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Seeing the big picture

By Sarah Barmak | September 27, 2016
Seeing the big picture

“If I’d listened to all my friends 29 years ago when I started, I wouldn’t be here,” Jacob says. “They all told me I was crazy and the business was going to be bought in two years.”

Instead, box-office hits like Star Wars: The Force Awakens helped propel publicly traded Cineplex to its best year ever in 2015, with revenue of $1.37-billion, up 11 per cent from 2014. Theatre attendance hit an all-time high of some 77 million, an increase of 4.6 per cent. One million more people joined the SCENE loyalty program that Cineplex runs with Bank of Nova Scotia.

Movies are just one part of the Cineplex empire. The Toronto-based company is one of the country’s largest entertainment conglomerates, with 1,666 screens in 163 theatres operating under several brands. But with Jacob at the helm, Cineplex has also broadened its horizons to gaming, live entertainment, dining and digital media through a string of acquisitions and new ventures.

Seeing opportunities where fellow legacy media firms might see threats, Cineplex has built relationships with other content and technology partners over the past five years that have allowed it to embrace change, whether that means virtual reality or watching movies on a tablet. Jacob, who became President and CEO in 2003, has moved the company forward by encouraging employees to be creative  

and look to the future – leadership that saw Canadian Business magazine name him Canada’s Most Innovative CEO in 2013. 

“We’re always paranoid, thinking about the next event that needs to happen,” he says. “There’s so much disruption taking place. It’s not only in our business; it’s all businesses. If you don’t stay relevant, you’re not going to be there long-term.”

That philosophy isn’t new. An instinct for big moves was evident in Jacob’s role in the 1999 creation of theatre chain Galaxy Entertainment, and in Galaxy’s 2003 merger with Cineplex Odeon Corp., which put Jacob in charge of a new public company. It was there in 2005, when Cineplex-Galaxy bought Famous Players, a deal that helped it to secure the lion’s share of Canada’s movie theatre market.

At a time when audiences have unprecedented power to choose when and what they watch, Cineplex has given them more reasons to go to the cinema. “It’s a lot different than staying home and watching a movie on a 100-inch TV, which most people don’t even have today, compared with a 60-foot screen with Dolby Atmos sound, which you can’t replicate at home,” Jacob says. “The analogy is, if you have food in your refrigerator, do you stop going out to eat?”

Movie theatres have come a long way since digital replaced film. Thanks to Cineplex, customers can choose from a dizzying array of viewing options. Close to 50 per cent of the company’s revenue comes from premium tickets, Jacob notes, whether it be 3D, D-BOX, UltraAVX, VIP, IMAX or 4DX, the brand-new immersive cinema technology. Through a partnership with the world’s first 4DX provider, South Korea’s CJ 4DPLEX Co., Ltd., this experience will premiere at Toronto’s Cineplex Cinemas Yonge-Dundas and VIP in the summer. To make the cinematic illusion even more lifelike, 4DX features motion chairs and environmental sensations such as lightning, mist, bubbles and even scent.

Jacob has taken major changes in the industry as cues for innovation and diversification. As people consume films at home more and more, Cineplex is the only theatre chain anywhere to offer SuperTicket, which lets customers watch a movie at the cinema and also buy it and download it on multiple devices. “When you think of movies, we want you to think about Cineplex,” Jacob says.

In fact, film, entertainment and content, the company’s traditional business, has 

become just one of three pivots. The other two, media and amusement and gaming and leisure, are growing in a big way. In the realm of media, people may not realize that when they walk into a McDonald’s, Tim Hortons or Royal Bank, the digital signs they see are from Cineplex Digital Media, one of the largest Canadian providers of such displays.

Gaming and leisure – including competitive video gaming, or e-sports – will play a central role in the company’s future. The Rec Room, a series of upscale casual dining and interactive entertainment complexes, opens its first location in Edmonton this summer; Cineplex plans to build a Toronto venue across from Rogers Centre. These destinations will allow the roughly 7.3 million SCENE members to earn points while they eat, play games and take in live music. “It’s basically taking our skills and our infrastructure and maximizing the value from what we’ve created with our loyalty program and our media assets,” Jacob says.

By acquiring the assets of U.K.-based WorldGaming in 2015, Cineplex has moved into the burgeoning e-sports space, which is less developed in North America than in Asia. In March, the two companies held their first Canadian championships at Toronto’s Scotiabank Theatre, featuring Call of Duty: Black Ops 3. “Sitting there as an older guest, it’s a whole other activity,” Jacob says. “Seeing a video game on a 60-foot screen, that’s impactful. The amount of money people are playing and winning in different parts of the world is incredible.” 

To spur innovation beyond the C-suite, Cineplex has baked this willingness to try new things into its corporate culture, letting employees know that anyone can come up with the next big idea. “I’d rather you make a decision and make a mistake than procrastinate,” Jacob explains. “It’s really all about being entrepreneurial as an organization, even though we’ve grown as much as we have. We’ve introduced something called Transformation Cineplex, where we get ideas from everybody, including the people right on the theatre floor in the front lines.” Concepts such as UltraAVX auditoriums and lounge seating emerged from the Transformation process.

Looking ahead, Jacob remains confident in movies’ enduring ability to inspire 

people to enjoy entertainment together. Over the next five years, the Cineplex experience will evolve, he pledges. “There are going to be movies with faster frame rates, 4K [ultra-high-resolution] movies,” Jacob says. “There’s going to be the environment where we put 4DX. You’re going to have screens with 270-degree viewing that we just saw demos of in Vegas, which were absolutely awesome.” 

Cineplex’s audience will also continue to evolve. Jacob says the market for films in languages other than English – such as Hindi, Filipino and Mandarin – is growing at a 15-to-20 per cent clip annually or more. 

In the end, the appetite for change will keep people flocking to theatres, he asserts: “Where else can you get an experience that’s a $100-to-$200-million creation for the price of parking your car?” 

Related content: Global entertainment and media outlook 2016-2020

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