JIM 0:00
Live from the Laser Theater at Cinionic World at CinemaCon in Las Vegas. Welcome to the Insider's Show. This is the week the movie industry comes to Caesar's Palace to see Hollywood's game plan for 2023. It's the meeting where A-list directors and stars come to share clips of their upcoming movies and meet face-to-face with their cinema team partners. And this week, there was great news at the box office, cinemas were packed as the Super Mario Brothers movie filled theaters worldwide.
The film broke box office records with an astounding $800 million in just two weeks. I'm Jim Chabin and with me is our co-host for this series, Wim Buyens. He serves as CEO of Cinionic, and he's with me here in Las Vegas with a fantastic live audience. Good afternoon, Wim.
(Applause)
WIM 0:52
Hi, everybody. Good afternoon.
JIM 0:57
It's great to see you in person. It's great. This is the week that Hollywood comes to Vegas. And the presentations so far, Wim, have been absolutely fantastic. We've had Ridley Scott and Joaquin Phoenix last night presenting Napoleon. Oprah was here talking about the Color Purple musical for Christmas for Warner Brothers. Greta Gerwig was here for Barbie. She brought along Ryan Gosling and Margot Robbie, and Denis Villeneuve brought Timothy Chalamet and Zendaya for Dune Part II. So, we're off to a robust start to this show. And I'm just wondering, what are you and your partners thinking as you come into this celebration?
WIM 1:40
You know, this is always the starting point, right? We needed good content, and we can't complain about it. You just gave a lineup, which I think everybody's tremendously impressed about.
I think our partners are looking at what is the next thing in technology. What are the refreshes? And I think we've been pleased to make a couple of announcements - that's also part of CinemaCon. Last week we announced a multi-year agreement with our friends of National Amusements, which is going to around 1,000 screens, but they are committed to go laser. It's all about laser.
We also see quite an uptake in laser retrofit, which means upgrading the existing technology to laser. So, with the Series 2 projectors, we’re giving them an extension; it fits very well in our sustainability story. And there's more than 3000 of those [Laser Light Upgrades] that we have installed in the last couple of years. Especially with COVID, it is the fastest way to laser. So, we're very excited about that. And of course, we’re most excited about our latest announcement that we did today - with our friends of Cineplex in Canada. Which is about going to go laser, and going laser with Barco Projectors from Cinionic. We're very pleased about that because it shows the belief in the market for two things for me, one thing is that the slate is strong. That people say, yes, we're going to make the investment. But as important as that, it’s elevating the moviegoing experience, because we need to get people to the movies, and the experience is critical. And that's what they're showing. And that's fantastic.
JIM 3:07
Well, it's perfect that you're announcing the Cineplex agreement today, because their COO is our guest, and we're going to have him out here in a minute. But for today's show, we want to get a firsthand look at the cinema business this year, find out what kind of year we have ahead, and we'll take a look at those fantastic numbers at the box office for Super Mario Brothers to see what they might mean for the year ahead.
But first, the Cannes Film Festival announced that it will close its film festival next month with the premiere of Elemental, the new film from Disney and Pixar Animation, directed by Peter Sohn. Peter's currently at Skywalker Sound, mixing sound and music, but we spoke with him earlier, and he's joining us via video in this show.
(Applause)
We've got some fantastic guests, and I know you're all here to hear them give their view of the year ahead. So, let's get them out here. Dan McGrath is here. He's one of the most respected leaders in our business. He serves as chief operating officer of Cineplex Entertainment, one of Canada's leaders in cinema, with more than 10,000 employees and millions of guests across North America. Cineplex has also been recognized as having one of the most admired work cultures in Canada for its engagement with its employees and its guests. Please welcome Dan McGrath. Dan.
(Applause)
Also with us is our box office scorekeeper, Paul Dergarabedian. He is the senior box office analyst for Comscore. He advises the company's studio and Wall Street clients and is a regular contributor to CNBC and the Wall Street Journal. Welcome Paul Dergarabedian. Paul.
(Applause)
Great to have you guys. Thank you for making the time in your busy schedules to see us.
WIM 5:01
Let me kick it off here, Dan. What are the goals Cineplex has set for this year? What are your objectives? What does success look like for you guys?
DAN 5:10
A lot of box office. You know, obviously, it's been a challenging three years for everybody in the industry, and we started to come out of it last year. So, what we're really excited about is just the amount of product that's coming out. It's really about building that attendance base back up again. It's all about getting bums in seats. So if we can, you know, as the product comes out for us, it's all about between experiences and marketing and working with the studios. How do we get more people back into going to the movies?
JIM 5:43
Let me jump in and ask you something about upgrading your technology, which was announced today with Wim’s team. What are you trying to achieve there?
DAN 5:54
You know, I mean, obviously, the industry made a huge jump when we went from 35 millimeters to digital, and that was a great step because it was a great step for the guest in terms of improving that overall experience. So, that ability now to give the guest that much more of an improved visual experience with laser is... It's just something that obviously the whole industry is moving towards and it's very exciting because it's one more thing that improves that experience in the in the theater.
JIM 6:21
As you know, the Writers Guild of America have almost unanimously voted for a strike beginning next month unless negotiations succeed. Are you concerned about a writer strike in May and how would this affect the Canadian market you reside over?
DAN 6:37
Yeah, I mean, Canada gets affected the same way that the U.S. does. Most of our product that we rely on is based on Hollywood product. So, you know, although we have a very robust international film product slate as well. But, you know, the challenge that obviously if there's a writer's strike, it just it's one more delay in production. And we saw what happened in 2022 that, you know, was the 2020 production delays and 2021 production delays, which impacted the release of product in 2022. So, as we're finally coming out of that, it would be really unfortunate if there is a writer's strike. We're not going to see the immediate impacts of that in theatrical, but that will, unfortunately, start to impact releases going into 2024 and 2025. Hopefully, if it does happen, it doesn't last for very long.
WIM 7:22
We've seen in the last 20 years a lot of changes within the market, right? How do you see- from your perspective - the change in consumer behavior going to cinemas?
DAN 7:32
You know, when you look at all the research that's been done and look at trends that have happened, people are now much more focused on experiences. People are trading out products for experiences. I think the big difference is that the guest is looking for that significantly better experience. We have to deliver on the experience that our guests are looking for when they come out.
That's your audiovisual presentation. It's how our cast members treat our guests. It's how our managers treat our guests It's how you know every single step in the journey for the guest we have to deliver on that experience It's where premium formats have really come in and done so well. I think it's one of the great reasons that premium formats have been so successful in the past year is that people are looking for that experience, that differentiator from what they can get at the home. And that better experience that they get that's the driver for getting them out into the theaters
JIM 8:25
We want to talk about what happened at the box office over the last couple of weeks with our friend Paul. We ask you to stop by and tell us, Paul, who came out to see Super Mario Brothers?
PAUL 8:34
Everybody came out to see Super Mario Brothers. And there's all this talk about it being a four-quadrant movie. That's absolutely true, but that doesn't do it justice. Really, I think it's more about the film has universal appeal.
And if you look in the various international territories as well, the movie has done incredibly well in Mexico, Germany, France, obviously the UK, it's done very well there. It's closing in on a billion dollars worldwide. It had that massive opening weekend two weeks ago, and it was really amazing to see the second weekend drop. Domestically on Super Mario was 37%, which is an unheard of, like a tiny second weekend drop. Just amazing. And then the third weekend drop, this past weekend, 35% drop. Normally on a film, as we all know here, if you open with over 100 million, you may drop 50, 60, 65% that second weekend. So, it shows that audiences are loving it, they're going back over and over again, and the nighttime shows are doing well also. It's not just playing just to kids and families. It's playing to everyone because of the nostalgia factor. A lot of people grew up on Super Mario. The numbers are just incredible.
And what a great movie to have as we're here at CinemaCon. That creates a lot of optimism to have a movie performing that well. And that's not the only movie in the first quarter that's been doing incredibly well. It's been a great slate for sure.
WIM 9:59
Dan, coming to you here, so what is this movie going to do for you this year? What does it tell you about the slate and what's your expectation there?
DAN:
10:05
I mean, just to talk a little bit about what Paul was saying, I mean, the beauty of this film, not only the box office that is generating, but it is that age demo that we're getting. You know, we have a number of VIP theaters, which are adults only, you have to be legal drinking age to get into those auditoriums. We're filling our VIP auditoriums with Super Mario. I just had lunch with some of the execs from Universal, and they were talking about, you know, and I've heard this from our managers as well, you've got 45-year-old men coming dressed as Super Mario and et cetera. So, it's really getting that very wide age demo. But the great thing is, it's the strength of family product. Obviously, it's still mainly a family movie. And I think what this shows is just that people are dying to get out. They still want to get out of the house in spite of the plethora of content that's available on streaming services. People want to get out of the house. Families want to get out.
PAUL:
11:00
And I would think that for your concessions, having families there, like what kid says, no, I don't want popcorn. It's cool, I'll just, I won't get any popcorn or candy or a soda. So you're getting that.
DAN:
11:10
Nobody's allowed to not have popcorn.
PAUL:
11:13
Exactly. So it's it is really cool to see that. That you have the family audience as well. Also, if you look at last weekend, these were five or six R rated movies in the top 10. So, it's a diversity of content that's driving all this. You have Air out there. John Wick Chapter Four. Beau is Afraid is another one that was limited and have like an eighty-one thousand dollar opening weekend and three location per theater average. Second weekend expanded very well. Got a lot of big movies on the way. So this is a perfect marketplace. Feels like the pre-pandemic era. And there's many more films being released this year in wide release than last year. We were down 41 films, 41 films fewer released in 2022 than in 2019. That's a lot of movies that weren't there. This year though, the good news is we're going to have 30 or more films wide release than we had last year. So that's good. You’ve got to have the movies in the theaters.
JIM:
12:05
One more question on Super [Mario Bros]. The track record of the box office for video games has been a little bit hit-and-miss for that kind of IP.
PAUL:
12:14
But this is changing now, and it's really, I think it's more about having animated video game adaptations. If you look at Angry Birds and Detective Pikachu, Pokémon, and Sonic the Hedgehog one and two, those are all video game adaptations that did well. Where I think there's been an issue has been with some of the live-action video game adaptations, but that could change too. This kind of opens the door, and this could be the new frontier. It's always been superhero movies where that big genre, maybe it's the video game at it. Now there could be a paradigm shift in both the thinking by the industry and by audiences and family audiences who everyone thought was lost during the last couple of years, they came out in big numbers.
DAN:
12:52
I think what this movie did, what Super Mario did, it really changed everybody's mindset about the box office for 2023. You know, first quarter was a little softer than everybody liked, Avatar was obviously fantastic. There were still good movies, and we started to see more films coming out. But it's just that one film, by just doing so much box office and exceeding every single expectation. Every analyst. I can tell the people at Universal, didn't expect it to do this level of business. And it just, that one movie, to me, has changed the mindset on how successful. 2023 is going to be.
PAUL:
13:26
That's so true, and I agree with you 100 percent, because it's also the perception. So, when people read about the movies, and they see, well, the box office is down as movie disappointed. It's like, you know, everybody wants to be part of that, what's ever popular or cool? Well, it's not cool to have a failing box office or movies that underperform. But now this whole idea that was brought up during the pandemic, that the movie theater was going to meet its inevitable demise more quickly than expected because of the pandemic, just didn't happen. And now I think we can put that to bed permanently. The movie theater can take on all comers, take on all challenges, and it's great operators like you that are making that experiential part of it so key for the moviegoer.
JIM:
14:11
We want to bring in a special guest right now. He is the director of the new Disney film from Pixar Animation, and Walt Disney Animation Studios, Elemental. He's currently at Skywalker Sound, but we connected with him via video earlier. Please welcome Peter Sohn.
(Applause)
PETER:
14:30
Hi Everyone! Hello, CinemaCon. It's an honor to be here, Jim.
JIM:
14:35
Pete, you've directed two features for Pixar, The Good Dinosaur, and Elemental. Tell us about this film.
PETER:
14:42
Oh yeah, I mean, I'm so excited even. I mean, this Elemental has been a real personal project for me. It's about a world that comprises of earth, wind, fire, and water, and how they all can mix and can't mix. And in the middle of all of that, it's this warm love story between this young fire woman and a water boy. And in the middle of that, it's also a love story between a father and a daughter. And so, it's this triangle.
JIM:
15:13
Well, Dan McGrath is with us from Cineplex. And I'd love for you to share your thoughts with him and our audience here of what the cinema visual and sound experience provides to you as a filmmaker.
PETER:
15:28
You know, it's... There's a lot of love put into the films, of course everywhere, but at Pixar, our dedication to the big screen, our dedication to a fidelity and a richness of an image that can be very immersive. And so that high quality picture of course is a priority, but we're still at Skywalker mixing the film now and the wizards over there have brought such a level and layer of this world, of this immaculate reality where it's become even more believable. And so that sound fidelity, of course, is a high priority. But look, this is all about connecting with an audience. This is all about trying to find moments that are memorable, find characters that you can connect with. And we've been working really hard to do that so that we have Thomas Newman as a composer. And again, we're so lucky to be even working with him, but just hearing his music merging with the sound effects, merging with the picture right now has been one of the greatest highlights of my life. And so, I'm hoping that audiences around, you know, everywhere can really feel the work that we've all put into it.
JIM:
16:37
What do you do to create characters that my children see as their friends, not just images on a screen?
PETER:
16:44
That is such a great question. And, you know, for as long as I've been at Pixar, I see the filmmakers here constantly looking to their lives, looking to their friends, and looking to the people around them in terms of inspiration of how to build some of these characters. And it's funny to say that we're building characters. When you start even talking about a character, they begin to come alive in a way where you don't feel like you're building them. You feel like you are growing with them. And from the character designs to the voices, all of it stems from very personal places for people in fun ways, you know, Nemo and I remember, I understand the director talking about Marlon and his own fear as a parent, you know, walking his kid to school and letting him go and that all came from a real place. And so, you know, like Russell in Up, the little Asian kid that was tagging along with Carl Fredrickson. It all came from like, oh yeah, you know, this wasn't, isn't it funny? Like a Boy Scout in the city. Yeah.
JIM:
17:53
Every Pixar movie has its own color palette that is so magnificent that it's almost trippy to watch the movie because the colors are such a rich part of the storytelling. Um, with our HDR and all these new projection techniques, laser, we're really able to project a lot of the colors that you all want to push. Talk about that for just a moment.
PETER:
18:18
We are rendering everything in 4K. And so there's already a fidelity that, that's something that we are really excited about. The HDR component, look, our main character's fire. And so she's projecting light. There are no shadows that are allowed on her. It's one of the toughest characters we've built here at Pixar. Wade is water and light bounces all over him and he's a very difficult character to control. And so the lighting of these two characters has been a tremendous challenge. And so the HDR, the fidelity of the image has been something that we have fought whole time to make really pristine and to exploit so that the audiences get there can feel when our characters are burning bright, when Ember, our main character who's fire, when her light, you know, when she feels inspiration she goes brighter and you know we don't want the image to get blown out but you're balancing that game because she is a being of light to so that you can still have that contrast and the dynamic range that is so wonderful in all of our theaters.
JIM:
19:23
Peter, we know you have to get back to mixing. We have such high hopes for this film. You have such fans in this audience that are so grateful to Pixar for always delivering the finest films in the finest way to be seen. So great good luck. Thank you for stepping away to say hello to us today. And we will see you at the movies, Pete. Thank you.
Peter:
19:49
Thank you, Jim. It's been an honor. Thank you so much. Thank you, CinemaCon. Thank you, everyone.
(Applause)
Jim:
19:56
Dan, it's great to hear someone who's literally stepping away from a mixing studio to talk about his characters and how much light they put off so that your theatres, your customers have a transcendent experience, huh?
DAN:
20:12
Yeah, absolutely. And you know, it's interesting when you talk about light, because it's always been one of the challenges we all have in running our theatres is that light output on screen. It's one of the great things about laser - significantly improving that light output will be fantastic for the guest.
WIM:
20:28
So Dan, Cineplex is offering a wide variety of experiences and VIP experiences. Take us a little bit through that. What is that? And what are you trying to accomplish for your moviegoers with that?
DAN:
20:40
Yeah, so really just carrying on from what we talked about before, it is that differentiator from the home. And so giving people the opportunity to see a movie in our premium large format, which, we call Ultra AVX in an iMac screen with ScreenX we have. And we have 4DX auditoriums as well. D-Box seats. Then you throw on the VIP experience. We have kids auditoriums, a concept we call the clubhouse. So it's really about creating that different experience. It's not a, you know, what, obviously we still have, you know, we have 1600 screens and the majority of them are still your traditional theaters. But whether it be through seating upgrades or creating a differentiated experience, it's what people love and they are very willing to pay. Every single one of these premium experiences have come out at a fairly significant premium price tag, and people have no problem. They are always the first auditoriums to sell out, are all of our premium experiences.
WIM:
21:37
Do I hear you saying that you're going to expand the premium experiences if I hear the success they're having?
DAN:
21:43
We've had great success and we're just going to continue to add every in every single one of those formats that I talked about. We will continue to add throughout the year.
JIM:
21:51
Dan, you talk about a journey for the for the customer. It feels as if and I've had several friends just anecdotally say that they were in the habit, the word habit, of going to the movies almost every weekend or every couple of weeks. It was a fallback idea of getting out of the house and going to do something. The pandemic shook that up. And I had a friend who saw Air and said, oh my gosh, I went and saw this movie. It was my kind of movie. I had a great time. But I realized when I was in the theater, it had been months since I'd been there. Is it a habit? And what do you think re-instills in people? They know it, it's muscle memory but maybe they haven't practiced it recently.
DAN:
22:34
You know, I think it's so true, Jim. You know, I have a saying that movie going begets movie going. So and it is so much more is when I talked earlier, so much of it is getting people back into that habit. So even if they did come out to see Top Gun, let's say, which, you know, thank you, Paramount, it was such a fabulous movie. And it did get people out again. But then there was nothing else for that demo to see for months. And then they get out of the habit. So what I'm really excited about now is not only the product that we're starting to see this week. But just the fact that even in the past, you know, call it the last six weeks, eight weeks, there's been a new movie every single week. So and we haven't had that all of 2022 was very lumpy from a release schedule. It goes back to some of those production delays, you know, and really just studio models in terms of how they were releasing some of their films. But getting people in that habit, so they do it because you go to a theater and then you see a poster or you see a trailer for a movie that's upcoming. And you just get reminded about what a great out of home and very affordable out of home experience it is. So yeah, I think again, content is everything and the more content there is, more we'll get people in that.
Jim:
23:37
I now go out to dinner at restaurants and I play a game with myself to try to guess how high the bill's gonna be for dinner for two. It's an expensive thing that all of a sudden makes going to a movie theater seem to be one of the better values out there. You don't have to drive anywhere to get there.
PAUL:
23:53
It's a great value, I think for the money, especially for a family of five or six, to be able to go outside the home, have a great experience and enjoy that. And relative or compared to other outside the home activities, going to a movie theater is a relative bargain. And if you love the movie, that's even better. And if you love the in-theater experience, that's great. But it's definitely a momentum business. And like you said, you got to keep that rolling. Otherwise, there was a lull last fall after an amazing summer. That kind of shrunk the marketplace a bit. This year, we're on track to have a much more even, more movies and more often is my motto for this year. And that's gonna hold the industry in good stead.
JIM:
24:33
Dan, I'm curious, you partnered with Netflix to release Knives Out in theaters last year, and you've been in the press indicating an interest to partnering with streaming services. There was a point a couple years ago where everybody thought they were the enemy. You seem to be thinking that they may be partners. What's behind this thinking?
DAN:
24:50
Well, and it comes back to content again, so, you know, I wouldn't say we partnered with Netflix. So, I think that would be a bit of a stretch but what I would what I would say is that as studios have looked at Reducing and when I say reducing right back to you know, the way they used to release movies sort of five ten years ago it's all about getting more content, so if talent is shifting some of their time and energy whether that be directors or actors and actresses moving into streaming, and there's great content that's being developed as those streamers look to have a theatrical release window. We will only release as a company if there is a significant theatrical window. We're not gonna do it if there's a two-week window. That just doesn't make any sense. But if we get the exclusive theatrical window for a long enough period and the content is there, then I think the streamers provide us, they provide all of us in the industry, with that content and fill some of those gaps.
JIM:
25:50
What's a desirable window to have?
DAN:
25:54
WIM:
26:06
You announced a deal with Lionsgate. What's your content strategy for this year?
DAN:
26:10
So one of the challenges that we have in the Canadian market is that we certainly get all the Hollywood releases. There aren't as many smaller distributors in Canada. There used to be a lot more. So there's probably about 200-300 movies a year that get released in the US that never make it to the Canadian marketplace. When you look at some of the other international markets, there's a lot of local content. Canada doesn't have that. We're kind of stuck because our good filmmakers end up going to Hollywood.
You know, you look at Denis Villeneuve, and I don't want to say that that's a little unfair to some very good Canadian filmmakers who stay, but the product, there just isn't as much product. So we don't have as much of that local content that can come in and fill some of those gaps. My first job in the business was in our distribution company that we had many, many years ago. And we got out of that for a number of different reasons. But in the past five years, so we had started our own distribution business, which was really about finding those smaller movies, finding those anime movies or something that would not have had a Canadian distributor otherwise. So we're able to fill that gap. So moving to this distribution deal that we're doing for Lionsgate was a natural extension of the distribution business that we already had in place. But now allows us to leverage, especially our data. I mean, we have 13 million members in our loyalty program, which is about a third of the Canadian population. We're able to leverage that data, leverage our marketing muscle that we have and distribute those films. And if you look at the success that we've had with a movie like John Wick, where we significantly over-indexed in Canada compared to what we normally would against a regular release of a film.
You know, it just shows that we can really leverage that data and the marketing muscle that we have to overperform.
Jim:
28:04
Paul, name five movies this year that you think will break $100 million pretty easily.
PAUL:
28:10
You mean that have already opened or?
JIM:
28:12
No, no, no. Well, in the next few months.
PAUL:
28:16
Guardians of the Galaxy Volume 3 obviously is going to kick off the summer. Marvel traditionally has kicked off many a summer. It's a little disrupted over that past couple of years. I know that Mission Impossible Dead Reckoning Part One could not have a better tee up than Top Gun Maverick last year and like Dan was saying, because the shift in production schedules, it threw the release calendar into disarray, which then put Top Gun Maverick in last year and then now we have Dead Reck, which I think is a great one-two punch. It's gonna be amazing. Barbie, I mean, that one is really, it's catching a lot of... heat.
JIM:
28:56
Who's that targeted at?
PAUL:
28:58
Well, you know, that's an interesting question, because it's not really a kids movie, even though it's based on a toy, so to speak, but it's much more than that. And I haven't seen the movie, but it looks like it's going to be sort of a philosophical look at how we view different roles in society. I don't know. It looks very interesting to me, and the fact, I mean, a great cast, and I think it's going to have an interesting point of view. I look back at that teaser trailer, which was an homage to 2001, the space odyssey, the Barbie teaser that was an homage to the monolith scene at the beginning of 2001. I thought that was brilliant. So for a film fan, that's just I don't know, Barbie just feels like that kind of movie. Fast 10, I think, obviously.
JIM:
29:42
Indiana Jones.
PAUL:
29:43
Oh, yeah. All day. I mean, there's more than five hundred million dollar films yet to come, which is great news. The Flash, which we're going to see this afternoon, I believe.
JIM:
29:55
David Zaslav said this morning, chairman of Warner Brothers, he thought it was the best superhero movie he'd ever seen.
PAUL:
30:04
That's a bold statement. That's a pretty strong. That's pretty strong. And of course, it's their movie, and they're really behind it. The trailer looks amazing. I'm not going to spoil anything, because I don't want to say the wrong thing, because there's a lot going on in that movie. I think people are going to be very excited coming out of that one I think also too, we don't wanna lose sight of the fact that independent film is super important because it's, you know, it's not, I know in the, during blockbuster season, which is the 18 weeks of summer, which is 40% of the domestic market per year that we fixate on the blockbusters. And that's what gets people in the seats. But if you look at a movie like Beau Is Afraid or something like that, if you look at the per theater averages for some of these films, if they're filling Dan's auditoriums, even though the box office of those films won't necessarily rank them in the top five of the year. It's still important to have those movies out there and have great theaters curating that content for their patrons.
DAN:
30:56
Well, I'm making sure that we get that wide demo of audience too. That's the other thing, we don't wanna have a business that only caters to families and Marvel fans. You know, that's not a business. That's not a business model that's gonna work in the long run. So we need that wide range of product to hit all demo.
JIM:
31:15
And it seems like it. Seems like it's here.
PAUL:
31:17
Yeah, it is here. If you look at this past weekend, Super Mario Brothers, Evil Dead Rise, Guy Ritchie's The Covenant, John Wick 4, Dungeons and Dragons, Air, The Pope's Exorcist, Renfield, Beau’s Afraid, and then we have an anime film, Suzume, I hope I'm pronouncing that correctly, Indian films in the mix, events cinema in the mix. This is a very exciting marketplace. I say, Dan, and I know you'll agree, and Wim and Jim, that if you can't find a movie on this slate that doesn't appeal to you, you are not looking at the slate. There is literally, it's cliche, something for everyone on this slate.
WIM:
31:53
Dan, let's talk a little bit about experimentation, right? We hear about variable pricing. We hear about movie paths, different formats. What are you guys doing? You're typically always strong in, you know, trying new things out. What do you think is important in the experimentation phase for you guys?
DAN:
32:07
So we have a lot of discussions internally around dynamic pricing. And one of the guys who I worked very closely with has said, well, we already have dynamic pricing because we have so many different pricing options for people. We obviously have child and senior pricing. One of the things we're very successful with in Canada, happened for many, many years, is a discounted price on Tuesdays, so it's about 40% discount. So Tuesdays are as busy as a Friday night in many cases. And so there's a value seeker crowd who goes for that. We also, because of our different experiences, I talked to it before with the premium experiences, we have different pricing models there as well. We've done a little bit of testing around different pricing models within the auditorium. I mean, D-Box seats is one, it's a different experience in that seat to have a seat within an auditorium.
We had something that we call prime seating that we tried for a little bit where we had we had different a better seat within the middle of the auditorium and I would say we had varied success with that I wouldn't I wouldn't come away from it saying yeah, that was really good because the the challenge is I love to sit in the middle of an auditorium. That's my best seat. Some people like to sit in the front, some people like to sit in the back. So, you know, so so differentiating pricing based on where the seat is in the auditorium is actually a little bit. We found it's a little bit challenging, because it's not necessarily for everybody. But listen, I do think that the industry overall, though, has an opportunity to have more of a dynamic type of pricing model. One of the things we tested many years ago, and not every studio loved it, but I really think it's the way to go, and it is more dynamic, is it was last-chance pricing. So when we knew it was going to be the last week of a movie, and we would then send out to our database and say, this is the last week this film was playing, if you haven't seen it yet, and we already knew they hadn't seen it because of our loyalty program data. And we tell them it's gonna be at a reduced price. So getting into something like that, that gets a little bit more with supply and demand, I think is where there's a bigger opportunity.
JIM:
34:11
I was recently very nearby Coachella and was struck by 125,000 young people were so focused on sustainability. And it seems as if that's an issue that's gonna continue to be important. I'd just like to ask both you and Wim, is sustainability, the environment, is that a part of your corporate culture? How do you address it, your thoughts?
DAN:
34:37
Yeah, it's very much. I mean, especially as a public company, yes, every public company is now starting to be measured on their ESG initiatives. So sustainability is very important to us as a company, and it's one of the great things we're seeing with laser projectors and other projects like reducing that energy usage within the auditoriums. We've done a lot of things within our theaters to reduce energy consumption as well, and recycling and a number of other things, but it's really, I think we're still early days. There's a lot more that the entire industry can be doing, and it's very important. You know who is most important too, is our cast members. They're the ones we hear from because they are, they're young people who are working for us. And why aren't you doing this? Why aren't you doing that? We get a lot of great ideas from them.
JIM:
35:21
Wim?
Wim:
35:22
No, absolutely. I think it's a big theme. If I take over the last four years, we kicked it off, I think four years ago with our new project range at the time, which was really built up of the ground where sustainability was one of the key parameters in the sense of, you know, we call it the eco scores we gave them. And it's not just about the consumption, but the recycling, the upgradability and those things. What we see today, it's a big discussion, right? It's probably the biggest discussion we have on our booth here, is about sustainability. So it really grows. But I think adding to what Dan says is the moviegoers and that demographics, they really care. So I think that we should all care because of, you know, the planet and many other things. And as public companies, we get measured on that. But at the same token, I think our customers care, the moviegoers care. And that's why I think we should take this and really take it to the next level. And we do if we can. We got a panel on that tomorrow, by the way, but everybody's interested, you know, you're more than welcome.
JIM:
36:16
And we've got time for a couple of questions. So if you've got a question, put your hand up. I want to ask Dan and Wim and Paul, we have been through such a tumultuous two or three years. And it seems to me that most of the senior folks that I'm running into, they seem to be focused and know what they want to do and get accomplished. Do you feel that you and your team are doing your best work right now? Does it feel like you're finally clearing the trees?
DAN:
36:47
Yeah, absolutely. And I think one of the things that did happen, I mean, we've got to try to look at some, what were the benefits of COVID? And there were some benefits. Nobody would ask for it, so I don't want to say that. But when you were shut down, it forced you to get some things done, to take a look at your processes, and take a look at, we're doing a lot around automation now within our company, for instance. And there's a lot of things that have really allowed us to focus on the things that are really important and needed to get done. And I think we've got, especially with, you know, there's sort of, when we've got all these pressures around us from so much disruption in our business, it really does allow you to focus on the things that are really important. So yeah, I would say our team is doing their best work around the whole guest experience and efficient operations.
JIM:
37:33
Wim?
WIM:
37:34
Yeah, I think that, you know, I talked about it yesterday night at dinner, you know, so the COVID is, people said, how do you get through this? Right. And if the way we look at it, building technology, you know, it's a long term vision. It's a projector you build, it takes you a couple of years. It's a lifetime of another 10 years and then another 10 years of end of service. It's a 20 year life cycle. So, not to stop those things in COVID was critical for us. How do we survive and continue doing those things? But of course, cutting down on many other things. Because in keeping the long-term horizon, and that meant then coming out of COVID, you know, gives you a stronger opinion. Gives you a stronger position because it means that you have been very diligent about what is critical in the long-term. And that's about strategy, making choices. But I think we had to make a lot of choices, but we are glad to did so because it put us ahead of the curve coming out of that. So...So yes, I think that COVID has definitely taught us how important it is.
JIM:
38:28
Dan, Paul, what movies have you got your eyes, what are you looking forward to seeing this year?
DAN:
38:34
You know, Paul talked about The Flash. I saw a trailer for The Flash last week and it was the first one I'd seen. I gotta tell you, that movie, I think, is gonna surprise people. It looks really good. But, you know, I would say, if I, probably the movie I'm most looking forward to is Oppenheimer.
PAUL:
38:50
You just stole my thunder. Sorry. That's my movie.
DAN:
38:53
Yeah, I mean, it just Christopher Nolan is incredible. And I think it's there's so many that I'm excited to see. But Oppenheimer will be right up.
PAUL:
39:01
And that's the thing. It's the excitement level that I think people feel. And seeing a trailer on a big screen is a totally you know, we talk about the difference between the home experience and the theatrical experience. Those things apply to the marketing as well. Are the trailers for the movie you're getting people excited and let's not forget the importance of the sound, right? Laser projection coupled with amazing sound. That impact, in that room, I think exponentially, we get more excited about movies when you see like I saw the some of the flash teaser trailers and things on YouTube or on a small screen like that looks really cool. Then I saw it yesterday or whenever the trailer was shown on that big screen with that sound, the Dune trailer today, just hit you right in the gut and it looks so amazing. That's what it's all about. That confidence that studios have in the business is shown by all the movies that are on the slate this year and set for next year. Consumers who are the ultimate arbiters of this business, whether it succeeds or fails, they are loving going to the movies and they have all that great content at home, but guess what? They're going out to the movies.
JIM:
40:09
I had a chance to talk this weekend with some people that are very close to Oppenheimer and they were saying. we think this movie's going to be one of the three or four or five that you'll remember your whole life. It's that kind of movie. He can deliver. So that's great. Listen, I want to thank Dan. I want to thank you, Paul. Thank you, Wim. Thank you. We close this show with a quote of the day. And the quote of the day comes from director James Mangold, who will premiere his new Indiana Jones film at Cannes next month. Here's what he had to say about this experience this week. He said, you're walking among legends and you're aware of it. The only wonderful thing on this project is that all the legends are embracing you and are happy to be there with you. Whether you're talking about Harrison Ford or Steven Spielberg or Kathy Kennedy or George Lucas or John Williams, what an opportunity. It's like being on an all-star baseball team. You just hope you rise to the occasion. Thanks again, gents. It's been a great show.
Thank you, audience. You've been wonderful. And we'll see you all at the movies.
Live from the Laser Theater at Cinionic World at CinemaCon in Las Vegas. Welcome to the Insider's Show. This is the week the movie industry comes to Caesar's Palace to see Hollywood's game plan for 2023. It's the meeting where A-list directors and stars come to share clips of their upcoming movies and meet face-to-face with their cinema team partners. And this week, there was great news at the box office, cinemas were packed as the Super Mario Brothers movie filled theaters worldwide.
The film broke box office records with an astounding $800 million in just two weeks. I'm Jim Chabin and with me is our co-host for this series, Wim Buyens. He serves as CEO of Cinionic, and he's with me here in Las Vegas with a fantastic live audience. Good afternoon, Wim.
(Applause)
WIM 0:52
Hi, everybody. Good afternoon.
JIM 0:57
It's great to see you in person. It's great. This is the week that Hollywood comes to Vegas. And the presentations so far, Wim, have been absolutely fantastic. We've had Ridley Scott and Joaquin Phoenix last night presenting Napoleon. Oprah was here talking about the Color Purple musical for Christmas for Warner Brothers. Greta Gerwig was here for Barbie. She brought along Ryan Gosling and Margot Robbie, and Denis Villeneuve brought Timothy Chalamet and Zendaya for Dune Part II. So, we're off to a robust start to this show. And I'm just wondering, what are you and your partners thinking as you come into this celebration?
WIM 1:40
You know, this is always the starting point, right? We needed good content, and we can't complain about it. You just gave a lineup, which I think everybody's tremendously impressed about.
I think our partners are looking at what is the next thing in technology. What are the refreshes? And I think we've been pleased to make a couple of announcements - that's also part of CinemaCon. Last week we announced a multi-year agreement with our friends of National Amusements, which is going to around 1,000 screens, but they are committed to go laser. It's all about laser.
We also see quite an uptake in laser retrofit, which means upgrading the existing technology to laser. So, with the Series 2 projectors, we’re giving them an extension; it fits very well in our sustainability story. And there's more than 3000 of those [Laser Light Upgrades] that we have installed in the last couple of years. Especially with COVID, it is the fastest way to laser. So, we're very excited about that. And of course, we’re most excited about our latest announcement that we did today - with our friends of Cineplex in Canada. Which is about going to go laser, and going laser with Barco Projectors from Cinionic. We're very pleased about that because it shows the belief in the market for two things for me, one thing is that the slate is strong. That people say, yes, we're going to make the investment. But as important as that, it’s elevating the moviegoing experience, because we need to get people to the movies, and the experience is critical. And that's what they're showing. And that's fantastic.
JIM 3:07
Well, it's perfect that you're announcing the Cineplex agreement today, because their COO is our guest, and we're going to have him out here in a minute. But for today's show, we want to get a firsthand look at the cinema business this year, find out what kind of year we have ahead, and we'll take a look at those fantastic numbers at the box office for Super Mario Brothers to see what they might mean for the year ahead.
But first, the Cannes Film Festival announced that it will close its film festival next month with the premiere of Elemental, the new film from Disney and Pixar Animation, directed by Peter Sohn. Peter's currently at Skywalker Sound, mixing sound and music, but we spoke with him earlier, and he's joining us via video in this show.
(Applause)
We've got some fantastic guests, and I know you're all here to hear them give their view of the year ahead. So, let's get them out here. Dan McGrath is here. He's one of the most respected leaders in our business. He serves as chief operating officer of Cineplex Entertainment, one of Canada's leaders in cinema, with more than 10,000 employees and millions of guests across North America. Cineplex has also been recognized as having one of the most admired work cultures in Canada for its engagement with its employees and its guests. Please welcome Dan McGrath. Dan.
(Applause)
Also with us is our box office scorekeeper, Paul Dergarabedian. He is the senior box office analyst for Comscore. He advises the company's studio and Wall Street clients and is a regular contributor to CNBC and the Wall Street Journal. Welcome Paul Dergarabedian. Paul.
(Applause)
Great to have you guys. Thank you for making the time in your busy schedules to see us.
WIM 5:01
Let me kick it off here, Dan. What are the goals Cineplex has set for this year? What are your objectives? What does success look like for you guys?
DAN 5:10
A lot of box office. You know, obviously, it's been a challenging three years for everybody in the industry, and we started to come out of it last year. So, what we're really excited about is just the amount of product that's coming out. It's really about building that attendance base back up again. It's all about getting bums in seats. So if we can, you know, as the product comes out for us, it's all about between experiences and marketing and working with the studios. How do we get more people back into going to the movies?
JIM 5:43
Let me jump in and ask you something about upgrading your technology, which was announced today with Wim’s team. What are you trying to achieve there?
DAN 5:54
You know, I mean, obviously, the industry made a huge jump when we went from 35 millimeters to digital, and that was a great step because it was a great step for the guest in terms of improving that overall experience. So, that ability now to give the guest that much more of an improved visual experience with laser is... It's just something that obviously the whole industry is moving towards and it's very exciting because it's one more thing that improves that experience in the in the theater.
JIM 6:21
As you know, the Writers Guild of America have almost unanimously voted for a strike beginning next month unless negotiations succeed. Are you concerned about a writer strike in May and how would this affect the Canadian market you reside over?
DAN 6:37
Yeah, I mean, Canada gets affected the same way that the U.S. does. Most of our product that we rely on is based on Hollywood product. So, you know, although we have a very robust international film product slate as well. But, you know, the challenge that obviously if there's a writer's strike, it just it's one more delay in production. And we saw what happened in 2022 that, you know, was the 2020 production delays and 2021 production delays, which impacted the release of product in 2022. So, as we're finally coming out of that, it would be really unfortunate if there is a writer's strike. We're not going to see the immediate impacts of that in theatrical, but that will, unfortunately, start to impact releases going into 2024 and 2025. Hopefully, if it does happen, it doesn't last for very long.
WIM 7:22
We've seen in the last 20 years a lot of changes within the market, right? How do you see- from your perspective - the change in consumer behavior going to cinemas?
DAN 7:32
You know, when you look at all the research that's been done and look at trends that have happened, people are now much more focused on experiences. People are trading out products for experiences. I think the big difference is that the guest is looking for that significantly better experience. We have to deliver on the experience that our guests are looking for when they come out.
That's your audiovisual presentation. It's how our cast members treat our guests. It's how our managers treat our guests It's how you know every single step in the journey for the guest we have to deliver on that experience It's where premium formats have really come in and done so well. I think it's one of the great reasons that premium formats have been so successful in the past year is that people are looking for that experience, that differentiator from what they can get at the home. And that better experience that they get that's the driver for getting them out into the theaters
JIM 8:25
We want to talk about what happened at the box office over the last couple of weeks with our friend Paul. We ask you to stop by and tell us, Paul, who came out to see Super Mario Brothers?
PAUL 8:34
Everybody came out to see Super Mario Brothers. And there's all this talk about it being a four-quadrant movie. That's absolutely true, but that doesn't do it justice. Really, I think it's more about the film has universal appeal.
And if you look in the various international territories as well, the movie has done incredibly well in Mexico, Germany, France, obviously the UK, it's done very well there. It's closing in on a billion dollars worldwide. It had that massive opening weekend two weeks ago, and it was really amazing to see the second weekend drop. Domestically on Super Mario was 37%, which is an unheard of, like a tiny second weekend drop. Just amazing. And then the third weekend drop, this past weekend, 35% drop. Normally on a film, as we all know here, if you open with over 100 million, you may drop 50, 60, 65% that second weekend. So, it shows that audiences are loving it, they're going back over and over again, and the nighttime shows are doing well also. It's not just playing just to kids and families. It's playing to everyone because of the nostalgia factor. A lot of people grew up on Super Mario. The numbers are just incredible.
And what a great movie to have as we're here at CinemaCon. That creates a lot of optimism to have a movie performing that well. And that's not the only movie in the first quarter that's been doing incredibly well. It's been a great slate for sure.
WIM 9:59
Dan, coming to you here, so what is this movie going to do for you this year? What does it tell you about the slate and what's your expectation there?
DAN:
10:05
I mean, just to talk a little bit about what Paul was saying, I mean, the beauty of this film, not only the box office that is generating, but it is that age demo that we're getting. You know, we have a number of VIP theaters, which are adults only, you have to be legal drinking age to get into those auditoriums. We're filling our VIP auditoriums with Super Mario. I just had lunch with some of the execs from Universal, and they were talking about, you know, and I've heard this from our managers as well, you've got 45-year-old men coming dressed as Super Mario and et cetera. So, it's really getting that very wide age demo. But the great thing is, it's the strength of family product. Obviously, it's still mainly a family movie. And I think what this shows is just that people are dying to get out. They still want to get out of the house in spite of the plethora of content that's available on streaming services. People want to get out of the house. Families want to get out.
PAUL:
11:00
And I would think that for your concessions, having families there, like what kid says, no, I don't want popcorn. It's cool, I'll just, I won't get any popcorn or candy or a soda. So you're getting that.
DAN:
11:10
Nobody's allowed to not have popcorn.
PAUL:
11:13
Exactly. So it's it is really cool to see that. That you have the family audience as well. Also, if you look at last weekend, these were five or six R rated movies in the top 10. So, it's a diversity of content that's driving all this. You have Air out there. John Wick Chapter Four. Beau is Afraid is another one that was limited and have like an eighty-one thousand dollar opening weekend and three location per theater average. Second weekend expanded very well. Got a lot of big movies on the way. So this is a perfect marketplace. Feels like the pre-pandemic era. And there's many more films being released this year in wide release than last year. We were down 41 films, 41 films fewer released in 2022 than in 2019. That's a lot of movies that weren't there. This year though, the good news is we're going to have 30 or more films wide release than we had last year. So that's good. You’ve got to have the movies in the theaters.
JIM:
12:05
One more question on Super [Mario Bros]. The track record of the box office for video games has been a little bit hit-and-miss for that kind of IP.
PAUL:
12:14
But this is changing now, and it's really, I think it's more about having animated video game adaptations. If you look at Angry Birds and Detective Pikachu, Pokémon, and Sonic the Hedgehog one and two, those are all video game adaptations that did well. Where I think there's been an issue has been with some of the live-action video game adaptations, but that could change too. This kind of opens the door, and this could be the new frontier. It's always been superhero movies where that big genre, maybe it's the video game at it. Now there could be a paradigm shift in both the thinking by the industry and by audiences and family audiences who everyone thought was lost during the last couple of years, they came out in big numbers.
DAN:
12:52
I think what this movie did, what Super Mario did, it really changed everybody's mindset about the box office for 2023. You know, first quarter was a little softer than everybody liked, Avatar was obviously fantastic. There were still good movies, and we started to see more films coming out. But it's just that one film, by just doing so much box office and exceeding every single expectation. Every analyst. I can tell the people at Universal, didn't expect it to do this level of business. And it just, that one movie, to me, has changed the mindset on how successful. 2023 is going to be.
PAUL:
13:26
That's so true, and I agree with you 100 percent, because it's also the perception. So, when people read about the movies, and they see, well, the box office is down as movie disappointed. It's like, you know, everybody wants to be part of that, what's ever popular or cool? Well, it's not cool to have a failing box office or movies that underperform. But now this whole idea that was brought up during the pandemic, that the movie theater was going to meet its inevitable demise more quickly than expected because of the pandemic, just didn't happen. And now I think we can put that to bed permanently. The movie theater can take on all comers, take on all challenges, and it's great operators like you that are making that experiential part of it so key for the moviegoer.
JIM:
14:11
We want to bring in a special guest right now. He is the director of the new Disney film from Pixar Animation, and Walt Disney Animation Studios, Elemental. He's currently at Skywalker Sound, but we connected with him via video earlier. Please welcome Peter Sohn.
(Applause)
PETER:
14:30
Hi Everyone! Hello, CinemaCon. It's an honor to be here, Jim.
JIM:
14:35
Pete, you've directed two features for Pixar, The Good Dinosaur, and Elemental. Tell us about this film.
PETER:
14:42
Oh yeah, I mean, I'm so excited even. I mean, this Elemental has been a real personal project for me. It's about a world that comprises of earth, wind, fire, and water, and how they all can mix and can't mix. And in the middle of all of that, it's this warm love story between this young fire woman and a water boy. And in the middle of that, it's also a love story between a father and a daughter. And so, it's this triangle.
JIM:
15:13
Well, Dan McGrath is with us from Cineplex. And I'd love for you to share your thoughts with him and our audience here of what the cinema visual and sound experience provides to you as a filmmaker.
PETER:
15:28
You know, it's... There's a lot of love put into the films, of course everywhere, but at Pixar, our dedication to the big screen, our dedication to a fidelity and a richness of an image that can be very immersive. And so that high quality picture of course is a priority, but we're still at Skywalker mixing the film now and the wizards over there have brought such a level and layer of this world, of this immaculate reality where it's become even more believable. And so that sound fidelity, of course, is a high priority. But look, this is all about connecting with an audience. This is all about trying to find moments that are memorable, find characters that you can connect with. And we've been working really hard to do that so that we have Thomas Newman as a composer. And again, we're so lucky to be even working with him, but just hearing his music merging with the sound effects, merging with the picture right now has been one of the greatest highlights of my life. And so, I'm hoping that audiences around, you know, everywhere can really feel the work that we've all put into it.
JIM:
16:37
What do you do to create characters that my children see as their friends, not just images on a screen?
PETER:
16:44
That is such a great question. And, you know, for as long as I've been at Pixar, I see the filmmakers here constantly looking to their lives, looking to their friends, and looking to the people around them in terms of inspiration of how to build some of these characters. And it's funny to say that we're building characters. When you start even talking about a character, they begin to come alive in a way where you don't feel like you're building them. You feel like you are growing with them. And from the character designs to the voices, all of it stems from very personal places for people in fun ways, you know, Nemo and I remember, I understand the director talking about Marlon and his own fear as a parent, you know, walking his kid to school and letting him go and that all came from a real place. And so, you know, like Russell in Up, the little Asian kid that was tagging along with Carl Fredrickson. It all came from like, oh yeah, you know, this wasn't, isn't it funny? Like a Boy Scout in the city. Yeah.
JIM:
17:53
Every Pixar movie has its own color palette that is so magnificent that it's almost trippy to watch the movie because the colors are such a rich part of the storytelling. Um, with our HDR and all these new projection techniques, laser, we're really able to project a lot of the colors that you all want to push. Talk about that for just a moment.
PETER:
18:18
We are rendering everything in 4K. And so there's already a fidelity that, that's something that we are really excited about. The HDR component, look, our main character's fire. And so she's projecting light. There are no shadows that are allowed on her. It's one of the toughest characters we've built here at Pixar. Wade is water and light bounces all over him and he's a very difficult character to control. And so the lighting of these two characters has been a tremendous challenge. And so the HDR, the fidelity of the image has been something that we have fought whole time to make really pristine and to exploit so that the audiences get there can feel when our characters are burning bright, when Ember, our main character who's fire, when her light, you know, when she feels inspiration she goes brighter and you know we don't want the image to get blown out but you're balancing that game because she is a being of light to so that you can still have that contrast and the dynamic range that is so wonderful in all of our theaters.
JIM:
19:23
Peter, we know you have to get back to mixing. We have such high hopes for this film. You have such fans in this audience that are so grateful to Pixar for always delivering the finest films in the finest way to be seen. So great good luck. Thank you for stepping away to say hello to us today. And we will see you at the movies, Pete. Thank you.
Peter:
19:49
Thank you, Jim. It's been an honor. Thank you so much. Thank you, CinemaCon. Thank you, everyone.
(Applause)
Jim:
19:56
Dan, it's great to hear someone who's literally stepping away from a mixing studio to talk about his characters and how much light they put off so that your theatres, your customers have a transcendent experience, huh?
DAN:
20:12
Yeah, absolutely. And you know, it's interesting when you talk about light, because it's always been one of the challenges we all have in running our theatres is that light output on screen. It's one of the great things about laser - significantly improving that light output will be fantastic for the guest.
WIM:
20:28
So Dan, Cineplex is offering a wide variety of experiences and VIP experiences. Take us a little bit through that. What is that? And what are you trying to accomplish for your moviegoers with that?
DAN:
20:40
Yeah, so really just carrying on from what we talked about before, it is that differentiator from the home. And so giving people the opportunity to see a movie in our premium large format, which, we call Ultra AVX in an iMac screen with ScreenX we have. And we have 4DX auditoriums as well. D-Box seats. Then you throw on the VIP experience. We have kids auditoriums, a concept we call the clubhouse. So it's really about creating that different experience. It's not a, you know, what, obviously we still have, you know, we have 1600 screens and the majority of them are still your traditional theaters. But whether it be through seating upgrades or creating a differentiated experience, it's what people love and they are very willing to pay. Every single one of these premium experiences have come out at a fairly significant premium price tag, and people have no problem. They are always the first auditoriums to sell out, are all of our premium experiences.
WIM:
21:37
Do I hear you saying that you're going to expand the premium experiences if I hear the success they're having?
DAN:
21:43
We've had great success and we're just going to continue to add every in every single one of those formats that I talked about. We will continue to add throughout the year.
JIM:
21:51
Dan, you talk about a journey for the for the customer. It feels as if and I've had several friends just anecdotally say that they were in the habit, the word habit, of going to the movies almost every weekend or every couple of weeks. It was a fallback idea of getting out of the house and going to do something. The pandemic shook that up. And I had a friend who saw Air and said, oh my gosh, I went and saw this movie. It was my kind of movie. I had a great time. But I realized when I was in the theater, it had been months since I'd been there. Is it a habit? And what do you think re-instills in people? They know it, it's muscle memory but maybe they haven't practiced it recently.
DAN:
22:34
You know, I think it's so true, Jim. You know, I have a saying that movie going begets movie going. So and it is so much more is when I talked earlier, so much of it is getting people back into that habit. So even if they did come out to see Top Gun, let's say, which, you know, thank you, Paramount, it was such a fabulous movie. And it did get people out again. But then there was nothing else for that demo to see for months. And then they get out of the habit. So what I'm really excited about now is not only the product that we're starting to see this week. But just the fact that even in the past, you know, call it the last six weeks, eight weeks, there's been a new movie every single week. So and we haven't had that all of 2022 was very lumpy from a release schedule. It goes back to some of those production delays, you know, and really just studio models in terms of how they were releasing some of their films. But getting people in that habit, so they do it because you go to a theater and then you see a poster or you see a trailer for a movie that's upcoming. And you just get reminded about what a great out of home and very affordable out of home experience it is. So yeah, I think again, content is everything and the more content there is, more we'll get people in that.
Jim:
23:37
I now go out to dinner at restaurants and I play a game with myself to try to guess how high the bill's gonna be for dinner for two. It's an expensive thing that all of a sudden makes going to a movie theater seem to be one of the better values out there. You don't have to drive anywhere to get there.
PAUL:
23:53
It's a great value, I think for the money, especially for a family of five or six, to be able to go outside the home, have a great experience and enjoy that. And relative or compared to other outside the home activities, going to a movie theater is a relative bargain. And if you love the movie, that's even better. And if you love the in-theater experience, that's great. But it's definitely a momentum business. And like you said, you got to keep that rolling. Otherwise, there was a lull last fall after an amazing summer. That kind of shrunk the marketplace a bit. This year, we're on track to have a much more even, more movies and more often is my motto for this year. And that's gonna hold the industry in good stead.
JIM:
24:33
Dan, I'm curious, you partnered with Netflix to release Knives Out in theaters last year, and you've been in the press indicating an interest to partnering with streaming services. There was a point a couple years ago where everybody thought they were the enemy. You seem to be thinking that they may be partners. What's behind this thinking?
DAN:
24:50
Well, and it comes back to content again, so, you know, I wouldn't say we partnered with Netflix. So, I think that would be a bit of a stretch but what I would what I would say is that as studios have looked at Reducing and when I say reducing right back to you know, the way they used to release movies sort of five ten years ago it's all about getting more content, so if talent is shifting some of their time and energy whether that be directors or actors and actresses moving into streaming, and there's great content that's being developed as those streamers look to have a theatrical release window. We will only release as a company if there is a significant theatrical window. We're not gonna do it if there's a two-week window. That just doesn't make any sense. But if we get the exclusive theatrical window for a long enough period and the content is there, then I think the streamers provide us, they provide all of us in the industry, with that content and fill some of those gaps.
JIM:
25:50
What's a desirable window to have?
DAN:
25:54
WIM:
26:06
You announced a deal with Lionsgate. What's your content strategy for this year?
DAN:
26:10
So one of the challenges that we have in the Canadian market is that we certainly get all the Hollywood releases. There aren't as many smaller distributors in Canada. There used to be a lot more. So there's probably about 200-300 movies a year that get released in the US that never make it to the Canadian marketplace. When you look at some of the other international markets, there's a lot of local content. Canada doesn't have that. We're kind of stuck because our good filmmakers end up going to Hollywood.
You know, you look at Denis Villeneuve, and I don't want to say that that's a little unfair to some very good Canadian filmmakers who stay, but the product, there just isn't as much product. So we don't have as much of that local content that can come in and fill some of those gaps. My first job in the business was in our distribution company that we had many, many years ago. And we got out of that for a number of different reasons. But in the past five years, so we had started our own distribution business, which was really about finding those smaller movies, finding those anime movies or something that would not have had a Canadian distributor otherwise. So we're able to fill that gap. So moving to this distribution deal that we're doing for Lionsgate was a natural extension of the distribution business that we already had in place. But now allows us to leverage, especially our data. I mean, we have 13 million members in our loyalty program, which is about a third of the Canadian population. We're able to leverage that data, leverage our marketing muscle that we have and distribute those films. And if you look at the success that we've had with a movie like John Wick, where we significantly over-indexed in Canada compared to what we normally would against a regular release of a film.
You know, it just shows that we can really leverage that data and the marketing muscle that we have to overperform.
Jim:
28:04
Paul, name five movies this year that you think will break $100 million pretty easily.
PAUL:
28:10
You mean that have already opened or?
JIM:
28:12
No, no, no. Well, in the next few months.
PAUL:
28:16
Guardians of the Galaxy Volume 3 obviously is going to kick off the summer. Marvel traditionally has kicked off many a summer. It's a little disrupted over that past couple of years. I know that Mission Impossible Dead Reckoning Part One could not have a better tee up than Top Gun Maverick last year and like Dan was saying, because the shift in production schedules, it threw the release calendar into disarray, which then put Top Gun Maverick in last year and then now we have Dead Reck, which I think is a great one-two punch. It's gonna be amazing. Barbie, I mean, that one is really, it's catching a lot of... heat.
JIM:
28:56
Who's that targeted at?
PAUL:
28:58
Well, you know, that's an interesting question, because it's not really a kids movie, even though it's based on a toy, so to speak, but it's much more than that. And I haven't seen the movie, but it looks like it's going to be sort of a philosophical look at how we view different roles in society. I don't know. It looks very interesting to me, and the fact, I mean, a great cast, and I think it's going to have an interesting point of view. I look back at that teaser trailer, which was an homage to 2001, the space odyssey, the Barbie teaser that was an homage to the monolith scene at the beginning of 2001. I thought that was brilliant. So for a film fan, that's just I don't know, Barbie just feels like that kind of movie. Fast 10, I think, obviously.
JIM:
29:42
Indiana Jones.
PAUL:
29:43
Oh, yeah. All day. I mean, there's more than five hundred million dollar films yet to come, which is great news. The Flash, which we're going to see this afternoon, I believe.
JIM:
29:55
David Zaslav said this morning, chairman of Warner Brothers, he thought it was the best superhero movie he'd ever seen.
PAUL:
30:04
That's a bold statement. That's a pretty strong. That's pretty strong. And of course, it's their movie, and they're really behind it. The trailer looks amazing. I'm not going to spoil anything, because I don't want to say the wrong thing, because there's a lot going on in that movie. I think people are going to be very excited coming out of that one I think also too, we don't wanna lose sight of the fact that independent film is super important because it's, you know, it's not, I know in the, during blockbuster season, which is the 18 weeks of summer, which is 40% of the domestic market per year that we fixate on the blockbusters. And that's what gets people in the seats. But if you look at a movie like Beau Is Afraid or something like that, if you look at the per theater averages for some of these films, if they're filling Dan's auditoriums, even though the box office of those films won't necessarily rank them in the top five of the year. It's still important to have those movies out there and have great theaters curating that content for their patrons.
DAN:
30:56
Well, I'm making sure that we get that wide demo of audience too. That's the other thing, we don't wanna have a business that only caters to families and Marvel fans. You know, that's not a business. That's not a business model that's gonna work in the long run. So we need that wide range of product to hit all demo.
JIM:
31:15
And it seems like it. Seems like it's here.
PAUL:
31:17
Yeah, it is here. If you look at this past weekend, Super Mario Brothers, Evil Dead Rise, Guy Ritchie's The Covenant, John Wick 4, Dungeons and Dragons, Air, The Pope's Exorcist, Renfield, Beau’s Afraid, and then we have an anime film, Suzume, I hope I'm pronouncing that correctly, Indian films in the mix, events cinema in the mix. This is a very exciting marketplace. I say, Dan, and I know you'll agree, and Wim and Jim, that if you can't find a movie on this slate that doesn't appeal to you, you are not looking at the slate. There is literally, it's cliche, something for everyone on this slate.
WIM:
31:53
Dan, let's talk a little bit about experimentation, right? We hear about variable pricing. We hear about movie paths, different formats. What are you guys doing? You're typically always strong in, you know, trying new things out. What do you think is important in the experimentation phase for you guys?
DAN:
32:07
So we have a lot of discussions internally around dynamic pricing. And one of the guys who I worked very closely with has said, well, we already have dynamic pricing because we have so many different pricing options for people. We obviously have child and senior pricing. One of the things we're very successful with in Canada, happened for many, many years, is a discounted price on Tuesdays, so it's about 40% discount. So Tuesdays are as busy as a Friday night in many cases. And so there's a value seeker crowd who goes for that. We also, because of our different experiences, I talked to it before with the premium experiences, we have different pricing models there as well. We've done a little bit of testing around different pricing models within the auditorium. I mean, D-Box seats is one, it's a different experience in that seat to have a seat within an auditorium.
We had something that we call prime seating that we tried for a little bit where we had we had different a better seat within the middle of the auditorium and I would say we had varied success with that I wouldn't I wouldn't come away from it saying yeah, that was really good because the the challenge is I love to sit in the middle of an auditorium. That's my best seat. Some people like to sit in the front, some people like to sit in the back. So, you know, so so differentiating pricing based on where the seat is in the auditorium is actually a little bit. We found it's a little bit challenging, because it's not necessarily for everybody. But listen, I do think that the industry overall, though, has an opportunity to have more of a dynamic type of pricing model. One of the things we tested many years ago, and not every studio loved it, but I really think it's the way to go, and it is more dynamic, is it was last-chance pricing. So when we knew it was going to be the last week of a movie, and we would then send out to our database and say, this is the last week this film was playing, if you haven't seen it yet, and we already knew they hadn't seen it because of our loyalty program data. And we tell them it's gonna be at a reduced price. So getting into something like that, that gets a little bit more with supply and demand, I think is where there's a bigger opportunity.
JIM:
34:11
I was recently very nearby Coachella and was struck by 125,000 young people were so focused on sustainability. And it seems as if that's an issue that's gonna continue to be important. I'd just like to ask both you and Wim, is sustainability, the environment, is that a part of your corporate culture? How do you address it, your thoughts?
DAN:
34:37
Yeah, it's very much. I mean, especially as a public company, yes, every public company is now starting to be measured on their ESG initiatives. So sustainability is very important to us as a company, and it's one of the great things we're seeing with laser projectors and other projects like reducing that energy usage within the auditoriums. We've done a lot of things within our theaters to reduce energy consumption as well, and recycling and a number of other things, but it's really, I think we're still early days. There's a lot more that the entire industry can be doing, and it's very important. You know who is most important too, is our cast members. They're the ones we hear from because they are, they're young people who are working for us. And why aren't you doing this? Why aren't you doing that? We get a lot of great ideas from them.
JIM:
35:21
Wim?
Wim:
35:22
No, absolutely. I think it's a big theme. If I take over the last four years, we kicked it off, I think four years ago with our new project range at the time, which was really built up of the ground where sustainability was one of the key parameters in the sense of, you know, we call it the eco scores we gave them. And it's not just about the consumption, but the recycling, the upgradability and those things. What we see today, it's a big discussion, right? It's probably the biggest discussion we have on our booth here, is about sustainability. So it really grows. But I think adding to what Dan says is the moviegoers and that demographics, they really care. So I think that we should all care because of, you know, the planet and many other things. And as public companies, we get measured on that. But at the same token, I think our customers care, the moviegoers care. And that's why I think we should take this and really take it to the next level. And we do if we can. We got a panel on that tomorrow, by the way, but everybody's interested, you know, you're more than welcome.
JIM:
36:16
And we've got time for a couple of questions. So if you've got a question, put your hand up. I want to ask Dan and Wim and Paul, we have been through such a tumultuous two or three years. And it seems to me that most of the senior folks that I'm running into, they seem to be focused and know what they want to do and get accomplished. Do you feel that you and your team are doing your best work right now? Does it feel like you're finally clearing the trees?
DAN:
36:47
Yeah, absolutely. And I think one of the things that did happen, I mean, we've got to try to look at some, what were the benefits of COVID? And there were some benefits. Nobody would ask for it, so I don't want to say that. But when you were shut down, it forced you to get some things done, to take a look at your processes, and take a look at, we're doing a lot around automation now within our company, for instance. And there's a lot of things that have really allowed us to focus on the things that are really important and needed to get done. And I think we've got, especially with, you know, there's sort of, when we've got all these pressures around us from so much disruption in our business, it really does allow you to focus on the things that are really important. So yeah, I would say our team is doing their best work around the whole guest experience and efficient operations.
JIM:
37:33
Wim?
WIM:
37:34
Yeah, I think that, you know, I talked about it yesterday night at dinner, you know, so the COVID is, people said, how do you get through this? Right. And if the way we look at it, building technology, you know, it's a long term vision. It's a projector you build, it takes you a couple of years. It's a lifetime of another 10 years and then another 10 years of end of service. It's a 20 year life cycle. So, not to stop those things in COVID was critical for us. How do we survive and continue doing those things? But of course, cutting down on many other things. Because in keeping the long-term horizon, and that meant then coming out of COVID, you know, gives you a stronger opinion. Gives you a stronger position because it means that you have been very diligent about what is critical in the long-term. And that's about strategy, making choices. But I think we had to make a lot of choices, but we are glad to did so because it put us ahead of the curve coming out of that. So...So yes, I think that COVID has definitely taught us how important it is.
JIM:
38:28
Dan, Paul, what movies have you got your eyes, what are you looking forward to seeing this year?
DAN:
38:34
You know, Paul talked about The Flash. I saw a trailer for The Flash last week and it was the first one I'd seen. I gotta tell you, that movie, I think, is gonna surprise people. It looks really good. But, you know, I would say, if I, probably the movie I'm most looking forward to is Oppenheimer.
PAUL:
38:50
You just stole my thunder. Sorry. That's my movie.
DAN:
38:53
Yeah, I mean, it just Christopher Nolan is incredible. And I think it's there's so many that I'm excited to see. But Oppenheimer will be right up.
PAUL:
39:01
And that's the thing. It's the excitement level that I think people feel. And seeing a trailer on a big screen is a totally you know, we talk about the difference between the home experience and the theatrical experience. Those things apply to the marketing as well. Are the trailers for the movie you're getting people excited and let's not forget the importance of the sound, right? Laser projection coupled with amazing sound. That impact, in that room, I think exponentially, we get more excited about movies when you see like I saw the some of the flash teaser trailers and things on YouTube or on a small screen like that looks really cool. Then I saw it yesterday or whenever the trailer was shown on that big screen with that sound, the Dune trailer today, just hit you right in the gut and it looks so amazing. That's what it's all about. That confidence that studios have in the business is shown by all the movies that are on the slate this year and set for next year. Consumers who are the ultimate arbiters of this business, whether it succeeds or fails, they are loving going to the movies and they have all that great content at home, but guess what? They're going out to the movies.
JIM:
40:09
I had a chance to talk this weekend with some people that are very close to Oppenheimer and they were saying. we think this movie's going to be one of the three or four or five that you'll remember your whole life. It's that kind of movie. He can deliver. So that's great. Listen, I want to thank Dan. I want to thank you, Paul. Thank you, Wim. Thank you. We close this show with a quote of the day. And the quote of the day comes from director James Mangold, who will premiere his new Indiana Jones film at Cannes next month. Here's what he had to say about this experience this week. He said, you're walking among legends and you're aware of it. The only wonderful thing on this project is that all the legends are embracing you and are happy to be there with you. Whether you're talking about Harrison Ford or Steven Spielberg or Kathy Kennedy or George Lucas or John Williams, what an opportunity. It's like being on an all-star baseball team. You just hope you rise to the occasion. Thanks again, gents. It's been a great show.
Thank you, audience. You've been wonderful. And we'll see you all at the movies.
