Good day, welcome to the Cineplex Inc. first quarter conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Pat Marshall, Vice President of Communications and Investor Relations. Please go ahead, Ms. Marshall.
Good morning. Before beginning the call, we would like to remind you that certain statements being made are forward-looking and subject to various risks and uncertainties. Such forward-looking statements are based on management's beliefs and assumptions regarding the information currently available. Actual results could differ materially from those expressed in the forward-looking statements. Factors that could cause results to vary include, among other things, the adverse factors generally encountered in the film exhibition industry, risks associated with national and world events, discovery of undisclosed material liabilities, and general economic conditions. I'll now turn the call over to our President and CEO, Ellis Jacob.
Thank you, Pat. Good morning, welcome to Cineplex Inc.'s 2016 first quarter conference call. We are pleased you could join us today. I will begin by providing a brief overview of our first quarter results, as well as a summary of our key accomplishments during the period. We'll take a look at some of the most anticipated films of the summer film slate. At the conclusion of my remarks, our Chief Financial Officer, Gord Nelson, will provide an overview of our financials, and we will follow with a question and answer period. I am very pleased to report that Cineplex achieved record first quarter results for 2016. Total revenue increased 30.8% to CAD 378.9 million, Adjusted EBITDA increased 42% to CAD 57.1 million, both first quarter records.
Additional first-quarter records were established for box office revenue, food service revenue, BPP, and TPP, We established an all-time quarterly attendance record of 20.6 million theater guests. The strong performance of the film slate, our success in food service, as well as the additional revenue derived from the consolidation of Cineplex Starburst Inc., following our acquisition last year, contributed to the record first quarter. Media revenue continued to grow this quarter, largely due to revenue from Cineplex Digital Media. Gord will share the balance of our record-setting first quarter results with you in a few moments. I will take time to highlight some of our key accomplishments during the first quarter. Star Wars: The Force Awakens continued to perform well in January, becoming the highest-grossing film of all time in North America.
Other top-performing films during the quarter included Deadpool, Zootopia, The Revenant, and Batman v Superman: Dawn of Justice, which recorded the highest-grossing March opening weekend of all time. These successes reinforce the message that theater guests want great movies for all demographics year-round and will come out in large, record-breaking numbers to support them. In March, we opened Cineplex Cinemas Marine Gateway and VIP in Vancouver, British Columbia. It is a two-story, 11-screen theater with seven traditional auditoriums and one UltraAVX auditorium with D-BOX motion seats on the first floor. The second level is home to downtown Vancouver's first VIP Cinemas with three licensed auditoriums and a licensed lounge. Later this year, we will open our eight-screen Cineplex Cinemas North Barrie and 11-screen Cineplex Cinemas Kitchener and VIP, both in Ontario.
We continue to enhance and expand our premium offerings and recently announced plans to significantly expand our existing D-BOX footprint of 44 auditoriums by an additional 23 auditoriums. Subsequent to the quarter end, we also announced a new partnership to add 4DX immersive theater technology to Cineplex Cinemas Yonge-Dundas and VIP in Toronto this summer. A 4DX auditorium features specially designed motion chairs and adds special environmental effects like wind, mist, and scent, all working together with the action on the big screen. This is a first in Canada, and we are pleased to provide another exciting entertainment choice for our theater guests. Moving on to media. This area of the business, comprised of Cineplex Media and Cineplex Digital Media, continued to experience growth during the quarter.
Cineplex Media revenue increases were driven by growth in the automotive category, as well as our new media initiatives, including WorldGaming and increased revenues from our digital poster cases, web mobile, and interactive media zones. Cineplex Digital Media also experienced increased revenues year-over-year as their client base continued to expand, resulting in increased project installations and advertising revenue. As previously announced, Cineplex Digital Media expanded its client base by becoming American Dairy Queen Corporation's endorsed provider for in-store digital merchandising solutions for Canada and the U.S. Looking at amusement, gaming, and leisure, we continue to move forward with the launch of The Rec Room, Canada's premier social entertainment destination, and announced our first Toronto location at the historical John Street Roundhouse across the street from the CN Tower. Plans are already underway for a 2017 opening.
Our first location to open is our South Edmonton location, which is under construction and set to open later this summer. During the quarter, Cineplex Starburst Inc. acquired the remaining 20% of Brady Starburst LLC that it did not previously own. Brady Starburst is one of the largest distributors of amusement and vending equipment in the U.S. Moving to Scene. Our Scene loyalty program continues to grow. During the quarter, we added another 200,000 new Scene members. This brings our total as of March 31st, 2015, to more than 7.5 million Scene members. Now, let's take a look at some of the films for the summer. Whether you're up for action and adventure, a romantic comedy, or an animated children's feature, there are movies for everyone. We've kicked off an exciting second quarter with "The Jungle Book," which continues to do well in our theaters.
On May 6th, we launch "Captain America: Civil War" in 3D. On May 20th, "The Angry Birds Movie" that is based on the very popular app, opens. We end the month on May 27th with the launch of "X-Men: Apocalypse" and Johnny Depp starring in the sequel film, "Alice Through the Looking Glass," also in 3D. On June 3rd, the Teenage Mutant Ninja Turtles are back with "Out of the Shadows," followed by the action-adventure film, "Warcraft." On June 17th, the highly anticipated sequel to "Finding Nemo" hits the big screen with "Finding Dory" in 3D. On June 24th, two decades after the first "Independence Day" film invaded theaters, we have "Independence Day: Resurgence" in 3D.
July's film lineup looks strong with the Canada Day launch of Steven Spielberg's "The BFG" or the "Big Friendly Giant." On July 8th, I think every pet lover in the country will want to see "The Secret Life of Pets" as it finally shares with us what our pets really do when we leave them on their own. On July 15th, we have the return of the cult classic, "Ghostbusters," this time featuring an all-female comedic cast. On July 22nd, "Ice Age: Collision Course" in 3D will be sure to please families, and "Star Trek Beyond" is sure to satisfy the adult and Trekkie fans alike. We end the month on July 29th with the launch of the action thriller, "Jason Bourne," with Matt Damon starring.
On August 5th, "Suicide Squad" in 3D jumps from the streets of Toronto, where it was filmed last year, to the big screen, and there's lots of good buzz about this movie. On August 12th is the family fantasy adventure film, "Pete's Dragon," starring Bryce Dallas Howard and Robert Redford. On August 19th, the classic film, "Ben-Hur," returns to the screen in 3D, and we end the month with the animated comedy from Andy Samberg entitled, "Storks." As you can see, the summer truly does have something for everyone. Before I turn the call over to Gord, who will provide an in-depth overview of our financials, we were pleased to announce a 3.8% increase to our dividend from CAD 1.56 to CAD 1.62 per share on an annual basis. The increase will be effective with the May 2016 dividend and payable in June 2016.
I'm proud to say that Cineplex has increased its dividend every year since the company converted to a corporation in 2011. I would like to take a moment to congratulate Gord Nelson on being named Canada CFO of the Year for 2016. This prestigious award is presented annually to honor senior financial leaders who have made significant contributions to business in Canada while demonstrating quality, insight, and integrity. Those attributes and more certainly describe Gord. Please join me in congratulating Gord for this well-deserved recognition. With that, I'll turn the call over to Gord, Canada CFO of the Year.
Thanks, Ellis. I am pleased to present the first quarter financial results for Cineplex Inc. For your further reference, our financial statements and MD&A have been filed on SEDAR this morning. They're also available on our investor relations website at cineplex.com. As Ellis mentioned, Cineplex reported first quarter records for all revenue categories as well as for VPP, CPP and adjusted EBITDA. Attendance was an all-time quarterly record. Total revenue increased 30.8% to CAD 378.5 million. Adjusted EBITDA increased 42% to CAD 57.1 million. Cineplex's first quarter box office revenue increased 23.5% to CAD 192.6 million as compared to CAD 156 million in the prior year as a result of an attendance increase of 17.4%. A VPP increase of 5.2% to CAD 9.36, a first quarter record from CAD 8.90 in 2015.
Our premium product percentage in the first quarter increased to 40.4% of box office revenue in 2016 from 25.3% in 2015. The impact of premium priced product on the average ticket price was CAD 1.04 for this quarter as compared to CAD 0.57 in the prior year, primarily due to the success of 3D product, with three of the top five films in 2016 being released in 3D as compared to none in the prior year. Food service revenue increased 23.4% to CAD 112 million as a result of the higher attendance and a 5% increase in concession revenue per patron to CAD 5.44, a first quarter record. The CPP growth was primarily a result of higher average transaction values as a result of expanded offerings, including those from Cineplex's VIP Cinemas. Total media revenue increased CAD 4 million or 13.7% to CAD 33.1 million for the quarter.
Cineplex Media revenue, which is primarily theater-based, increased 5.4%. Cineplex Digital Media revenue increased 32%, with increased project revenue for recently announced new clients, including A&W and American Dairy Queen, in addition to growth in existing and new business opportunities, including advertising revenue from the Tims TV network deployment and the Oxford Properties Group digital installation. With the acquisition of the remaining 50% of the equity of Cineplex Starburst Inc. on October 21st, 2015, we began consolidating their results during the fourth quarter of 2015. Other revenue includes CAD 23.3 million of gaming revenue arising as a result of the consolidation of CSI's results. During the first quarter, CSI acquired a 20% interest in its indirect subsidiary, Brady Starburst Inc., which it did not already own, for CAD 4.4 million. Turning briefly to our key expense line items.
Film costs for the quarter came in at 55.7% of box office revenue as compared to 51.4% reported in the prior year. The increase in the film cost percentage is a result of the significant increase in box office revenue and the concentration of the box office revenue from the top five films in the current period. These five titles accounted for 49.3% of box office revenue as compared to the top five Q1 2015 titles, which represented 34.2% of box office revenue. The top four films in the first quarter of 2006 each outgrossed the top title in 2015. These top films tend to have higher settlement rates than the other films in this slate during the strong performance. Cost of food service for Q1 2015 was 19.6% as compared to 21.4% in the prior year as a result of a mix of food offerings, including VIP offerings.
Other costs of CAD 189.4 million increased CAD 38.5 million, or 25.5%. Other costs include theater occupancy expenses, other operating expenses, and general and administrative expenses. Theater occupancy expenses were CAD 52.7 million for the quarter versus a prior year actual of CAD 51.1 million. Other operating expenses were CAD 117.6 million for the quarter versus a prior year actual of CAD 80.9 million, an increase of CAD 36.7 million. Specifically include an increase of CAD 20.1 million due to the consolidation with CSI, an increase of CAD 1.7 million due to the impact of new and acquired theaters, net of disposed theaters, higher same-store payroll of CAD 4.4 million due to higher business volumes as well as minimum wage increases in certain provinces.
Higher amusement, gaming and leisure costs, excluding CSI, of CAD 3 million, due in part to the addition of WorldGaming Network acquired in the third quarter of 2015. Higher 3D royalty fees of CAD 0.7 million due to higher 3D attendance during the quarter. Higher credit card fees of CAD 0.5 million due to increased online ticket sales and general operating cost increases due to higher business volumes. G&A expenses were CAD 19.1 million for the quarter, which were CAD 0.2 million higher than the prior year. Interest expense of CAD 4.8 million was CAD 0.9 million lower than the prior year amount of CAD 5.7 million. Contributing to the decrease was a CAD 1 million decrease in non-cash interest, mainly as a result of the full accretion of the EK3 earn-out in 2015. The company recorded tax expense of CAD 5.5 million during the first quarter of 2016, comprised substantially of current tax expense.
Our blended federal and provincial statutory tax rate currently is 26.8%. Net CapEx for the first quarter was CAD 28.7 million as compared to CAD 26.2 million in the prior year. We continue to estimate that net CapEx will be approximately CAD 100 million for 2016. Subsequent to the quarter and taking advantage of the favorable credit and interest rate environment, we entered into an amended and restated credit agreement, increasing our borrowing capacity to CAD 550 million, of which CAD 400 million is a revolving facility. Record first quarter revenue contributes to our strong Q1 results. We continue to remain comfortable with where Cineplex Inc. is positioned today. Our strong balance sheet and low leverage ratio allows us to continue to invest in future growth opportunities for the company and benefit from future strong film product.
As Ellis mentioned, we are pleased to announce the 3.8% increase in the annualized dividend to CAD 1.62, effective with the May dividend to be paid in June 2016. That concludes our remarks for this morning. We'd now like to turn the call over to the conference operator.
Thank you. Ladies and gentlemen, the Q&A session is now open. Please queue up for questions. Our first question comes from the line of Paul Treiber at Scotia Capital. Please go ahead.
Gord, maybe you could talk just a little bit about the trending you've seen in Western Canada, Alberta in particular, just around CPP and how that's sort of played out over the last few months.
Sure. As was said over the course of the last seven, eight years or so, in times of economic struggles, people still go out to movies, and their box office has increased seven of the last nine recessionary periods. As expected, at box office, the results are still very strong out in Alberta. We do see some minor softening in the spending at the concession stand, but I wouldn't say characterize it as significant at this point.
Okay. On CDM, maybe talk a little bit more about the pipeline there. It was nice to see the Dairy Queen deal locked down. How does the U.S. pipeline look, guys?
Yeah. As was said, we opened an office in the U.S. about a year and a half ago. We were very encouraged about the prospects and the opportunities and the processes that we're involved in the U.S. We were happy to announce the Dairy Queen agreement in the first quarter, our outlook on additional new business going forward is still very strong.
Great. I guess just one last one, we'll pass the line. There was a lot of noise in the last month at CinemaCon, in particular, around a premium windowing strategy. Maybe give us your thoughts, Ellis, as to how you'd view that or if it's any different than the last couple of times we've been down this path.
Yes, Paul, it's a good question. As you know, we always are faced with different challenges in the exhibition business. We can't forget that this is a CAD 38 billion worldwide business and a CAD 11 billion North American business. Canada is close to CAD 1 billion of that. The studios themselves are not going to be walking away from these businesses. As we heard from some of the biggest filmmakers there, like James Cameron and Christopher Nolan, that the best place to see a movie when it's first released is in a movie theater. I don't think that is going to change as the market outside of North America continues to grow significantly and the desire for Hollywood movies continues to evolve in other parts of the world.
To basically cut short the answer, we at Cineplex are committed to protecting the theatrical window, we are always looking at different ways of working together with our distribution partners.
Great. Thanks, guys.
Our next question comes from the line of Drew McReynolds at RBC Capital Markets. Please go ahead.
Yeah, thanks very much, and good morning. Starting with you, Ellis, just in terms of the big picture trend towards greater box office concentration, just would love to get your updated thoughts on whether you believe that is a firm trend that's underway across the industry and ultimately, how you think that impacts your business.
That's a great question. As we saw in the first quarter, we had a significant amount of the box office coming out of the big five movies that were released, which is great news in the fact that there's a real strong desire for people to come and have the experience in the theaters. We continue to raise the bar as it comes to UltraAVX premium large format, our 3D D-BOX, IMAX, 4DX, VIPs. We've got a lot of different choices for people. The key thing is, I think what you're seeing is basically the studios and our suppliers looking for the bigger films to deliver the grosses. What's interesting is at CinemaCon, we saw basically presentations from newer studios like STX, which is committed to delivering the middle-range movies.
We even saw Amazon that's now also looking at delivering movies and keeping within the required theatrical window. As the studios move in one direction, I think you're going to see a number of these others come up with movies that will service the smaller budgets and the box office in the CAD 50 million to CAD 100 million range.
Okay, that's interesting. Thanks for that. Also, just following up on the tournament that finished up in March on the esports side, just wondering, having gone through it now, just some of your key takeaways, positive or negative from that experience, and then what the roadmap looks like for the rest of the year. Final question, maybe for you, Gord, just in terms of the ramp-up in installations within CDM, can you help us for modeling purposes, model that perhaps for the rest of the year, at least in the next couple of quarters? Thank you.
Gord handed out the big check, so he's going to tell you that.
Look, we're creating something that's sort of unique globally in terms of creating national tournaments, which consists of both online play and then location-based play culminating in the final. It's very exciting from our perspective to launch Call of Duty as our first tournament. The response was remarkable. The media interest, the sponsor interest was very strong. The participant interest was also strong. The title went extremely well from a logistical perspective. We are now offering our second title right now, which is Street Fighter V, which semifinals occurred on Sunday. We will look to launch what we'll call national tournaments on a quarterly basis. We're going to look to do some one-off type titles and one-off tournaments also throughout the year.
As we look at this platform, as I described, it is kind of unique in that we are combining online and physical-based play, is we are looking to extend that into other geographies through relationships with some of our other partners and peers throughout the world. With respect to your question on CDM and the rollouts, as we have described before, certain clients look to roll out throughout their installation base very quickly, and other clients will take a number of years to roll out over their base. I would say once you get involved in franchise type operations, you are probably talking about something that is a little bit of a slower rollout program than something that would be a corporate-owned entity or something like a financial institution.
Okay. Thank you very much.
Our next question comes from the line of Derek Lessard at TD Securities. Please go ahead.
Good morning, everybody. Just to go back to the WorldGaming, you did say that it did contribute to the digital media uplift this quarter. Just wondering if you were able to add some color to the materiality of that.
It was actually in the media, more traditional. The tournament was based in the theater, it's in the media line as opposed to the digital media line, just so you know. It was enough to warrant a discussion in the MD&A. We're not quantifying that though at this point in time.
Okay. Fair enough. The 1.2% increase in the concession cost percentage in the quarter, just wondering if that's something you guys are typically able to pass on.
Yeah, we always monitor cost. First and foremost, you need to remember that a portion of that increase is related to increased VIP sales. Sorry, concession sales in the VIP auditoriums. Those are typically higher priced items at lower margins. In that case, that's not a cost to be passed on to the consumer. Now, there is a small element of food cost pressure that we're just seeing, and everyone is seeing, related to the U.S. and the Canadian dollar. That could be an item that we may look to in the future passing that to consumers.
Okay, thanks for that. Just maybe just one final modeling question. In terms of the new credit agreement, I'm just wondering in terms of what should we be modeling for the effective interest rates going forward?
Look at it. We have an existing swap in place which goes till 2018. That's noted in the MD&A. The all-in cost will be approximately around 2.5%.
Okay. Thanks, everybody.
Thank you.
Our next question comes from the line of Rob Goff at Echelon Wealth Partners. Please go ahead.
Thank you very much, and good morning. My question would go back to the esports again, just trying to dive a little bit deeper into that business model. If you could talk to how you are seeing the sponsorships. I know Sony is there, and ASUS is there. Are there other opportunities? Could you also talk to the extent that it's becoming more of an online business as opposed to in theater, how that balance is? Gord, you made a reference to other geographies. Is there anything else you could provide on that? Thank you.
First on the sponsors, in addition to the ones that you noted, Plantronics was a sponsor, as was EB Games during the first event. I think the one sort of key thing about sponsorship in this space is we just held our first event. A lot of sponsors want to see a little bit of a track record and want to see what these events are all about before they commit to their sponsorship dollars. We were extremely encouraged by the high level of interest by the sponsors that we've named to get in there on the first event. We just continue to see peaked interest going forward. We expect that to grow with future events.
With respect to the question of online versus the Canadian Championship Series, which is a combination of both online and location-based play, is with the press and the media surrounding the Canadian Championship Series, we've also seen the traffic grow on purely the online aspects of the site. That's very encouraging, too. Lastly, your question on extending into other geographies is, as an exhibitor and looking for alternative uses for our auditoriums and for potentially non-peak periods, esports was high on our radar just as it is on other exhibitors globally. We now have a platform and a process in place that we could potentially share and partner with other exhibitors. That's where we see an opportunity to potentially grow globally.
Thank you very much.
Thank you.
Our next question comes from the line of Adam Shine at National Bank Financial. Please go ahead.
Thanks a lot. Good morning. Ellis, when I look to the MD&A and I see the evolving revenue mix, I'll give you a bit more context. Obviously, we've seen media and other as a share of revenues move over the last four years from about 9% to about 20%. Obviously, there are a number of other initiatives on the way, in particular, The Rec Room, as well as some of the other media initiatives you're pursuing. Can you speak to maybe an objective over the next five years or perhaps a longer-term target goal for some of these other initiatives?
That's a great question, Adam. Our focus, as we've said in prior calls, is to continue to diversify our business model and the less reliance on Hollywood where we have the peaks and valleys depending on the product that's out there. Media is one area that we are focused in and will continue to grow, both on the conventional media and on the digital media side, both in Canada and the U.S., and move beyond that as we develop the skills, expertise, and the client base. On The Rec Room, the gaming and amusement side, we see great opportunities there because again, it's using our infrastructure and what we do best in servicing our guests. Once the first few start to roll out, we will see the benefits of that contribution to our overall EBITDA.
It's hard for me to target a number, but our continued focus is over the next 3 to 5 years to deliver a good chunk of our EBITDA from non-Hollywood-dependent product. You're going to see costs related to that as we continue to build this business into the future.
Okay. I'll push you further on that at a later date in terms of a target, but maybe one quick question, and it might be really just a timing issue, but just as it relates to The Rec Room in Edmonton being pushed out from the spring into later in the summer, as you alluded to in your opening remarks. Anything to highlight there?
No, it's basically one where we had a clean slate and we started from scratch, and it's our first location, and we have to make sure that it is awesome when it opens. That's our major focus. I don't think this is a rush to the finish line. It's a rush to make sure that it's the best.
Super. Thank you very much.
Our next question comes from the line of Aravinda Galappatthige at Canaccord Genuity. Please go ahead.
Good morning. Thanks for taking my question. Just wondering, Ellis, if you could sort of maybe revisit some of your base pricing plans. I just wanted to find out if you were at a stage where you're starting to experiment with different pricing models for different periods of time, more dynamically around weekends, around sort of the heavier seasons, et cetera. Just wanted an update on that. Thanks.
We continue to look at our pricing models and actually have done some in-depth research on where we stand as it relates to pricing. We do have a lot of pricing options, but those are mainly driven by the experience that we are offering our guests, and that seems to resonate very well. If you look at our premium large formats, Aravinda, we have some of the best premium large formats in the world today when it comes to the box office grosses on the opening weekend of films. Even though we may represent only 6%-7% of the box office in North America, we have 70%-80% of the PLFs on opening weekend.
For us, it's all about delivering value for our guests and providing them with that experience, whether it's VIP, whether it's PLF, whether it's 4DX and IMAX and 3D, all of those areas. As far as the base ticket price and dynamic pricing, we will continue to look and evaluate that whole potential, especially when it comes to the big blockbuster movies. At this point, we haven't implemented anything in that direction.
Okay, great. Thanks for that, Ellis. A quick question for Gord. I know we always talk about the other operating expenses item. Not surprisingly, we saw some inflation given the level of activity. As we look ahead, obviously we have the CSI piece, which is going to be an incremental piece for a few more quarters and the WGN acquisition. Excluding that, can we, Gord, maybe expect sort of a lower single-digit inflation in that line item?
Yeah, we typically indicate the payroll. We segregate the payroll amounts. When we look at the increase there, roughly half in the first quarter was sort of volume and half was minimum wage increase.
Yeah, I would say going forward, the key driver is the business volume. There's such a huge increase in business volume in the first quarter on a year-over-year basis. I know that made it challenging from your modeling perspective in terms of the overall cost. Yeah, you should have marginal inflationary increases in the costs. Then that payroll item, which we segregate, will vary more closely with the business volume changes.
Okay, great. Thank you. I'll pass the line.
Thank you.
Our next question comes from the line of Robert Peters at Credit Suisse. Please go ahead.
Hi. Thanks for taking my question. Gord, maybe just on CDM, just for modeling purposes, can you give us an update on how many locations you have now? I believe it was 10,000 at the end of the year.
Yeah. I'm going to say about 10,300 or so at the end of the first quarter.
Perfect. Thank you very much. When we look at The Rec Room installation pace, maybe just to build on the question around the first location, are we still on track for the second location in Calgary opening this year? I know that the Ontario location is going to be a 2017 number. How should we think about the install pace going forward?
I think you've got to look at the Calgary and the Toronto location as being 2017 early openings.
Perfect. Thank you. Maybe, talking on the 4DX, that was an interesting announcement. I was just wondering, in terms of setting that up at the location and getting it installed, in terms of the auditorium, is that just a traditional auditorium that's going to be converted? How should we think about that in terms of maybe potential other retrofits at other locations?
Well, it's the existing auditorium, but it's totally a retrofit. You take a 300-seat auditorium and you end up with about 88 seats. These are basically special seats, which are pods, and the seats move with the movie. There's also, as I said, wind, rain, and air pocket effects, and there's up to 15 different effects as part of the experience. We are the third one in North America. There are two others, and this is the first one in Canada.
Perfect. Looking forward to trying it out myself. Thank you very much.
Great. Thank you.
Ladies and gentlemen, as a reminder, if you'd like to ask a question, please queue up at this time. We will take our next question from the line of Ben Mogul at Stifel Nicolaus. Please go ahead.
Great. Good morning, thanks for taking my question. First of all, Gord, congratulations. Very well-deserved, clearly. I want to go back to Paul's question about Screening Room. The demographic that a lot of us on this call are probably in is demographic that they're targeting, sort of young families, don't go to the movies as often as they'd like to. You guys were part of AMC on a Paramount sort of early window experiment. AMC's clearly dovetailed a little bit from the other group in terms of going down this path here right now. When you look at the world, do you see a world where there's a possibility where you can have basically both the ability to have sort of your window preserved, but also sort of participate in some of these digital technologies?
Just kind of curious if you view it sort of as an either/or or anything like that.
Look, Ben, we have been in the forefront when it has come to innovation as it relates to the movie technology. We were the first one in the world to do Super Ticket, which basically allows you to download and own the movie. Then also watch the movie on the EST windows. The critical issue becomes is I don't think the studios in their own want to trade dimes for nickels. The movie theater is still the engine that drives the train as far as launching a movie. Yes, will there be experiments? We will always look at opportunities, that's not to say that we will go with one model or the other. We look to our studio partners to work together with them. We did participate in the Paramount experiment as part of it.
Then all the other sort of demographics. I know folks are focused on a lot, which the millennials. There has been a lot of stats from the MPAA on them going a lot less to theater than they did five, 10 years ago. When you look at things like Atom Tickets, sort of group buying tickets, incorporating social media, et cetera, how do you think those fit in?
Well, we are in a different place, Ben, because we spent a lot of time, energy, and money in building up, number one, a very strong loyalty program. We own our own ticketing app. We have a great relationship with our guests. Not to say that Atom doesn't have good technology. We have had discussions with them, we have to look at Cineplex on the whole website and where we sit and how we process our guest tickets all the way through. To me, content and theater are critical.
Sure. Okay. That's great. Thank you. I'll let you both go.
Thank you.
We'll now take our next question from the line of Ken Rickelman at Raymond James. Please go ahead.
Thank you. Good morning. Ellis, I want you to speak to the advertising revenue trends, specifically the mixed impact with advertisers in a course of the likes of what we just had. Then maybe to one of the earlier questions, with the increased or more concentrated to the slate, let's call it, out of the studios, how that has had either impacting your advertiser mix or how advertisers are thinking about you as a channel.
The advertising continues to be strong from a theatrical perspective and also all the other mediums that we offer all the way from our magazine, which is one of the top-read magazines in Canada, in addition to our websites, our loyalty programs, and our mobile app, which has now been downloaded by more than 14.5 million Canadians. When you look at it, in the first quarter, the automotive was a huge part of our advertising at the theater level. Then we've got others, including financial services, the government, and the film studios themselves. It's a great medium because you've got a captive audience, and with things like TimePlay, we even added to the interactivity between the guest and the movie theater screen. Some of the demographics actually come to the theater earlier to play TimePlay on the big screen.
That part of the business continues to be strong and continues to grow moving forward.
Just Sorry, just to follow up there.
It's also the shift from the traditional media to cinema and out-of-home, which we are seeing on an ongoing basis. That's agencies and advertisers move their budgets from traditional media over to theater and all of the other assets that we have to offer.
Got you. I'll leave it there. Thanks very much.
Thanks.
There are no further questions at this time. I'd like to turn the call back over to Mr. Jacob.
Thank you all for joining us this morning, and we hope to see you all at our annual meeting next Wednesday, May 11th at 10:30 A.M. at Cineplex Cinemas, Yonge-Dundas and VIP. Our 4DX won't be ready, but you can see what's happening. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.