D-Box Inc. (TSX:DBO) - And the D-Box Beat Goes On

Are they at an inflection point?

Disclaimer: We own this one.

D-Box, Inc. (TSX:DBO) has been working on haptic feedback technology for over twenty years. The company’s stock languished for the past decade and operational troubles were exacerbated by COVID-times given widespread movie theatre closures. However, since then, revenue and cash flow have started to turn and are at the highest levels in its history driven by their key product, D-Box seats. They are now installed in over 1,000 theatres worldwide. The company has refocused under new leadership and is scaling a royalty-driven model.

D-Box piqued our interest last fall. However, we did not purchase at that time as we were a bit perplexed with what to think about the simulation-side and, frankly, we were busy with other ideas. However, we are now an owner. For full disclosure, we made our initial purchases averaging around $0.30 and made subsequent purchases after their Q1 2026 results (off-cycle) this past week. A bit late to the party, but we still think it is trading at a reasonable valuation given the changes happening in the business.

How do you get your head around a product like this? You look at the real buyers – the actual movie theatres - and use it yourself. Today, in addition to typical financial analysis, we look at how Cineplex and other theatres think about D-Box and provide our first ever movie review of the American mystery horror movie Weapons, a movie offered and seen by us in D-Box seats. Was it good? Will it get 5/5 on our new proprietary Beavertail Scale (trademark pending)? Read on.

Table of Contents:

• The Cineplex case study

  • Cineplex disclosures: The way Cineplex talks about it in their reporting

  • How they pitch it to you

  • Our movie night: CVI’s first movie review – Weapons

  • The chair experience

• Other theatres

• Financials – the long road

• Our key takeaways

And the beat goes on (better believe it)

Still moving strong, on and on

Don't stop for nobody

This time, I'll keep my feet on solid ground

-The Whispers - And the Beat Goes On

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The Cineplex case study

Cineplex disclosures: The way Cineplex talks in their reporting

Our case study focuses on Cineplex (TSX: CGX, no position), which runs ~160 theatres in Canada including the theatre we went to. D-Box is part of what they call their premium and enhanced guest theatre services and premium is very important, accounting for an outsized amount of revenue vs overall seats.

Providing a variety of premium and enhanced guest theatre experiences. Premium priced theatre offerings include 3D, 4DX, UltraAVX, VIP, IMAX, D-BOX, ScreenX and Cineplex Clubhouse. BPP for premium priced product was $17.36 in 2024, and accounted for 41.6% of total box office revenues in 2024. Recent enhancements to, and offerings at, the current circuit include the addition of five all-recliner seating auditoriums, including one auditorium with D-BOX seating at the new theatre Cinéma Cineplex Royalmount, which opened on November 25, 2024.

They provide a breakdown of their screens by year. We note that when they say a screen is a “D-Box” screen, it does not mean every seat is D-Box. They have a strategy for how to position them as we get into later.

The way they talk about the benefit.

Technology Risk

Technological advances have made it easier to create, transmit and electronically share unauthorized high-quality copies of films during theatrical release. Some consumers may choose to obtain unauthorized copies of films rather than attending the theatre which may have an adverse effect on Cineplex’s business. In addition, as home entertainment technology becomes more sophisticated and additional technologies become available such as virtual and augmented reality, consumers may choose alternative technology options to consume content rather than attending a theatre.

To mitigate these risks, Cineplex continues to enhance the out of home experience through the addition of new technologies and experiences including 3D, VIP, UltraAVX, D-BOX, 4DX, ScreenX and laser projection in order to further differentiate the theatrical product from the home product.

BPP excluding premium priced product: Calculated as total box office revenues for the period, less box office revenues from 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX product; divided by total paid theatre attendance for the period, less paid theatre attendance for 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX product.

Premium priced product: Defined as 3D, 4DX, UltraAVX, IMAX, ScreenX and VIP film product.

How they pitch it to you in the theatre

The thing about D-Box is that it is not for every movie or everyone. It improves the experience of certain movies, primarily being action movies like the latest F1 with Brad Pitt (5/5 on the Beavertail Scale) and maybe improve movies like the new horror film Weapons (Did it? See review below). Romantic comedies are obviously not the target market.

D-BOX technology offers motion-enabled seating that synchronizes with the action on-screen, allowing you to feel every vibration, sway, and movement in real-time. Reserved D-BOX seating ensures the best views and an amplified sense of adventure, turning ordinary screenings into memorable experiences.

The alternative premium offerings include recliners, but we view those as a different type of experience (think dinner-at-a-big-movie screen with in-chair service). The real comparable for this type of experience is 4DX, developed and manufactured by CJ 4DPlex, a subsidiary of the South Korean conglomerate CJ CGV.

4DX brings movies to life with a multisensory experience. It combines motion seats with environmental effects like wind, rain, snow, scents, fog, and even lightning. Imagine your chair tilting and swaying during a car chase, feeling a breeze during an outdoor scene, or light sprays of water during a storm. It’s like stepping right into the movie, making every moment feel real and unforgettable!

We note that 4DX is even less applicable to movies and is significantly more complex and expensive to execute than D-Box, while D-Box does not replace recliner seating with table service.

The key is that theatres are using a mix of all of these at the same time to win different types of customers and different types of movies.

https://www.cineplex.com/news/What-is-AVX-4DX-Dbox-and-more-what-you-need-to-know-about-movie-viewing-options

The seats

The seats are 1) premium experience and 2) premium location. They typically are a small percentage of overall seating. It enables the theatre to charge a bit more for the experience. As shown in our price check bellow, the premium price for D-Box at a recent Godzilla screening was $27 for a ticket vs $21 without D-Box. Anecdotally, at this particular showing we checked, D-Box seats were roughly half sold out in advance an otherwise mostly empty theatre.

Our movie night: CVI’s first movie review - Weapons

The premise of D-Box seats – to us – makes sense. It could make a movie more immersive, so long as it is executed well. But, is it executed well and is the immersion worth it? We decided to try a movie we were skeptical it would be worthwhile for, the movie Weapons. Set in the fictional town of Maybrook, Illinois, Weapons revolves around the terrifying disappearance of 17 third graders—all vanishing overnight at exactly 2:17 a.m.—leaving only one child, Alex, behind. (Queue suspenseful music).

We purchased tickets in advance. As with other showings we looked at, the D-Box seats seem to sell first vs regular seating. At actual showtime, the theatre was maybe 40% full with most D-Box seats taken. When arriving at the theatre we went to, D-Box was advertised prominently.

The chair experience

The chairs themselves are quite comfortable. They are better than the regular chairs (softer and bigger), though not as comfortable as a recliner experience.

Each chair has a button control system that lets you control the intensity of the movement. So what is the movement exactly? We have to say it was quite neat. Sometimes the effect is subtle, like the chair leaning with the camera panning, or rumbling slightly during a car ride scene. Other times, it is very evident, like when one of the characters was being picked up and slammed down (by evil!); the chair synced to the movements. The interesting thing is that we did not “think” about the chair, i.e. it was not distracting. It just added to the experience.

The takeaway? The Canadian Value Investors Beavertail Scale Review – 3 out of 5 Tails for Weapons, but the chair was worth it. We would repeat the experience (with a different movie).

The key here is the actual execution. Our understanding is that it requires about 200 hours to process a movie for D-Box and is a bit of an art. They seem to have the process down with online reviews we found, like the one below, being generally positive (i.e. “worth it for the right type of movie).

Other theatres