IMAX betting on China growth and superhero films
Imax Corp. is staying out of the escalating conflict between movie exhibitors and streaming services.
“We’re going to stay out of that fight,” Richard Gelfond, chief executive officer of Imax, told BNN Bloomberg in a Thursday interview when asked about the battle between major Hollywood studios and streaming giants like Netflix which has been brewing for the last half-decade.
“We’re going to let them fight it out and either way, we’ll be fine.”
Netflix (NFLX.O) has been frozen out of cinematic institutions like the Cannes Film Festival over the past couple years and some traditionalists – most notably Steven Spielberg – argue streaming platforms threaten the traditional movie-watching experience by eliminating theatrical runs for some films and limiting those films’ potential reach.
Despite that criticism, streaming services are chipping away at the theatre-chain establishment in recent years by succeeding with content produced in-house. Netflix scored a major viral hit with 2018’s Bird Box, which surpassed 80 million streams as of mid-January, the company said.
Netflix recently lured some of cinema’s top talents to release their projects directly to the online streaming service, including Martin Scorsese’s upcoming production The Irishman and Alfonso Cuaron’s Roma. Cuaron’s epic drama dominated this past spring’s awards season but lost the Best Picture Oscar to Green Book in a vote that some viewed as a rejection of streaming platforms.
Of course, Netflix is not the only threat to the cinematic establishment with Amazon.com Inc. (AMZN.O) and now Apple Inc. (AAPL.O) getting into the streaming business.
Gelfond said Imax (IMAX.N) – known for its high-resolution, big screen and big sound presentations – is somewhat beholden to exhibitors.
“Even though we don’t have that big a personal stake, we’re housed in theatres, and our partners are exhibitors. So, we support our partners,” Gelfond told BNN Bloomberg.
But Gelfond was unconcerned about streaming services threatening his company’s business model.
“For Imax, frankly, it’s not as much a big deal as it is for the exhibitors, because you can’t get Imax in your home,” he said.
The company is hedging its bets by getting into the home viewing space with its “Imax Enhanced” entertainment system, which offers audio and visual upgrades on the streaming experience.
Gelfond said he thinks theatres and streaming services can find a middle ground.
“I think, over time, the streaming services are going to start, including Netflix, to have some [cinematic exhibition] windows, and I think the studios will probably shorten the windows [to allow titles a quicker path to streaming services],” Gelfond said.
“So, what is at this far apart right now will meet somewhere in the middle.”
However, Gelfond said the cinematic old-guard may be the ultimate decision-makers if peace is to be achieved between the two.
“The key to whether it works is, ‘Is it sufficient for the exhibitors?’” he said.
Gelfond pointed to a record US$11.8 billion annual North American box office in 2018 as proof that the theatre experience isn’t going anywhere, adding that cinema has survived past threats from the likes of television and home video.
“Every one of those threats that came along, people said, ‘Oh, people aren’t going to go to theatres anymore.’ But guess what? 2018 was a record year in North America and worldwide for box office,” he said.
However, Gelfond’s math ignores inflation in ticket prices. On the basis of tickets sold, 2018 was the fourth worst-performing year this century, with 1.3 billion tickets scanned, according to BoxOfficeMojo. The North American record was reached in 2002 with 1.57 billion, although BoxOfficeMojo's estimated average ticket cost at that time was US$5.81 as opposed to US$9.11 in 2018.
Imax responded to its competitive threats by looking outside of North America, and is currently riding high on the success of The Wandering Earth, which has become the company’s biggest money-maker in the Chinese market and is currently the second-highest grossing film worldwide so far in 2019.
“The box office is growing in China, so the production values are going up for new content. As that goes up, the movies are more Imax-kind of movies,” Gelfond said.
Gelfond said the Chinese market is emerging as a growing focus for the company.
“I feel good about China … There were some systemic issues in China through a couple years ago where the tastes shifted a little bit to more local content in China and we programmed differently,” he said.
“So, if you go back two years, about 25 per cent of what we showed were local films, and last year was 33 per cent. I think this year it’ll be more.”