed bailout could put these theatre giants on steady ground again. After all, it’s not just movie theatres that are at stake here, but the very creative spirit that drives them.