Facing the threat of video on demand services, Cineplex (TSX: CGX) this morning announced that it has entered an arrangement with Universal Filmed Entertainment Group to secure exclusivity windows within the Canadian market. The multi-year arrangement will enable the theatre operator to have exclusive windows for theatrical viewing before titles are released to video on demand services.
Referring to the arrangement as “preserving the theatrical experience while adapting to changing consumer behaviour,” the arrangement effectively halts any theatrical film released by Universal Picture and Focus Features from being distributed via a premium video on demand platform for at least three full weekends, or 17 days, following the release of the film. Upon expiry of these terms it is believed such films are to be made available on the Cineplex store, among other platforms.
Furthermore, the arrangement will also see any title that has an opening weekend box office of $50 million or more, which includes franchise films, given an exclusivity window of at least five full weekends, or 31 days, before the film can be made available to video on demand providers.
The two parties presented the new arrangement as somehow being “beneficial” to consumers, with the Chairman of Universal stating, “Giving consumers the flexibility to view content on their terms is more important than ever to help expand moviegoing, and Ellis and our partners at Cineplex allow us to increase these opportunities for our Canadian audience.” How exactly limiting viewing options improves flexibility for consumers was not elaborated on.
Full terms including monetary matters were not provided by the company.
Cineplex Inc last traded at $9.12 on the TSX.
FULL DISCLOSURE: Information for this briefing was found via Cineplex and Sedar. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
