The movie screens in a Cineplex multiplex may seem small but it turns out that Canada’s largest movie theatre chain is running even smaller screens—in fast food restaurants, of all places.
Cineplex is now operating literally tens of thousands of digital menu screens for Tim Hortons, A&W Canada, Subway Europe, McDonald’s Canada, and many other corporate clients.
This seems odd until you ask yourself what business Cineplex thinks it is in: showing movies, or screening content? Clearly the answer has to be the latter.
Cineplex (for those who may be unfamiliar) operates some 162 movie theatres across Canada, through its Cineplex Entertainment LP subsidiary. This business of exhibiting movies is what the 20-plus-year-old company, based in Toronto, Ontario, has always been known for.
At the same time, movie exhibition is a business loaded down with lots of overhead and it may not have the greatest future—depending how hard consumers turn to at-home streaming of movies.
Canada’s premier movie exhibitor appears to have seen the writing on the wall screen for some time.
It has been quietly—but massively—diversifying into delivering digital screen content to enterprise customers for nearly a decade now—chiefly through acquisitions.
For example, Cineplex inherited the contract to deliver content to McDonald’s Canada menu screens seven years ago, when it purchased EK3, another Canadian digital screen content provider.
I only discovered all this, by the way, on Thursday (June 6), thanks to the random happenstance of a short power outage three days earlier.
Your favourite menu is coming to (or from) a Cineplex near you
For about an hour Monday morning, the power blinked out in the 1400 block of West Broadway. It wasn’t a big deal.
I only mention it because the majority of the digital menu screens in the McDonalds at 1482 West Broadway did not come back to life when electrical power to the block was restored.
Instead of displaying colourfully animated menu and promotional information, the three main menu screens, arranged in a long strip above the restaurant’s front order counter, displayed nothing more than a static McCafe logo against a sombre black background.
Surprisingly, this situation persisted for three days. More surprising still, relatively few customers could be heard complaining about it.
One of the few complaints that I heard occurred Thursday morning and earned a terse explanation from counter staff, to the effect that “the menu doesn’t work.”
The menu (like the revolution) will be televised
Early Thursday afternoon, however, two technicians finally arrived to put the menu screens right.
The repair process included dismounting the left-most menu screen to reveal something like a large cable-set-top box.
I cannot say that the content to the digital screens is delivered via cable but I know that it is delivered remotely and that the individual stores have no control over it.
It is also not delivered over the same Internet connection as the free, in-store Wi-Fi and mobile ordering because when these go down the screens continue to operate.
In any event, I was watching the repair process in hopes of seeing an operating system boot process indicating whether the menu screens were still powered by Ubuntu Linux, as had been variously reported to be the case some seven years ago.
What I saw instead was a startup screen displaying the following:
Cineplex Digital Media
Mobile Activation Serial: 0010F38517A0
IP Address: 10.159.97.153
Install Location: No Location Provided
Hardware Profile: Nexcom_NDiS_B533
Status Message: Registered
Date/Time: June 6, 2019 8:15 p.m.
That wasn’t what I was expecting to see but, as usual, it was my expectations that were at fault, not reality.
A little research shows that Cineplex clearly sees no contradiction whatsoever between operating movie theatre screens and moving menu screens in fast food restaurants, or rather “quick service restaurants” (QSRs), as they are more commonly called in business circles.
Highlights from Cineplex’s big leap to the small screen
June 2010: Cineplex buys Waterloo-based Digital Display & Communications Inc.(DDC) for $3.5 million. This deal appears to mark the origin of Cineplex’s digital media ambitions and delivers DDC’s stable of major clients, including Air Canada Centre, Rogers stores, Future Shop-Best Buy, CIBC, Labatt Breweries, Citibank, and Sun Trust of Georgia.
July 2013: Cineplex’s new “Digital Solutions” division stages a “friendly takeover” of EK3 Technologies of London, Ontario. The buyout, estimated to cost upward of $78 million, gives CDS EK3’s proprietary, Linux-based, digital delivery platform, as well as its rich customer base, including Tim Hortons, McDonald’s Canada, Walmart, Target, and the RBC and BMO financial groups.
September 2015: Cineplex Digital Media (CDM) becomes the sole provider of digital menu boards to all 850 A&W restaurants across Canada.
November 2016: CDM gets the nod to “install, maintain and operate a digital display network, consisting of nearly 230 digital displays at 21 Ivanhoé Cambridge shopping centres across Canada”.
January 2018: CDM inks a deal to operate an unspecified (but huge) number of McDonald’s digital menu boards in Argentina, Brazil and Uruguay for the world’s largest McDonald’s franchisee—Arcos Dorados Holdings. This Argentine-based company is said to operate 2,200 McDonald’s locations in 20 countries and territories in Latin America and the Caribbean, or, 6.7 percent of all McDonald’s on earth.
September 2018: CDM is selected by Subway Europe “to design, deploy, support and operate a network of digital menu boards at Subway locations across Europe”.
Okay. I think we get the idea. After all that (and that is not all of CDM’s digital display deals) it’s hard to see Cineplex as a movie theatre chain that just does some digital display screen business on the side—quite the opposite, actually.
However, the most recent financial information I can find for Cineplex clearly shows that delivering digital display content is still the smallest part of its revenue.
Out of the total revenues of $1.6 billion reported by Cineplex for 2017, only 10.74 percent, or $171.9 million, came from its media operations, including CDM.
Fully 44.68 percent, or $715 million, of Cineplex’s revenue in 2017 still came from box office receipts (a 2.5 percent drop from 2016), while another $185.3 million came from “amusement revenue” (which—whatever it was—was it up a respectable 66.5 percent).
The rising star revenue performer for Cineplex in 2017 was actually theatre food service, which generated $422.3 million, or 26.39 percent of the total and described as an “all-time annual” record.
So who can say if Cineplex is even trying to pivot away from movie exhibition and toward digital screen delivery? At this point the company just looks like its trying to excel at doing both.