Cinemas 'Kicking Into High Gear' After 2020 Shutdown, Says Imax CEO

The movie business passed “an enormous stress test,” said Imax CEO Rich Gelfond on a Thursday earnings call, saying “the movies are back” as studios have recommitted to theatrical releases after they were largely shut down in 2020 due to COVID-19.

The slate of blockbuster titles is “kicking into high gear,” said Gelfond, referencing an “unprecedented pipeline of marquee tentpole” titles to close out 2021 and throughout 2022. Despite the “massive disruption” of theater shutdowns and the availability of movie releases at home via streaming, “consumer demand for movie going remains strong,” said Gelfond. “One hundred years of human behavior doesn’t change that easily,” he said, commenting on a theater's immersive, communal experience.

Q3 revenue at Imax was $56.6 million vs. $37.3 million in the pandemic-colored 2020 quarter. Gross margin improved to 48.6% from 10.3%, said the company. Net loss narrowed to $8.4 million from $47.2 million. Shares closed 2.9% higher to $20.09.

Imax’s in-home licensing business, Imax Enhanced, continues to grow, said Gelfond. The company expanded its partnership with Sony, adding more studio titles; it also added Sony Bravia TVs in the U.K. and Japan, he said. Imax is in “productive conversations” with top global streaming platforms interested in its wider aspect ratio “to gain a competitive edge,” he said. The expansion of Imax Enhanced to major subscription VOD services for streaming after the theatrical window “could be a strategic turning point as we seek to enter the home.” Imax Enhanced is in seven of the top TV brands globally, he said.

Imax is well-positioned to benefit from changes in the global film industry including a return of blockbuster titles in theaters as more mid-tier films move to the streaming platform, Gelfond said. Ninety percent of Imax annual total global box office is driven by the top 30 releases; 60% is driven by the top 10. The company will also gain from shorter 45-day theatrical windows, said the executive.

Imax has diversified its global portfolio with local-language filmmaking in Japan and China, Gelfond said. It set a record for annual local-language box office at $165 million “and counting.” It’s also pursuing the strategy in Russia, India and South Korea.

The company has seen little contraction among its exhibition partners but is “well-insulated” from the threat of theater closures because its screens operate in the top-performing multiplexes, said Gelfond. Some 80-90% of annual box office revenue in the U.S. comes from the top 20% multiplexes, he said. Referencing AMC and Regal acquisitions of “prime Los Angeles locations,” Gelfond said consolidation can create opportunities for Imax theaters in high-value locations.

Imax surpassed its record for the best October at the global box office (see 2110250039), said Gelfond -- with a weekend to go, including the premiere of No Time to Die from the James Bond series in China. The company is on track to pass $115 million in global box office in October, putting it among the top 10 months in its history, he said. Dune, shot with Imax cameras, has earned $29 million globally to date, demonstrating the “marketing power” of a filmed-for-Imax release, Gelfond said. It captured 22.5% of the opening weekend domestically “despite a day-and-date release on HBO Max,” he said. On upcoming Imax theater openings, Gelfond said it’s too early to provide concrete data.