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BoxOffice Interview: Ellis Jacob, CEO and President, Cineplex Entertainment on June 14, 2014

_P7A7038.jpgBy Daniel Loria

Canadian exhibitor Cineplex has been at the forefront of many of today's biggest innovations of the exhibition world. Ellis Jacob, CEO and president of leading Canadian exhibitor Cineplex, has been a fixture in the industry since joining the company in the late 1980s. BoxOffice spoke to Ellis Jacob ahead of ShowCanada to get his insights into the Canadian market, the importance of innovation, and the changing landscape of today's exhibition business.

Over the past few years, Cineplex has grown its market share in Canada to a spectacular 77 percent. What have been the drivers of this growth?

One of the things we as an organization have done is focused on trying to increase the incidence of people coming to the movies and increasing our attendance. The way we've done that is by focusing on the premium offerings that we have. If you compare us to the U.S. circuits, we derive a significant part of our revenue from these premium experiences.

If you look at the regular ticket price, a film in 2D at Cineplex today costs less than it did ten years ago. So our big focus has been on 3D, VIP, UltraAVX, IMAX, and all those different alternative ways of viewing. This weekend, when The Amazing Spider-Man 2 came out, we got over 70 percent of our revenue from premium offerings compared to 40 percent in the U.S. On an annualized basis, we ended 2013 with almost 40 percent of our box revenue coming from these premium offerings as compared to 3 percent six years ago.

What are the key differences you see between the U.S. market and the Canadian market?

The U.S. market has really been driven by increased box office pricing, and we've really focused more on giving the guest a better and broader experience and charging them only an increased price when the experience is different. We really haven't changed from our base ticket prices, whereas we charge a premium if you go to a 3D or VIP screening. There needs to be value for the price change.

In terms of our concession offering, we have always focused on total revenue per person, and our U.S. peers seemed to focus on gross margin and keeping that number as low as possible. As a result, their concession offerings tended to be core-soft drinks, popcorn, hot dogs, nachos, and select candy. At Cineplex, our approach is more akin to a food court offering, with numerous retail branded outlets offering everything from chicken tenders, burgers, and pizza to frozen yogurt, Tim Hortons doughnuts and coffee in addition to a wide range of candy and beverages. This way we earn more from each person even though our margins are a little lower.

Cineplex brought us the SuperTicket, a concept that has begun gaining traction in the United States. Could you tell us a bit about its results?

We started with Pacific Rim last summer with Warner Bros. and have done several films since then. We've seen continued improvement on the uptake on the SuperTicket. I think it will become more relevant as more and more studios start doing it, so the consumer knows that this is an offering they can avail themselves. I think it's a fantastic model where individuals can watch the movie at the cinema and also get a digital download. As you can see, other circuits have started doing it as well. One of the advantages for us is when the SuperTicket is purchased, you are actually depositing the SuperTicket in the Cineplex Locker, which we've created compared to other circuits where they need to use a third party service for their download.

We also have a digital rental program that we launched, "$2.50 Tuesdays," that allows people to match up what we do at the cinemas by being able to rent a movie for $2.50. It's all about innovating so the guest can think of Cineplex as the place to go when you think about movies.

Has the SuperTicket been a successful vehicle to drive your VOD efforts?

We have the SCENE loyalty program where we now have 5.6 million members. So one out of seven Canadians are members in our loyalty program. That gives us phenomenal data that allows us to communicate with them for things like the SuperTicket and VOD. What we know now are consumer habits, and we can basically link up with that particular guest for that movie or for another movie that's coming out. And it also allows us to sell them library titles that other exhibitors can't. There's a lot of runway in this business and it's a business that I think complements our existing services. It's a new business for us, and I see it becoming a "bricks-and-clicks" business in the long-term.

EJ-Cineplex.pngYou decided to go with your own in-house online ticketing service, where customers can buy a ticket to see a film at one of your theaters-or at any of your competitor's locations. How did you decide on this strategy?

We started with our own online ticketing many years ago. We were trying to create a destination where Canadians could find tickets by just going to our website. We have a geo-targeted app that will tell you the closest theater [for the film], whether it is a Cineplex theater or not. Fortunately, most of them are Cineplex.

Today we have more than 9 million people who have downloaded our app; 25 percent of Canada's population has our app, and we are now the ninth most popular mobile app in the country.

At the end of the day, we wanted it to be seamless for our guests so that whenever Canadians thought about movies, they'd go to the Cineplex app or website. That was the whole reason driving the decision [to open ticketing to third parties]. We don't really see ourselves as being competitive with other chains, we see ourselves as competitive with what you're going to do with your entertainment time and dollars.

Cineplex is more than a theater brand, it is now an entertainment brand that offers a holistic media approach with Cineplex Media. What are the trends you are envisioning to develop advertising opportunities around your brand?

The media business has grown for us quite significantly. There are a lot of links between the magazine, our website, and the loyalty program. There is a lot we can do together when an agency comes to us in order to create a fully integrated advertising campaign. You've got a lot of additional opportunities with the mobile app, digital signage, TimePlay-which is another innovation where we include interactivity as part of a movie's pre-show-and we've got ShowTime advertising, lobby advertising, and marketing partnerships with different Canadian retailers.

We just signed an agreement with 2,200 Tim Hortons locations to add Tim's TV, and we'll be providing them with the installation, content, and advertising for those locations. The media business goes well beyond the theater itself, so we can now do campaigns with many tentacles that go into several different areas reaching Canadians from coast to coast.

Our industry is about a best-in-class consumer experience. What are your priorities to enhance this experience? Where do you see the future of the exhibition industry heading?

From an industry perspective, I think you'll continue to see advancement in both the delivery of film, higher film rates, better sound systems, laser technology, and more experiments with 4D. In addition to that, at Cineplex we continue to focus on giving the guest the best experience. I've been to a lot of countries and a lot of cinemas around the world, and I would say that at Cineplex we give our customers one of the best experiences and a great value proposition. At the end of the day, its all about making sure that the audience comes back to the theater to continue to indulge in the movie experience.

A lot of the times when we do alternative content programming like the Met Opera, it brings back guests to our theaters who probably hadn't been for many, many years. They enjoy the experience and they start coming back to see movies as well.

What are your thoughts on the "hot-button" topics affecting our industry today: piracy and release windows?

We had a huge issue with piracy in Canada. We worked with the government and studios and now we have some of the toughest antipiracy laws in place. It's now a criminal offense to steal a movie from a theater, and you can end up in jail over it, which wasn't the case prior to 2007.

At Cineplex, we take piracy very seriously and have spent hundreds of thousands of dollars over the years adding security measures to deter theft. We have a zero-tolerance policy for it, and we have trained our theater teams on how to handle these situations. They deserve the praise for their work on the front lines dealing with the issue.

From the perspective of windows, I think it's really important both for the studios and ourselves, as it could have a major impact on both of our businesses if the windows were to continue to shrink as they have in the last number of years. It has kept close to a steady four-month period-there are exceptions, but on average it has been around that time frame. We look at it as an important window to maintain, but we also know we have other windows like VOD where we can continue to innovate.

 

 

 

NORTH AMERICA: 'The Fault in Our Stars' Shines with $65.98M in First Week on June 13, 2014

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By Daniel Garris

Fox's The Fault in Our Stars grossed $3.71 million on Thursday to lead the daily box office one last time. The low-budget drama starring Shailene Woodley was down 11 percent from Wednesday's performance. With both Sony's 22 Jump Street and Fox's How to Train Your Dragon 2 entering the marketplace on Thursday evening, wide releases experienced significant daily percentage declines in general yesterday. The Fault in Our Stars was the week's top film with a seven-day start of $65.98 million. That was on the very high end of pre-release expectations, though the film was especially front-loaded towards its $26.06 million opening day performance.

Maleficent held steady in a very close second place with $3.59 million. Disney's 3D fantasy film starring Angelina Jolie trailed The Fault in Our Stars by just $111,534 for the day. Maleficent was down 10 percent from Wednesday and down a healthy 33 percent from last Thursday. The film placed in second for the week with a weekly take of $50.67 million. That was down an encouraging 46 percent from the film's opening week performance and brings the film's two-week total to $144.52 million. Maleficent is currently running 33 percent ahead of the $108.79 million two-week take of 2012's Snow White and the Huntsman.

Warner's Edge of Tomorrow took in $2.29 million to remain in third place. The critically acclaimed 3D sci-fi film starring Tom Cruise and Emily Blunt was down a sharp 17 percent from Wednesday, as it clearly took a hit from both the launch of 22 Jump Street and Game 4 of the NBA Finals. Edge of Tomorrow surpassed the $40 million mark yesterday and placed in third for the week with a seven-day start of $40.47 million. While that is in line with pre-release expectations, the film is having an underwhelming domestic performance when considering its expensive price tag. Edge of Tomorrow is currently running 14 percent behind the $47.29 million seven-day take of last year's Oblivion.

X-Men: Days of Future Past grossed $1.39 million to continue to claim fourth. Fox's critically acclaimed 3D superhero sequel fell 19 percent from Wednesday and 47 percent from last Thursday. X-Men: Days of Future Past placed in fourth for the week with $22.04 million. That was down 51 percent from the previous frame and brings the film's three-week total to $196.44 million. X-Men: Days of Future Past is set to surpass the $200 million domestic mark over the weekend.

NCM Takes Center Stage: Interview with National CineMedia CEO Kurt Hall on June 12, 2014

khall.pngBy Phil Contrino

On May 5, the cinema advertising landscape changed in a significant way. That was the day National CinemaMedia announced that it entered into a definitive merger agreement with Screenvision for $375 million of cash and stock on a debt-free, cash-free basis. According to NCM, this merger "creates a video advertising network that will cover nearly all 210 Designated Market Areas® across all 50 states and deliver to approximately 3,900 theaters with over 34,000 screens, reaching over 1.1 billion annual patrons."

BoxOffice caught up with National CineMedia Chairman and CEO Kurt Hall to discuss this groundbreaking merger.

What will this merger mean for exhibitors who are currently using pre-show content from Screenvision?

There are some things that we're going to be investing in that have a direct and indirect impact on the circuits. First of all, right now Screenvision's network delivers advertising and programming to theaters via four different ways: satellite, broadband, thumb drives, and there's a few theaters that are delivered on 35-millimeter film. One of the first things we're going to do is get all of those screens onto our network as best we can. Some circuits may have technology in certain theaters that will make that more difficult, but we're starting to explore that now. The idea is that when we're done with the integration, we'll have a network that looks more like ours currently does. Our network is 100 percent digital projection and 80 percent digital cinema right now, and that number will continue to go up as people deploy digital cinema or we decide to take the LCD projector out and use a digital cinema projector. Ninety-seven percent of our attendance is delivered via a satellite or broadband network, and Screenvision's percent is much lower than that. For a theater circuit to work with an organization that can deliver via a network as opposed to a disc drive means they have a better product, because it's easier to buy for advertisers. And, hopefully, now that it's easier to buy, companies will buy more of it and at a higher price point. Because of the revenue-sharing deal that's in place with circuits, that means exhibitors will make more money. The ability of the combined company to deploy technology more rapidly is a huge advantage.

In order to create our First Look pre-show, we spend millions of dollars a year, and we have 70 to 80 people who produce around 50 to 60 versions each month. There's a big difference between G, PG, PG-13, and R versions, and then there are many different versions based on circuit and interstitials. We also change out the pre-show content every two weeks.

Are ad sales going to be more dynamic?

We can target all the way down to an individual theater now. That'll be important. The ability to target individual audiences better will make the product better. Right now we have four basic pre-shows, and we target audiences based on G, PG, PG-13, and R-rated films. We also have the ability within those groups to say, "OK, we're going to sell you all the PG-13 films except these films that don't fit your demographic, profile, or target very well." We do a lot of that. In the future we are going to be able to target by genre. The ability to be able to target groups of films better than we currently do is something we've been working on for a while. That technology is in development now, and we're hoping that by the end of this year or early next year that we'll have the ability to optimize the targeting much better than cinema is able to do today.

Do you think this merger will lead to a surge in cinema advertising?

Cinema advertising has been growing very nicely over the last several years. The market share shift that we always thought would happen between television and other avenues has been ongoing for the last 8 to10 years. If you look at last year and add our revenue up with Screenvision's, revenue was up 6 to 7 percent for cinema advertising, which is a higher growth rate than TV. Clearly cinema has continued to rise. I think that this deal will create a better product and we'll continue to see cinema take a bigger chunk out of TV.

The new technologies that are being provided to consumers focused on controlling advertisements is a very powerful advantage for cinema. We are arguably the only video advertising platform where it isn't fairly easy for the consumer to turn it off or get away from it. As online and mobile continues to grow, it's also going to have new technology introduced where people can skip the ads.

When you look at cinema, it offers both high-quality programming and the biggest delivery device, which are both top concerns for advertisers.

 

 

NORTH AMERICA: 'The Fault In Our Stars' Shoots Past $60 Million in 6 Days; 'Maleficent' Tops $140M on June 12, 2014

jun6.pngFox reports that The Fault In Our Stars added $4.17 million on Wednesday, off 17 percent from the day prior. The young adult sensation has tallied $62.3 million in its first 6 days, 5 percent behind where Divergent stood at the same point and 6 percent ahead of The Vow.

Edge of Tomorrow grossed $2.77 million yesterday for a day-to-day drop of 20 percent. The Tom Cruise sci-fi pic has earned $38.2 million domestically in its first 6 days, 4 percent off the pace of Elysium through the same point.

Disney's Maleficent declined 29 percent from last Wednesday to $3.987 million yesterday. The Angelina Jolie pic has brought in $140.9 million so far, 32 percent ahead of the pace of Snow White and the Huntsman.

X-Men: Days of Future Past took a 40 percent week-to-week drop with $1.71 million on Wednesday. The Fox sequel has totaled $195.1 million domestically through 20 days of release.

Rounding out the top five, A Million Ways to Die in the West added $0.915 million yesterday, giving it a 36 percent week-to-week decline. The comedy's domestic tally is now $33.2 million through 13 days.

'22 Jump Street' Tips The Scales In Its Favor Over 'Dragon 2' on June 12, 2014

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By Alex Edghill

Thursday Morning Update: 22 Jump Street rose a couple points to 81,419 tweets on Wednesday up from 79,925 tweets the day before. Hard to believe that with these numbers it isn't leading all films but The Fault In Our Stars and Maleficent continue to be juggernauts that command huge numbers of tweets each day despite their waning box office numbers. No R-Rated comedy has ever thrown up these types of numbers, not even Hangover II. We are predicting a huge $65 million beginning for it thanks weekend thanks to all this hoopla and with the strong word of mouth it is receiving $200 million+ should be a virtual lock domestically.

How To Train Your Dragon 2 had a 27% jump to 10,816 tweets, up from Tuesday's 8,549 tweets. By comparison, How To Train Your Dragon had 1,698  tweets its Wednesday before release while The LEGO Movie had 18,155, and Rio 2 had 10,524.  Strong numbers here again but I was hoping to see it far surpass Rio 2 and be closer to The LEGO Movie at this point, especially since its search string is actually more straightforward than Rio 2. Still, its not like its disappointing per say, just that I thought it would do even better and in light of this we are predicting a very close race between this and 22 Jump Street with the latter inching ahead of Dragon's projected $64 million start.

Dumb And Dumber To expanded even further to 34,361 tweets on Wednesday which is easily one of the best comedy-genre first trailers I have seen on Twitter. Its a long long way out but this looks primed to be a strong holiday contender given this early reaction. It will be interesting to see how it holds up in appeal to its second trailer and if it can carry this sort of interest along with it but color me impressed.

Frank Miller's Sin City: A Dame To Kill For (quite a mouthful I know), debuted its first trailer and it fizzled its way to 4,561 tweets on the day. Considering that 300: Rise OF An Empire had 20,391 tweets for its first trailer back in June of 2013 Dame's number here is severely lacking. The late August date is one that doesn't inspire much confidence as it is traditionally a dumping ground so it will have to do a much better job of generating chatter in the coming months if its to aspire to be more Sin City than The Spirit.

Top 15 Movies for Wednesday June 11th

Rk Film Tue Wed Week Tue-Wed %
1 (-) The Fault in Our Stars 246,462 164,069 646,991 -33.43%
2 (+1) Maleficent 69,880 82,060 214,538 17.43%
3 (-1) 22 Jump Street 79,925 81,419 219,956 1.87%
4 (+1) Dumb and Dumber To 11,067 34,361 45,709 210.48%
5 (-1) Edge of Tomorrow 14,186 14,922 46,853 5.19%
6 (+1) X-Men: Days of Future Past 7,729 12,165 28,404 57.39%
7 (-1) How to Train Your Dragon 2 8,549 10,816 26,643 26.52%
8 (+3) If I Stay 4,746 8,717 18,181 83.67%
9 (-) Transformers: Age of Extinction 5,437 7,524 16,755 38.39%
10 (+80) Frank Miller's Sin City: A Dame To Kill For 16 4,561 4,612 28406.25%
11 (+4) The Amazing Spider-Man 2 3,078 3,618 9,797 17.54%
12 (-) The Hunger Games: Mockingjay Part 1 4,440 3,568 11,845 -19.64%
13 (-) Godzilla (2014) 3,943 3,218 11,208 -18.39%
14 (+22) The Penguins of Madagascar 453 3,217 4,067 610.15%
15 (+34) The Interview (2014) 305 3,144 3,689 930.82%

Please check the methodology page for information about our Twitter project or here for historic data.


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