Friday, June 21, 2024
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Motion Picture Business Still Profitable Amid Strike

Operating revenue for the motion picture theatres industry totalled $1.5 billion in 2022, up 171.4% from the first year of the COVID-19 pandemic in 2020. Every province experienced significant growth in 2022 as the industry had more stability during the year. Pandemic-related restrictions that occurred throughout much of 2020 and 2021 were only in place for the first few weeks of 2022. Despite the sizable improvement, operating revenue remained 22.5% below the $1.9 billion attained in 2018.

Motion Picture Business Still Profitable Amid Strike

Operating expenditures did not suffer as large of a decline in 2020 as operating revenue because of the cost structure of the industry. As a result, the rebound in operating expenditures was more dampened in 2022 (+77.4%), and these expenditures were 13.5% less than in 2018.

Return to Profitability for Motion Pictures after Covid-19

The operating profit margin returned to a positive level (+6.5%) in 2022, following a sizable decline (-43.1%) observed in 2020 during the first year of the pandemic. In contrast, from 2014 to 2018, the operating profit margin had a positive average of 14.6%.

On the heels of rising price pressures and the introduction of online booking fees, the average ticket price (calculated as total admission receipts divided by the number of paid admissions) climbed from $9.53 in 2020 to $11.94 in 2022.

Motion Picture Business Still Profitable Amid Strike

Online Revenue Continues to Grow

E-commerce sales reached their highest value since the measure was first reported in 2016, with $307.3 million in 2022, representing 24.6% of total sales. Some establishments began offering food delivery services with online orders just before or during the pandemic. Deliveries continued throughout 2022 as the percentage of sales attributable to food and beverages grew to 37.9%. This represents an uptick of 0.6 percentage points from 2020 and an increase of 3.8 percentage points from 2018.

Several new movie releases in 2022 resulted in the return of royalties, franchise fees and memberships as the top operating expenditures. Previously at a 10.9% share of total operating expenditures in 2020, they climbed to a 22.7% share in 2022.

Salaries, wages and benefits increased 87.6% from 2020 to 2022, propped up in part by federal pandemic wage subsidies at the beginning of 2022 and greater industry stability later in the year.

Motion Picture Business Still Profitable Amid Strike

Will pent-up demand be enough to lead the Motion Picture industry through challenges?

The end of the restrictions and the pent-up demand from prior closures and delays in theatrical pandemic releases are expected to be a significant boon to the industry. However, some challenges lie ahead.

American-run film and television productions, including the ones filmed in Canada, were halted after members of the Writers Guild of America, the Screen Actors Guild and the American Federation of Television and Radio Artists went on strike. This delayed the release of several films and reduced the supply to theatres. Continued competition from streaming services and a resurgence in piracy of films are other challenges faced by the industry. The biennial survey on motion picture theatres will provide information on the financial impacts of these post-pandemic trends.

Motion Picture Business Still Profitable Amid Strike