Good morning, and welcome to the Cineplex Inc. Fourth Quarter and Year End 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'd 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, 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 President and CEO, Ellis Jacob.
Thank you, Pat. Good morning, welcome to Cineplex Inc. Fourth quarter and year end twenty fifteen conference call. We appreciate you joining us today. I will begin by providing a brief overview of our top line results as well as a summary of our key accomplishments during the fourth quarter.
I will also highlight a few of the most anticipated films for 2016. At the conclusion of my remarks, our Chief Financial Officer, Gord Nelson, will provide an overview of our financials. As always, once Gord has concluded his remarks, we will hold a question and answer period. I am very pleased to report that 2015 was the most successful year in Cineplex's history. Record setting results were achieved in all key business metrics.
Total revenue for the year increased 11% to $1,400,000,000 and adjusted EBITDA increased 24.3% year over year. New annual records were established for box office revenue, which increased 5.7% to 711,100,000 and attendance, which increased 4.6% to 77,000,000 guests. This was due to the success of multiple blockbuster films during the year, including The Force Awakens, The Age of Ultron, Minions and Furious seven. Or will share the balance of our record setting fourth quarter and full year results with you in a few moments. Now I would like to highlight our key accomplishments during the fourth quarter.
Looking at theater exhibition, Star Wars: The Force Awakens generated 22% of box office revenue during the quarter even though the movie had only played for fourteen days. Other standout performers included Spectre at 10.8% followed closely by The Martian at 9.2%. Simply put, the quarter was a tremendous success and proves once again that consumers love experiencing a movie in theater on a big screen with great sound. During the fourth quarter, we opened the three screen VIP cinemas at our Yonge Eglinton location. This brings our total VIP cinema locations to 15 with a total of 56 auditoriums at year end.
We also took the opportunity to upgrade the traditional theater at the same time, including new seats, carpeting and a concession stand among others. In early March, we will celebrate the opening of our newest theater in the Marine Gateway area in South Vancouver. Cineplex Cinemas Marine Gateway and VIP will feature seven traditional screens, Ultra AVX and three VIP cinemas. Our media business is comprised of two areas Cineplex Media and Cineplex Digital Media, which combined generated record results in 2015. Cineplex Media, our wholly owned and operated advertising business delivered its best results ever due to record showtime and pre show advertising sales.
The combination of growth in key sectors and the addition of new clients are the major factors behind this success. Cineplex Digital Media represents our digital out of home advertising business, which includes digital signage networks both on the path to purchase in shopping malls and office complexes and at the point of purchase in quick service restaurants, financial institutions and retailers across North America. Cineplex Digital Media provides an innovative and full turnkey digital solution for some of North America's top brands including Tim Hortons, McDonald's Restaurants of Canada, Royal Bank of Canada, Scotiabank, Oxford Properties, Ivanhoe Cambridge and Rogers to name a few. In November, we were very pleased to announce that Cineplex Digital Media had been selected by E and W Food Services of Canada Inc. To be the sole provider of digital menu boards for its over eight fifty restaurants across Canada and has already begun installation in some locations.
Subsequent to year end, American Dairy Queen named Cineplex Digital Media as their endorsed provider of in store digital merchandising solution for their stores throughout both The United States and Canada. This business is a strategic area of growth for us and we believe that Cineplex Digital Media is well positioned for significant growth throughout North America and beyond. In amusement, gaming and leisure, during the quarter, we completed the acquisition of the remaining 50% of the issued and outstanding equity of Cineplex Starburst Inc. That we did not already own for approximately $21,000,000 As we look to support the existing businesses and grow with The Rec Room, amusement gaming is a strategic area of growth for us and we believe there are more opportunities to expand this business organically and through additional M and A activity. We continue to move forward with the launch of The Rec Room, Canada's premier social entertainment destination, having announced two locations during the year with the first opening in South Edmonton Commons this spring and at Deerford City in Calgary in the 2017.
Other locations are in active development and will be announced as they arise. Subsequent to quarter end, Cineplex and World Gaming Network announced the signing of a comprehensive deal with Sony Computer Entertainment Canada, a world leader in interactive entertainment and gaming hardware. Sony is the exclusive presenting sponsor for all of our twenty sixteen tournaments, which we have named Cineplex World Gaming Canadian Tournaments presented by PlayStation. We anticipate hosting approximately four national tournaments annually. We also believe we can export this business model globally to other exhibitors and large venue operators providing a secondary future revenue opportunity.
We also announced that our first tournament will feature Call of Black Ops three. The online qualifying portion began on January 7 and ran through February 7. The regional finals take place in 24 of our theaters on February 21 and the tournament culminates with the Canadian finals on March 6 at our Scotiabank Theater in Toronto. On February 12, during the NBA All Star Game taking place here in Toronto, Cineplex and World Gaming will host a hands on come and see our new esports theatre initiative from five to 8PM at our Scotiabank Theatre in Toronto. Sports fans and gamers alike are invited to come and experience the thrill of gaming on the big screen.
It is important not to confuse this open house with the tournament play I mentioned earlier. Moving on to SCENE. We are pleased to announce a term extension to our agreement with Scotiabank for the SCENE program, which will now run for ten additional years until 10/31/2025. The extension also includes naming rights for two additional Scotiabank theatres bringing our total to 10 theatres and to the Cineplex VIP cinemas presented by Scotiabank and to Scotiabank's annual commitment with Cineplex Media. Our partnership with Scotiabank has been extremely positive and we are pleased to continue to work together in the future on this popular and much loved loyalty program.
The SCENE loyalty program continued to grow its membership adding approximately 200,000 new members to finish the fourth quarter at more than 7,300,000 members. This is the third consecutive year that SCENE has added more than a million members on an annual basis to the program. Looking at our corporate initiatives, we were very pleased to once again be recognized as one of Canada's 10 most admired corporate cultures of 2015 by Waterstone Human Capital. The annual program celebrates 10 organizations across four categories with cultures that drive performance and contribute to the bottom line. This is the second consecutive award for Cineplex and each award is for a three year term.
At year end, we launched a new integrated Cineplex brand platform that asks Canadians to see the big picture and rediscover the importance of entertainment in their lives. The platform is intended to forge a stronger connection between Cineplex and our guests and customers as well as unify all of our varied businesses and 13,000 employees across Canada. If you visited our theaters anytime from mid December onward, you would have seen the first initiative of this brand platform, which was an animated short film that played before every movie. Entitled Lily and the Snowman, it tells the story of a girl named Lily and a friendly snowman and showcases in a very heartfelt way how life gets in the way of Lily enjoying the entertainment she once loved. Given the overwhelming positive response we have received from guests in both mainstream and social media, we certainly made the connection with people that we wanted to reach.
The short had been seen more than 13,500,000 times in theaters since its launch in mid December and also has been viewed online via social media more than 28,000,000 times to date as the campaign went viral. Now let's take a look at the film slate for 2016. Overall, I'm very encouraged by the film schedule this year. We always like that when there's a combination of action, adventure, comedy, drama, science fiction and animated children's features throughout the year in addition to strong film sequels. Each quarter this year seems to have a good combination of these genres combined with a good mix of traditional and three d product.
The first quarter is off to a good start as box office in Canada for the month of January was up over 19% year over year as reported by Rantrack. The Force Awakens continued to perform well in January along with The Revenant and Kung Fu Panda three. Looking ahead, Deadpool, Zootopia, The Divergent series and Batman versus Dawn of Justice fill out the quarter. In the second quarter, we can look forward to Melissa McCarthy's new comedy, The Boss. Families and baby boomers alike will be delighted to see The Jungle Book this time in three d back on the big screen as well as Finding Dory also on three d, which is the highly anticipated sequel to Finding Nemo.
Civil War in three d, X Men, Apocalypse Warcraft and Resurgence complete this period. The third quarter features Steven Spielberg, The BFG or The Big Friendly Giant And the and from the studio that gave us the highly successful Minions and Despicable Me franchises, there's The Secret Life of Pets. Ghostbusters is back with an all female comedic cast. Then there's Star Trek Beyond, the still to be titled Jason Bourne film and Suicide Squad in three d round out the third quarter. In the fourth quarter, Tom Cruise returns in Jack Richard, Never Go Back.
Tom Hanks returns with the latest Stan Brown novel to hit the big screen with Inferno and Marvel has Doctor Strange. Harry Potter fans will be thrilled to see the prequel to the incredibly successful series when the first of two new films, Fantastic Beasts and Where to Find Them hits the big screen at U. S. Thanksgiving and then again in 2018. The year will finish with A Star Wars Story and Assassin's Creed, the popular Sony video game starring Michael Fassbender that launches in time for the holidays.
Before I turn the call over to Gord, I would like to say that it has been an extraordinary year for Cineplex. I feel very privileged to lead this company filled with exceptional senior management team and great employees in our offices and theaters across Canada. I want to take this time to thank them for all of their great work this past year. Also on behalf of Gord Nelson and Pat Marshall, we want to thank community for your ongoing support and votes in recognizing the Investor Relations team at Cineplex for the work we do by winning the Best in Sector Award for 2016 at last week's IR Magazine Awards Gala. Now I will turn the call over to Gord.
Thanks, Ellis. I'm pleased to present the fourth quarter financial results for Cineplex Inc. For your further reference, our financial statements and MD and A have been filed on SEDAR this morning and are also available on our Investor Relations website at cineplex.com. As Ellis mentioned, Cineplex reported all time fourth quarter and full year records for all revenue categories as well as for attendance, BPP, CPP and adjusted EBITDA. Total revenue increased 22.6% to CAD407.4 million and adjusted EBITDA increased 35.9% to CAD85.2 million.
Cineplex's fourth quarter box office revenue was million compared to CAD172.5 million in the prior year as a result of an attendance increase of 7.1% and a BPP increase of 6.3% to CAD9.63, a quarterly record from twenty fourteen fourth quarter BPP of $9.06 Our premium product percentage increased to 46.8% of box office revenue in 2015 from 29.4% in 2014. The impact of premium priced product on the average ticket price was $1.22 for this quarter as compared to $0.67 in the prior year, primarily due to the success of The Force Awakens in this quarter. Excluding premium product, our average ticket price increased 0.2% to $8.41 as compared to the prior year quarter. Food service revenue increased 16.4% to $113,800,000 as a result of the higher attendance and a 8.6% increase in concession revenue per patron to 5.58 a quarterly 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 CAD8.4 million or 17.9% to CAD55.3 million for the quarter. Cineplex media revenue, which is primarily theater based, increased 38%. Cineplex Digital Media revenue decreased 19.6% due to lower project revenues, which were down 52% as a result of the timing of project installations, and this was partially offset by a 30% growth in existing and new business opportunities, including the Tims TV network deployment and the Oxford Properties Group digital installations. As we have noted in the past, new client agreements typically have long lead time, and we were pleased to announce the recent agreements with American Dairy Queen and A and W and are optimistic about our opportunities with other potential new clients in 2016 and beyond. As you may recall, the acquisition of EK3 in 2013 included a deferred earn out payment based on normalized 2015 operating results as defined in the purchase agreement.
During the fourth quarter, based on timing and a weighted probability of reasonably possible outcomes, we adjusted the deferred consideration to CAD10 million from an undiscounted value of CAD39.6 million and recorded a gain of CAD29.1 million as a change in fair value of financial instruments. Final settlement of this item may be materially different from this amount. With the acquisition of the remaining 50% of the equity of Cineplex Starburst Inc. On October 1, we began consolidating their results during the fourth quarter. Other revenue includes CAD21.2 million of gaming revenue arising as a result of the consolidation of CSI's results.
On the acquisition of the remaining 50% CSI, Cineplex's historic 50% interest was remeasured at the current fair value, resulting in a gain on equity interest of CAD7.4 million. Turning briefly to our key expense line items. Film cost for the quarter came in at 53.6% of box office revenue as compared to 51.4% reported in the prior year. The increase was primarily a result of the concentration of box office results during Q4 as compared to the prior year. Cost of food service for Q4 twenty fifteen was 21.8 percent as compared to 22.1% in the prior year.
Other costs of $192,400,000 increased $32,100,000 or 20%. Other costs include feeder occupancy expenses, other operating expenses and general and administrative expenses. Feeder occupancy expenses were $50,500,000 for the quarter versus our prior year actual $50,100,000 Other operating expenses were $123,300,000 for the quarter versus a prior year actual of $94,400,000 an increase of $28,900,000 Major reasons for the increase include an increase of $19,000,000 due to the consolidation of CSI, an increase of $1,600,000 due to the impact of new and acquired theatres net of disposed theatres, higher same store payroll of CAD4 million due to higher business volumes and extended operating hours at select theaters for the opening of Star Wars as well as minimum wage increases in certain provinces Higher three d royalty fees of CAD1.3 million due to higher three d attendance during the quarter, higher credit card fees of CAD0.7 million due to record ticket presales for Star Wars and higher marketing costs of $1,200,000 due to expenses incurred by SCENE supporting its partnership with SportChek and Cara and the program's earn and redeem changes implemented during the quarter. G and A expenses were $18,500,000 for the quarter, which was $2,700,000 higher than the prior year, primarily due to a $1,100,000 increase in long term and short term incentive program expenses.
Interest expense of $5,300,000 was $400,000 lower than the prior year amount of $5,700,000 contributing to the decrease of $200,000 decrease in cash interest as a result of lower interest rates on the revolving facility. The company recorded tax expense of $15,000,000 during the 2015 comprised substantially of current tax expense. Our blended federal and provincial statutory tax rate currently is 26.6% and the losses acquired of the EMC acquisition were fully utilized in 2014. Net CapEx for the fourth quarter was $22,300,000 as compared to $21,200,000 in the prior year. We continue to estimate that net CapEx will be approximately $100,000,000 for 2016.
Record fourth quarter revenues contributed to our strong Q4 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. That concludes our remarks for this morning.
And we'd now like to turn the call over to the conference operator for questions.
Thank you. Our first question comes from Adam Shine of National Bank Financial. Please go ahead.
Thanks a lot.
Good
morning. Obviously, congratulations are these are spectacular results. Couple of questions related to Alberta. Obviously, not much of an impact, needless to say, in the Q4. But curious as to whether or not early in 2016 any pressures perhaps more on the advertising side of things and necessarily in terms of theater attendance?
Adam, overall, we haven't seen any significant impact coming out of Alberta. As a matter of fact, in the first month of the year, the attendance is up in those theaters because again, you have to understand this is an entertainment treat and instead of people traveling, they are staying closer to home. And we see in past situations with recessions that the box office and the business continues to perform extremely well. And on the media side, we really haven't seen any impact as a result of what's happening in the oil patch.
I guess, I think early last year, maybe around this time last year, Ellis, you're getting a bunch of questions as to whether or not you'd be exploring concessions or food related items sort of into food courts, notwithstanding what you're going to be doing with The Rec Room, which is separate and distinct. But your answer then was you'll be experimenting within the feeder for a variety of different food offerings through 2015. Maybe subject to how that experimentation went, is there any change to the strategy going into 2016?
Adam, as we've discussed before, we have a great opportunity in our theaters to experiment with food offerings. And so far, we have done very selective out of the theater locations. And the plan is to continue focus on the theaters and to maximize the value coming out of there before we start to run into third party locations.
Okay, thanks. So maybe just one last one for Gord, just in the context of some of the step up in regards to the AMW as well as the Dairy Queen mandates, obviously acknowledging that initially as you ramp up, you get the project revenues and then subsequently you build up in terms of advertising and other related revenues. Can you give us I mean, is there any way to quantify some of these mandates? One of the big mysteries each quarter is obviously the strength of the other revenue line, but anything you can add to that would be appreciated.
Yes. I mean and look,
know it's a question that would you have typically asked historically, but when we look at twenty fifteen's results, the Cineplex Digital Media's revenues was just over $40,000,000 We have approximately 10,000 locations deployed in that business. So as you look forward, you may use those two statistics I just gave you as an indicator of the potential an assumption of a full deployment.
Okay. Thank you very much.
Thank you. The next question comes from Paul Steep of Scotia Capital. Please go ahead.
Great, thanks. I guess I'll split this one into two. On the M and A side maybe Gord, could you talk a little bit about the view on the media space in terms of your outlook there? Are weak dollar has changed any sort of views in terms of how you might approach expansion in The U. S.
On the niche side? And then I thought, Allison, in your comments, you were going fast there, whether I heard you say something with regards to around rec room and some form of M and A. I just wanted to clarify that. I may have misheard.
No. To respond to on the M and A, I did not say anything related to Rec Room. It had to be with the expansion of our gaming business.
Okay.
As we consolidated CSI and we continue to focus on that business.
So Paul, on your first question then with respect to the digital signage business and the opportunity for M and A or business in The U. S. As we've mentioned probably for the last year, one years point or so is we focused on opening an office in The U. S. To attract major North American and U.
S.-based customers. I think the signing of Dairy Queen is a great example of the success that we've had down there. We continue to look at opportunities. Most of our cost infrastructure is in Canada though. So as we look for continue to look for opportunities, we're looking to add on skills, potentially customer relationships that don't exist today.
And we're mindful of where the dollar is, but our focus is still to explore the landscape to see if there are other opportunities. And as we find some of these U. S.-based customers, the revenue stream is typically denominated in U. S. Dollars.
And as I mentioned earlier, the cost base is primarily in Canadian dollars.
Great. And then actually just to carry on with you as well. Could you talk a little bit now that CSI will fully be in the numbers, if there's any revenue seasonality we should just think about as that sort of filters through? And I guess then the final one, if there's any sort of uptick further uptick we should think about in Q1 on the film cost or we're sort of steady state likely around the level we had this quarter?
Thanks, guys.
Yes, guess to answer both of those questions then, I mean, look at the CSI business, there is a little there is some seasonality to it if you think it's not as pronounced as the exhibition business. But typically during seasonal holiday times, the business will be a little bit higher than non peak periods. So there is a little bit of seasonality to it. And Film rentals. Around the film rental, yes.
I always tend to and I know you're concerned about Star Wars. And I think if you go back to the experience that you saw 02/2010 with Avatar, where you had a film that generated a sizable portion of its revenue in the first quarter as opposed to the fourth quarter. If you look at those kind of trendings in terms of film costs, that's a good indicator of what you may see coming forward into 2016.
And Paul, you have to understand that Star Wars has now become the biggest movie ever in North America across $900,000,000 this weekend. So it is a significant contributor in the fourth quarter and in the month of January.
Perfect. Thanks guys.
Thank you. The next question comes from Derek Lessard of TD Securities. Please go ahead.
Thanks everybody. Again, congratulations on great quarter and great year. Maybe if I just start, now that you've announced your first tournament and major sponsor in the esports realm, maybe just wondering if you have any more color on the business model and perhaps when you expect it to start contributing?
We're going to expect it to start contributing in 2016. I think as we look at the statistics and the trends and the growth projections in this business, we've shared with others in some of our presentations, the global market in esports is expected to grow from just under $1,000,000,000 today to about $3,000,000,000 in three years or so. But 75% of that revenue stream is expected to be in advertising and sponsorships. And North America is supposed to represent about a third of that space. So that's when you're looking at what's the opportunity, that's the opportunity.
We were very pleased to announce our sponsorship with Sony and with some other partners that we have in this program. The interest is high. This is our first tournament. So I think we'd a bit remiss to kind of project where we think we're going to be for the rest of the year. But interest is high.
Advertising and sponsorship interest is high. Everything is aligning in terms of where those projections are that we see from a global perspective.
Okay. Maybe just a follow-up on Adam's question a little bit. In light of the weaker Canadian economy, I'm looking at it just wondering how you're thinking about your rec room initiative and the upcoming openings in Alberta?
You know, one of the good things on the situation in Alberta is the labor cost of actually buildings the locations have, you know, tempered a little bit. And we still feel it is important that people have these escapes in situations where the economy is weak. And we are very, very focused on making sure that we have the best offering when we open our location in South Edmonton Commons.
Okay. And then maybe just one final one, Ellis, you touched on it. And I'm just interested in knowing what your thoughts are about the upcoming 2016 film slate. Specifically, I was wondering prefer if movie years like the one that's coming up where it seems to be a bit more balanced, lacking that true blockbuster Star Wars?
We always prefer movie years where the box office office is continuing to grow and the attendance is higher than the previous year. That being said, it's always nice to have repeat hits rather than one big home run, but we'll take that home run also. And this year is slightly different in the fact that there are a number of movies that we see that could break out. But again, there's important concepts that are out there that need to be verified with the public. Okay.
Thanks, Dennis.
Thank you. The next question comes from Tim Casey, BMO. Please go ahead.
Thanks. Good morning. My question relates to the Screen Media business. The numbers were quite strong through the end of the year. And Gord, you mentioned briefly that there was some new customers in there.
Is there anything else that's happening there? Was there some onetime business? Or were you reporting things differently? I'm just wondering how we should think about that business going forward and maybe asking for a little more color on what drove it through the end of the year? Thanks.
Yes. No, I think,
I mean, for anyone who visited our theaters too, think
you would see the types of advertisements were out there. I mean, we're absolutely pleased with kind of the growth of the mobile gaming type category and had some significant successes in that category. So it was a combination, as we said in our notes, is really new sorry, existing customers continuing to participate in the growth of new customers. Now would the success and the expected success of Star Wars attract advertisers to new theaters, I mean, that's the potential of the known quantity. But really, we had growth in both existing and new customers.
Thank you.
Thank you. The next question comes from Aviranda Galapatthige of Canaccord Genuity. Please go ahead.
Good morning. Thanks for taking my question. I just want to start with the foodservice numbers continues to be strong driven by VIP. I was just wondering when looking back a year or so, the projections that you had for VIP on the foodservice side, are these numbers that are coming in ahead of that? I mean, it seems to be that is, I mean, given the CPP growth that we're seeing.
Does this maybe cause you to sort of revisit the rollout of VIP and look at maybe an expanded rollout for that platform?
Arvinda, VIP is contributing, but again the VIP is a very small portion of the total gain on the concessions. It also has to do with our offerings that we have in our traditional auditoriums and theaters. And in total, with the increase in the basket size with our guests, we are seeing that growth year over year. Now we are expanding the VIP, but again, we are doing it in a controlled and measured fashion across the country with the next one opening in March in Vancouver.
Okay. Thanks for that, Ellis. And with respect to digital signage business, I mean, I know you talked about some of the dynamics in the quarterly numbers. But when you look at it on an annual basis, obviously, you signed some very good deals with a number of operators. But pro form a when you bought EK3, you were sort of just south of $40,000,000 revenue.
We're still a little bit north of 40,000,000 right now. Just help me understand sort of the dynamics there. Were there some maybe some customers that you sort of exited when you bought EK3 that are not sort of in the revenue mix right now?
Yes. I mean, I think look, I think Erwin is the one thing that we're in through this through having the business for a couple of years now is the length of the lead time in a sales process with major and significant customers. And that's kind of the sweet spot for our business is we're a partner with major brands in significant number of locations. So I think if anything, it's kind of the length of time it's taken to secure some of these new customers that came more of a surprise to us.
Okay, I understand. And then last question for me, Gord. With respect to the positive working capital swing, it looks like, I mean, not just for the quarter, but also for the full year, it looks like it's mostly accounts payable. Is this around sort of the film payments at all? Or I just wanted to get your thoughts on that.
And would that sort of smooth out as we go back into as we look at the 2016 number on a full year basis?
Yes. No, absolutely, Will. It comes down to
the timing of things. The business volume during the fourth quarter particularly peaked in those last couple of weeks. And just given traditional payment terms on anything, you're going to have thirty days' worth of thirty, forty five days' worth of payables in there at any point in time. So it's really kind of based on the significant business volumes, both at the theater level and from the media perspective. So yes, it will reverse itself over time.
Q4 is always the highest source of working capital as we're selling gift certificates and we're selling and we're also having experienced the huge business volumes on the payment terms that kind of extended to the first quarter.
Great. Thank you. I'll leave it there and congrats on the quarter.
Thank you.
Thank you. The next question comes from Kendrick Tighe of Raymond James. Please go ahead.
Thank you. Good morning. Ellis, particularly strong January, but I'm curious given how sort of atypical February was last year with the 50 Shades success, as to your thoughts on this first quarter. I mean, there enough in the January carry and the back end of the slate to your mind to sort of support the expectations around this quarter? I mean, how what's your level of confidence around the quarter given that we're going into an atypical or in the middle of an atypical February?
Well, the big weekend was the last year with 50 Shades of Grey and Kingsman. This year we are opening Deadpool, which seems to be doing very well from a tracking perspective. We are opening Zoolander and we're opening out to be singles. So it will be interesting to see how this year the three movies can perform compared to last year. And then you've got Gods of Egypt, you've got Zootopia, you've got the Divergent series and Batman versus Superman.
So it's a quarter that still has some big pictures for the balance of the quarter, plus the carryover from what we had in January. So it's hard to tell how the quarter is going to end. But at this point, we are, for January, ahead of last year.
And just on that note, could you just confirm, was that 19% on the Rantrack number for January? Did I hear you correctly?
That is correct, yes.
Thank you. And then just switching gears on the eSports quickly. I understand the longer term opportunity and road map. I'm curious on how this first competition has sort of been relative to your expectations, whether you've been positively surprised on the uptake or the energy around the initiative. I realize not something you can sort of put numbers to as yet, but I'm really just trying to get an idea on the excitement level relative to what you'd expected or the uptake relative to what you'd expected on this first tournament.
Yes. I think the excitement level is really there. There's been
a lot of attention given to the event from kind of expected sources and unexpected sources. We have this interesting event that we're going to host on February 12 that you're all invited to go and visit and see during the All Star Week. We have our first our regional tournaments occurring on February 21 and then the national on March 6 for our first event. So it's going to be a really exciting event and I invite you guys to come and check it out in person.
Thank you
and congrats. I'll leave it there. Thank you.
Thank you. The next question comes from Rob Peters of Credit Suisse. Please go ahead.
Hi, thanks for taking my question. Most of mine have been answered, but maybe a broader strategic question. When you guys think about kind of long term growth outside of the box office, you've got a number of different initiatives with the esports, digital media and games that you've touched on today. Kind of maybe if we look out a couple of years from now, where do you think what do you think is going to be the biggest driver of the business outside of your traditional box office and concessions?
I think the media growth will be both from a digital perspective and our traditional media business will continue to grow and will be a major contributor to our EBITDA. And in addition to that, you mentioned both eSports and gaming, plus we've also focused on alternative programming at theater level, which is also a business that continues to grow. So it's all about using our infrastructure and our assets to make our company stronger. And with the opening of The Rec Room, we are very excited because it really pulls together a lot of the assets we have today.
Perfect. Thank you, Alex. And maybe just one follow-up on that. When we look at Digital Media, I think you touched on there's kind of been a longer lead time on that portion of the business. Previously, you had mentioned about like doubling the business.
Is that still the goal over time to try and get the revenues doubled there? And is there maybe a change in the time line on that? Or how comfortable are you guys feeling about achieving that longer term?
Yes. So I mean, absolutely, I mean,
I think it's taken a little bit longer. We've announced some significant new customers. I gave you our existing location count at roughly 10,000 and with an American Dairy Queen with a potential of just under 5,000, that would be our largest customer. So we're in the midst of a number of other processes. We're very optimistic about the outlook.
So yes, we're still comfortable in those magnitudes. I'd say it's delayed like a year or maybe two as some of these customers now roll out over extended periods of time.
And Rob, our focus is on the long term growth of Cineplex. And yes, we have spent money from an R and D perspective to continue to grow these opportunities. So but again, it's more about what is Cineplex going to look like three years from now, what not worrying about the next quarter.
Absolutely. And good to see those deals starting to ramp up. Thank you very much.
Thank you.
Thank you. There are no further questions at this time. I would like to turn the call over to Ellis Jacob.
Thank you very much, and thanks for joining us this morning. We look forward to seeing you at our Annual General Meeting on May 1136. Please mark your calendars. Have a great day.
Ladies and gentlemen, this does conclude the conference call for today. You may now disconnect your line, and have a great day.