Cinema group Vista recovering from Covid-19 pandemic, sees 'bright' future

Tuesday, 1 March 2022

The box office is rebounding, giving cinema software company Vista Group confidence that the future is bright after the Covid-19 pandemic shut down theatres across the world.

Vista narrowed its loss to $9.9 million in the 2021 calendar year, from a loss of $51.8m in 2020.

Revenue increased 12 per cent to $98.1m, meeting the company’s forecast of $95m to $100m. Vista expects revenue this year to grow about 20 per cent to between $118m and $123m.

The Covid-19 pandemic has hurt Vista, prompting it to raise money from shareholders, write down its assets, and cut jobs to stem losses after cinemas shut around the world. However the company says a recovery is underway, as market conditions stabilise, cinemas largely open and blockbuster movies are released on schedule.

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People are returning to the movies again, offering hope to an industry battered by the Covid-19 pandemic.

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“The future is bright – our industry is back!” chief executive Kimbal Riley said in an investor presentation on the annual result.

Riley said he was “looking forward to a strong box office year with a resilient industry outlook”.

Many cinemas are opening with restrictions in place, such as social distancing.

The company’s shares rose 1.5 per cent to $2 in midday trading on the NZX on Tuesday. The stock has shed 53 per cent over the past three years but is up 15 per cent over the past year.

Vista said that in the early months of the pandemic, the future relevance of the cinema experience was questioned as people took to streaming while in lockdown, enabling other movie distribution models to be tested.

“The results are clear and the cinema experience has been reaffirmed as a cornerstone of the economic model of blockbusters,” Riley said. “The major studios have now all committed to an exclusive theatrical window, averaging 45 days, for the vast majority (in some cases all) of their premium content in 2022.”

Vista said a strong box office late in the year supported its customers and flowed through to all aspects of its financials.

Riley said audiences had shown their passion for big screen entertainment with almost every movie in full release beating box office expectations.

Vista is trialling ‘R&R Fridays’, where staff were encouraged to use their Friday afternoons to “refresh” and better balance personal and working life.

He singled out the movie Spider-Man: No Way Home, which was released globally in December 2021. Even with operating restrictions still in place in many countries, the movie became the sixth biggest movie of all time globally, the third biggest in the North American domestic market, displacing Avatar, and the top superhero movie in 19 countries, he said.

Riley said there was a strong and stable slate of movies scheduled for release this year, anchored by so-called tentpole releases, films that are expected to be successful and able to fund a range of other films.

Cinemas had opened and were operating with fewer restrictions and moviegoers were attending “in big numbers”, he said.

While cinemas were not yet “in robust financial heart”, Vista’s offerings were critical elements to their business, he said.

Global box office revenue increased 78 per cent to $21 billion in 2021, but is still just about half of pre-pandemic trading, Vista said.

Cinemas around the world were only open in a limited capacity for much of the first half of 2021 and it was not until April or May that blockbuster movies began to be in free release. Since then, even with the emergence of the Omicron variant, cinemas had largely remained open, often with capacity restrictions such as social distance seating or limited operating hours, and the release schedule of mainstream movies has been largely unchanged.

Riley warned that the company was expecting to spend more on staff, marketing, travel and hosting costs this year as the market recovered. He noted the market for talent was “very competitive”.

“The competition for talent, particularly in the technology sector, has continued to increase, including as a result of travel restrictions and the trend towards rapid digitalisation in response to the pandemic,” he said.

With many staff working from home over the past year, Vista looked at different ways of working and how it could support the wellbeing of employees. It trialled ‘R&R Fridays’, where staff were encouraged to use their Friday afternoons to “refresh” and better balance personal and working life.

“Early indications are that R&R Fridays has been a terrific success with a fully engaged team and with productivity remaining unaffected,” the company said.

It is also implementing an employee share scheme for all non-executive employees in New Zealand, the United States, and the United Kingdom, and launching a refreshed leadership development programme.

The company’s employee satisfaction scores were increasing, and its staff turnover was “comparatively low”, it said.

Since the first survey of 2021, the company’s rating increased 22 points to 40, which is 11 points above the industry benchmark and important for the attraction and retention of talent.

Vista received $3.1m of Covid-19 wage subsidies across its global operations in 2021, down from $5.9m the previous year.

Riley’s salary package, including the value of short and long-term benefits, rose to $1m, from $578,000 the previous year.

Vista didn’t pay a dividend, citing the impacts of the Covid-19 pandemic on the global film industry and its businesses. The board said it would revisit payment of dividends once the impacts of the pandemic on the global film industry and its businesses had sufficiently subsided.