On a rainy Saturday afternoon, I had a few hours to kill, so went to the local cinema to see the latest instalment of Mission Impossible. After spending $40 on a ticket, popcorn, water and parking, I settled back for a few hours to watch a far-fetched, entertaining action flick.
Later that night, my kids downloaded a movie at home for $2.99. There was no insanely priced cinema food, parking or tickets, and they watched the animated movie on a big screen from comfy lounge chairs. I wondered why people still pay so much to go to the movies.
But they do. Australians visit the cinema about seven times a year on average and 69 per cent of us go at least once a year. Attendance rates have been reasonably steady this decade and there was spike last year in cinema volumes because of a run of blockbuster films.
For all the gloom about cinema’s future, the industry is growing steadily in developed nations and booming in emerging countries as middle-class incomes grow. That’s why I like Disney Corp and other global entertainment stocks and, locally, Vista Group International.
The industry has faced many threats. First was the rise of video recorders and then DVR players in the ‘80s and ‘90s, as millions rented movies from the local video shop. After declining for a while, cinema attendances recovered as people missed the “movie experience”.
Now there is the threat from Netflix and other streaming services. It has never been easier – or cheaper for many movies – to download them at home with the push of a button. Why pay $40 to watch and eat at the movies when a monthly streaming subscription is less than half that?
Cinema-industry bears are overlooking four factors, in my view. First, cinema stacks up favourably against other forms of entertainment. A ticket to a big football match, snack and transport costs a lot more than $40, as can attending a play or theme park. 
Second, cinema facilities and movies have vastly improved. People are willing to pay extra for the large-screen experience, premium sound, comfy chairs and so on. They know that The Avengers or other super-hero films, or animated ones for that matter, are best seen on the big screen first and then deserve a second or third, cheaper viewing at home.
Third, emerging countries have booming demand for western and eastern cinema experiences. With another 2 billion Asians expected to join the middle-class by 2030, on OECD forecasts, it’s a safe bet that thousands of cinema complexes will be built across the region.
Fourth, there is a nostalgia about the movies not found in its nearest competing entertainment rivals. The movies are still the place to take young kids on school holidays, a second date, night out with the wife, or, in my case, to do something on a rainy Saturday.
Growth in streaming services, particularly for better-quality TV programs that are “binge watched” will affect cinema demand. But the industry has several long-term tailwinds that can offset gains in streaming entertainment services and drive strong cinema attendance.
New Zealand-based cinema-technology provider Vista Group International is superbly leveraged to these trends. Dual listed on ASX, Vista provides cinema-management software for independent cinema operators and large circuits, as well as moviegoer data analytics, film distribution and other cinema-related technology services. 
Its core Vista Cinema division, which provides software-as-a-service to large cinema chains, is used in 42,512 screens worldwide, for a 38 per cent market share, according to Macquarie Research. Vista’s market share in the United States is 45 per cent.
Vista’s Veezi technology helps independent cinema operators with ticketing, point-of-sale and inventory management and reporting. Movie Team is used for staff scheduling and management and Movio is a data-analytics platform used for film marketing. 
Movio collects data for applications that moviegoers use, such as YouTube film trailers, and helps film analysts better predict demand. The technology can help cinema chains boost attendance through targeted, low-cost marketing via social-media channels.
I mentioned Vista for The Bull in August 2016 as part of a broader story on fast-growing, dual-listed companies on ASX and NZX. Vista fell from about $3 in mid-2016 to $2.32 in February this year after slightly weaker-than-expected earnings growth.
That was the low point. Vista has rallied to $3.61 this year. Macquarie has an outperform recommendation and expects Vista to deliver a 19 per cent total return (including dividends) over 12 months.
Macquarie said this month: “We think Vista’s earnings momentum is set to continue, driven by product upgrades and a turnaround in its non-core operations.”
Vista in late September announced a multi-year agreement with Walt Disney Pictures to license Movio’s research and analytics products and services. That is a coup for Vista and more evidence of the commercial potential to capture data on moviegoer habits and use it to market movies on social media and boost cinema attendance. 
Share-price gains might be slower from here after Vista’s rally this year. But it remains one of the market’s higher-quality small-cap stocks with a genuine global footprint in a growth industry. 
If the industry can attract occasional moviegoers like me, imagine what it will do in the Asian middle-class consumption boom and as an ageing population boosts movie demand.
Chart 1: Vista Group International (VGI)Source: The Bull (VGI shares traded on ASX shown above)

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• Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs. Before acting on information in this article you should consider the appropriateness and accuracy of the information, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at October 3, 2018.