Is IMAX a Screaming Buy? With Rich Gelfond

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0:59Michael Batnick:Your biggest regret will be not doing it sooner. Learn more at betterment.com slash advisors. Thank you, Nicole. Ladies and gentlemen, welcome to Live from the Compound. We have a very special guest here. I've never seen Michael. I've seen you this excited once. Eli? Eli Manning is here. But you're very, very, very excited today. We have a very special guest. Rich Gelfand has been CEO of IMAX Corporation since April 2009 and a director since 1994 when he and Bradley Wexler acquired the company. He previously served as co-CEO with Wexler from 1996 to 2009 and as co-chairman from 1999 to 2009. Before IMAX, Gelfand worked as an investment banker and M &A attorney.

1:49That's your official intro, but I actually had something a little unofficial in mind. Are you okay with that? Well, you didn't mention that I'm a better quarterback than Eli Manning. Fair, fair. We did leave that out. What I wanted to say is, I think you preside over a company that right now is among the most important companies in Hollywood. I know you're not literally in Hollywood, but in my opinion, you can tell me if you think I'm right or wrong. I think nothing is more important to the livelihood of the movie business than an IMAX open. And everyone is now figuring it out. I think the stock price reflects that.

2:28And I think the casual fan understands that. And now I'm assuming the executives all understand that. He arrived at that conclusion years ago in talking about your stock. But we'd love to hear from your perspective where you think you sit. Well, I really appreciate you saying that. We have felt that way for a while. And the reason is we consider ourselves very much in the middle of the Hollywood ecosystem. And it's not just Hollywood. It's the global content ecosystem. So we're almost like a curator in a way. So if you have a big movie and you want it released in a way that it's going to turn into a blockbuster or it's going to break out, I think having an IMAX release is an integral component of that.

3:16And we have thought that, and our business plan, probably since you bought the stock or - May 14th, 2024, 17 bucks a share. Well, it was even before that, was our alliance with filmmakers, our alliance with studios, and again, it's really important to underline on a global basis. So we have 800 theaters in China. We did Nezha in China, which probably no one on this podcast has heard of, but it did$1.2 billion US a movie. If there's a big movie, we've been in the middle of it. And as that's happened, we've tried as a business strategy to say, how can we use our newfound position to strengthen it and to increase the value of the brand and to make us more integral to the system?

4:05And I think that's been happening, as you said in your question. I think people are waking up now and saying, wow, you really need IMAX in the middle of things. But I think we've known that for a while. And as I said, it's incredibly gratifying to see it happen. It feels incomplete if there's not an IMAX release concurrent with the theatrical release. It feels almost like how do they not get IMAX screens? And the first time I really started to feel that way was reading press reports about how vociferously Tom Cruise was lobbying for more screens for the Mission Impossible two-parter. And there were competing films coming out at the same time.

4:47And he just felt like he couldn't get enough screens. So that's when it became apparent to me. Michael was talking about IMAX. And now I feel like everybody sort of gets it. Well, it's nice of you to say competing for IMAX screens. Tom was on a mission, pun intended. It was Mission Impossible 7. and we had dated Oppenheimer with Chris Nolan and it was the second week of what they moved into. They weren't there. We picked that date. And the narrative that came out of Paramount, which was distributing the film at that time, was you guys are out of your minds. It's a biopic in black and white about a physicist.

5:30Why are you wasting screens on Oppenheimer? What are you kidding me? and you know it wasn't easy to stand by our principles and say we committed to it and you know Nolan's really one of few people who helped get us to where we are today loyalty is a big deal for us so when we did it we felt a lot of pressure around us but we never flinched and you know I like that even today to stay true to our principles so an example of something we're dealing with right now is Dune 3 comes out around Christmas time. And we think it's going to be a very big movie. Denis Villeneuve filmed it in part with IMAX cameras.

6:11It's going to be the same amount of prints as the Odyssey. We did great on Dune 2. Michael and I saw Dune 2 at Lincoln Square here in Manhattan on the 70 millimeter.

6:22Michael Batnick:So it took us two weeks to get tickets. And actually, I think that's about when I first pitched the stock. So you must have known the CEO of the company. Now we do. So, Rich. So, no, just to finish this point. So, Avengers was supposed, Doomsday, was supposed to be this summer. And they had some production issues. And they moved it to Christmas time right against Dune. And, of course, they called and said, well, can't you do Avengers? And, you know, can't you do something about Dune? And I said, you know, we love you guys and we love to do your movie. But we have a commitment. and that's the currency that we're made of.

6:58So as a result, we're missing out on Avengers, which I'm sure will be a very good movie, but we're leaning into Dune and I think we'll do really well on it. Disney said that they want to come out with a large format product. Do you think that's in response to not being able to get Avengers screens from you? Sure it is. They've said it. I mean, you know, it's been all over the media and it's called Infinity Vision And they put the tickets on sale for Avengers Endgame and maybe Doomsday also. They're bringing back Endgame. And the first place to buy them is this thing, Infinity Vision. But Infinity Vision is a marketing technique.

7:40They're not building new theaters. They're taking existing theaters with an X in them, and they're bundling them, and they're calling it Infinity Vision. And they sort of said, because we can't play IMAX, you know, again, I think consumers will figure out whether IMAX is different than that. And I'm not losing sleep about it.

8:00Michael Batnick:So you guys have had a massive impact on the box office year to date. Through 24 days, Oppenheimer, which was a huge movie, obviously, did$264 million. I'm guessing that's just domestic. Odyssey. I'm sorry. Oppenheimer. Oppenheimer. So I'm about to compare. No, it didn't do 264. So I'm talking about Oppenheimer. So through 24 days, just for comparison, the Odyssey has done$461 million. You're talking about domestic overall box. And Oppenheimer was a massive, massive hit. So you guys, because of the presale and the vision and Nolan filming, like you guys have had a massive impact on the increase of this.

8:41Michael Batnick:I saw that in 2024 that you guys were having, that people were leaning into live events. They wanted a premier luxury experience, which you guys deliver. and at$17, the stock looks super attractive. I said, you guys, and I meant this respectfully, the amount of influence and brand recognition that you have compared to your market cap was a joke. I thought it was very lopsided at a billion dollars. At$3 billion, I think what Wall Street is maybe discounting is they don't like uncertainty. And even though 2026 has been a massive year for the box office, you guys can't control what movies come out in 27.

9:19Michael Batnick:and 28. And it's very much transactional. Like if the box office softens, your results will soften. So how do we, how do you, what other levers can you pull? Is there maybe a subscription service in there? Like how do you increase your take rate? How do we make more money? Well, I mean, you know, there are no businesses. I would argue that we have more visibility into the future than almost any other business. Because if you're a car company, you have zero sales on opening day. If you're IMAX, we have a backlog of theaters that we're installing. We make that public. We have numbers. We give guidance on that.

9:57We also now have a tremendous backlog of films. So we have films committed to us for 28, and we probably have some for 29. I don't know. But in 28, we're doing the Beatles, four movies that Sam Mendes is doing. Bond is coming out. Oh, you guys are going to take all four? You committed to take all four? Because that's a big – what studio is that? Sony. That's a big risk that people want four distinct biopic parts of a Beatles movie. But we figured out a way where they'll be released within a time period where we're protected. I'm going. And I'm going too. And then, well, you're from Long Island and I am.

10:39And I begged my parents to go to Shea Stadium, but I was like 12 years old. And they said, you're not getting on the – I never forgave them. The sound quality was terrible. you to miss anything. Yeah, okay. Did you go? I wasn't born yet. Okay, well, that's good. That was their, you know, that was their last, that was the last straw. The Beatles never wanted to play live again after that. No, I didn't know that. They would intentionally flub the lyrics or play the wrong chords just to see if they'd get away with it. The screaming was so intense that nobody knew the difference. And they said, from now on, we'll focus on studio albums.

11:12They never toured America again. I thought it was being on Long Island that turned it off to America. It wasn't Long Island. It wasn't Long Island. It was Queens. It was Queens. Yeah, it's Queens. I can sort of understand. Can't you understand that a little bit? So you know, right, if somebody's working on a blockbuster film that's not going to come out for three years, it's on your radar. So they come to us way in advance. I'll use one example, which was last year F1 came out, you know, with Apple, and they released it on IMAX and in theaters. and a year or more before it came out, Jerry Bruckheimer, the producer, and Joe Kaczynski, the director, called me up and they said we want to do a theatrical release.

11:52And we don't have a distributor yet, but it's important to us that we get an IMAX release slot. We want to shoot it in IMAX, so could we make a commitment, we IMAX, to a certain date. So we went through a lot of what was in tail, had a film at an IMAX, and we agreed on a date. Then they went to a distributor and they eventually got Warner Brothers. But we were the first stop. And one of the things that's happened in our evolution is we're getting pitched now directly by filmmakers. So filmmakers, you and your audience has certainly heard of, come by my office, so we go see them. And they, I mean, people have won Academy Awards and say, we're thinking of doing this movie two years out.

12:36you know we would you guys sign on to that and we ask who's the cast and who's the director and this and that and we sign up so the business like you know we're part of the green light process now and i would say at most of the major studios an imax release is part of the green light so when a filmmaker goes in there and says i want to make a movie in 27 they say i want to release it in imax and we'll sit down with the studio and the filmmaker and figure out what date works and how we could pull together the most marketing around it. And, you know, and the studios will make marketing commitments.

13:14So for the next Mission Impossible, Mission 8, we committed to right when Mission 7, after it got done playing, and Paramount agreed to put up a fair amount of money. And they agreed to lean into the marketing. And Tom agreed to lean into it in certain ways. So the kind of short answer to your question is as we become more important in the ecosystem, we become more integrated and earlier on. So we have a bigger runway. But the second part of the answer to your question, where are you going to make more money, is we never really had a merchandising effort. And this year we started and we started small.

13:57So for Odyssey, we made popcorn buckets. I don't know if you guys have seen them or not. They look like an IMAX camera. And my team was fairly conservative. So we put 2 ,500 on sale. And they sold in two hours. So I said, put more on sale. They said, we don't have them. They said, we don't have them. I said, put them on sale and deliver it whenever you can get them. So we sold 2 ,500 more in, I think it was like less than an hour. And by the end of this in China, we put like 2 ,500 on sale. And I think we sold them in 60 seconds. So we're selling film strips now for the Odyssey. We sold 20 ,000 in 90 minutes.

14:42So I think that's definitely an area where we're going to capitalize. You can't influence ticket prices at all, can you? No, but that is an example of a place where we can do better. So AMC here in New York is charging the same price for an IMAX film ticket as they are for a regular ticket. Doesn't make sense. And as a matter of fact, on Wednesdays, which is half price days, they're selling it for half price. Meanwhile, you could buy them for$1 ,000. Can you talk to Adam and Aaron and just say, hey, if we sell Odyssey a year in advance in an hour, why aren't these tickets$100? What is his response to that?

15:25So he sets the price, not us. But I'm allowed to weigh in, and I've said that makes no sense. And when I have those discussions with exhibitors, they all say that's a really good point. But, you know, there's a guy in— Well, Live Nation is dynamic pricing now. Springsteen says whatever it's worth is what people will pay for it. And it happens. There's a guy in Las Vegas called Johnny Brendan. He has an IMAX film theater, Brendan Theaters. He charges 50 bucks and he sells out. AMC is charging 14 on Wednesdays. I mean, I can't tell you why they do what they do. And I think once I told Adam, he said, the problem is they're sold out for months.

16:09I can't go back and recoup that. But hopefully for Dune and other things, that is an area of opportunity. Also, I think you'll see a lot more film prints around films. So for next year, we haven't announced the names of them. But I think there's around four that are coming out on IMAX Film. And, you know, we have 40 theaters now that use film. So that's a really good revenue source. You know, when this film came out. Film versus digital. Yeah, because higher occupancy. Dome is more expensive. Right. Okay. Higher ticket price, hopefully more attendance, higher utilization rates, and greater buzz, greater indexing from us, which means percentage of the box office.

16:57We do a higher percentage of the box office.

16:59Michael Batnick:Are you at the ceiling or can you get above 20? We're at 26. 26. How high do you think that can get? I mean, that's healthy. Well, there are both sides, right? It's how many screens it opens on and what are the regular theaters doing. So we've been higher. We could be higher. But when you're opening almost every screens, that's pretty high. We've done over 30 on some movies. But again, the issue isn't indexing. It's how much money you make and what your margins are and all of that. So before this open, you'll like this because what football team do you guys root for? All right. I could still talk to you.

17:35If you said the Jets, I was going to walk out of the studio. No, I know Jets fans. Yeah. Only victims. Only my brother, and I hold it against them. But before this opened, I got my management team together, and at IMAX, we had an ultimate of 190 for the movie. That's what my film team thought it would do. And I said it would do over 300. And they said, oh, you're crazy. You're hyping us, this, that. So I went into the meeting and I said, pretend I'm the CEO and pretend I know what I'm talking about and pretend we're going to put a plan together of how we're going to capitalize on that and what we're going to do with it.

18:16And they all, you know, the guy's old. He doesn't know what he's talking about. You know, we know what. So today it'll be close to 300 and we have$40 million in pre-sales. So if we never sell another ticket, we're at 340 and we've got it playing until September. Film theaters, you can't get a ticket at the BFI until mid-September. So I was wrong. I was probably way too low. Do you think about the success of The Sphere as sort of a guidepost? Like this is something that we know we're undervalued relative to a business. Like they have one location. You guys are global. They're talking about a second location.

19:07It costs them a billion dollars to build one of those or maybe two billion. Or maybe three. Or maybe three. You guys have a bigger brand name. I would argue you guys have the potential to do more conversions. The Sphere can't do any. so you could go into existing theaters and you could say, we're going to retrofit. I was pitching your stock to retail clients as a stockbroker in 2005. I still have my script. Everything I was pitching 21 years ago turned out to be true, but the share price really hasn't done all that much. So how do you think about like, why aren't we getting the recognition of a sphere, which became, I think, one of the hottest stocks of 2026?

19:49Arguably more people are aware of IMAX than they are of that. We've done brand studies with NRG and our brand is on a level of Disney and Nike and people like that. This is not just us saying, hey, I think it's. And I agree with you that we get very little recognition of what that brand value is in relative monetization. But that's why we're doing things like merchandising. I don't know if you saw, we're doing an AV system in China with a company that's going to put it in autos, mostly driverless autos. So we were slow to it, but we are trying to monetize that where we are now. In terms of the sphere, I've been there.

20:31I think it's fantastic. Amazing. It's great technology. Again, though, I've heard it cost close to$3 billion. I don't know how you make money at that price. they're licensing some out now. That's probably a little bit better business model than putting all that money into each one. But, you know, personally, I wouldn't own that stock. I didn't buy SpaceX. I don't put my finger in the air and say, hey, this is worth$2 trillion. Not the way I invest. I like looking at earnings and cash flow. And I think, you know, we're starting to return to the world of reality now where our stock has gone up tremendously in the last since 24 when you bought it it's more than you have a hot you have a hot stock that is true um and michael was very early to it people that listened to him made a lot of money what are the what are the constraints around building more of the 70 millimeter experiences which obviously is i've heard you refer to as a rolls royce um of movie going i totally agree i went to see one battle after another in Fort Lauderdale.

21:39You guys are located in like an abandoned science museum. Like I was saying to myself, this should be the hottest ticket in Florida. People should be lined up out the door. I was able to buy a same day ticket for 70 millimeter. That same experience in New York sold out the second you put them up. I don't think people even know that that exists where it's located. Well, they do. We do pretty good numbers coming out of there. I don't think it was abandoned. and maybe it was closed that day. But I will agree with you. It's not the hottest place in the world. Felt abandoned. I was just saying to myself, can you imagine a brand new 70 millimeter IMAX in downtown Fort Lauderdale?

22:19Forget it. It would be lights out. Well, I can imagine one in downtown LA. Sure. It's called LA Live. And we converted it on January 1st this year. And the first six months, it did$800 ,000. dollars. The first few weeks, it did more than that. We put a film projector in there and it sold out for a long time going forward. The issue is purely economics with more film projectors. So one print at one theater. So think of the one that shows at 68th street here in Manhattan costs$50 ,000. The print itself. The print itself costs$50 ,000. And the projector is equally expensive? The projector is more expensive than that.

23:00And they were built 50 years ago and they don't really exist, but we're always scavenging and finding more. And I think there's a chance we can do that, but you, it can only be in really high traffic locations where you can amortize that cost of the print and make a return on it. So I know everybody says they want it, but you know, the model just doesn't work where you could have a lot. How many of the 70 millimeter theaters do you have in the United States right now? I think we have 25. Yeah. Something like that. And we have 41 globally, but keep in mind that's up. Barkley. When we did Oppenheimer, we only had 30 theaters.

23:40We're up to 41 and we have a clever new idea, which we haven't proved out yet. Well, we might be able to get 10 new ones. Okay.

23:48Michael Batnick:Could you share or no? No. All right. Well, let me ask you this. What do we do when there's a low in the box office? Because it's lumpy, right? It's so can we do Knicks watch parties, for example, during the playoffs? Like, are there other things that you can do to get asses in the seats when the box office is not on fire? All of that. So, last year we had 120 pieces of content, which included not only movies. You guys haven't talked about it, but I mentioned at the beginning. Foreign movies, international movies. So, big business for us in anime, and not just in Japan. We do it in China. Look at that.

24:25We're ready. That's from your slide. These are big foreign films that you guys have been able to - So 24 % CAGR since from 2019 to 2025. So, you know, that's a big business for us. And it's a big business, not just showing like anime in Japan, but showing it worldwide. This year, there's a big film coming out of India called Rachman. And I think there's a Rachman 2 coming next year. And we're going to open that on a global basis. So some of these really big ones bleed over. And by the way, there's no theater chains playing them. It's out of the box. And then we've done the NBA finals on a limited basis in China.

25:07People go for that? Yeah, they do go for it. We've had a lot of concerts. We did a live Stop Making Sense concert with David Byrne from the Toronto Film Festival that did really well. We've had events that we bring back movies all the time. We brought back Interstellar, and I think it did over$5 million. I went to that. Why do you guys do more than that?

25:29Michael Batnick:Is that the studio's decision? Like, if you re-released Pulp Fiction or whatever, like, I would go. The issue is really marketing costs. So when a movie comes out, obviously it's on bus stations. What do they call it, P &A? Yeah, and there's planes flying over and all that. So if you have a limited release for one weekend, it's very expensive to market it. So you really have to do iconic titles. We've done tests with the NHL in Europe where we played a lot of hockey games. I think some there we showed here, some here we showed there. We did an HBO series where we did some episodes from last year and then this year, and that did pretty well.