Why Can’t We Build More IMAX Theaters? With CEO Rich Gelfond

0:04Matt Belloni:This episode of The Town is presented by HBO Max. HBO Max presents Hacks, nominated for 25 Emmy Awards, including Outstanding Comedy Series. In the aftermath of mistaken news reports that Debra passed away, she and Ava returned to Las Vegas determined to secure Debra's legacy as a comedian. Don't miss the series Variety is calling one of TV's best comedies ever. Hacks is now streaming on HBO Max. Adobe Firefly is the all-in-one creative studio with AI-powered image and video editing for today's creative process. Built for creators of every kind, Firefly helps you generate, edit, and experiment fast.

0:43Matt Belloni:Because the asks aren't getting smaller, the budgets aren't getting bigger, and the timelines, oh yeah, still tight. With all the best creative AI models in one place, Firefly brings your ideas to life. Unlock a better way to make with Adobe Firefly. It is Wednesday, August 12th. The box office has been on fire lately, thanks mostly to Spider-Man and The Odyssey. But if we're going to put a dumb name on this season, I'd argue it's Hot IMAX Summer. Craig will probably tell me that's cringy. But if you look at the numbers, IMAX is really overperforming. This past weekend, the global box office hit$52 million in the format, the fourth consecutive weekend over$50 million, the first time that's ever happened.

1:27Matt Belloni:And The Odyssey, the first movie shot entirely in IMAX, it's about to become the highest grossing movie ever in the format. The stock price is up about 40 % in the past six months, and the company is for sale, or at least it's entertaining options. Still, a lot of issues with IMAX as well. Namely, there aren't enough theaters to deal with demand when big movies come out. And there certainly aren't enough 70mm IMAX film theaters in operation. Only about 41 worldwide. why. So it becomes a frenzy when something like the Odyssey premieres. And Disney was so fed up with the IMAX shortage and being unable to secure IMAX screens for Avengers Doomsday that they made up Infinity Vision, their own name for the other premium large format screens.

2:09Matt Belloni:Spider-Man Brand New Day generated a$360 million opening weekend without any IMAX screens. Not a good fact if you're out there trying to sell the company to Disney or another potential buyer. A lot going on with IMAX, so it seemed like a good time to have Rich Gelfond back on the show. He's the longtime CEO of the company and a very savvy observer of the box office. Today, it's the hot IMAX summer, and why the heck can't they make more 70 millimeter projectors? From the Ringer and Puck, I'm Matt Bellany, and this is The Town.

2:43Matt Belloni:All right, we are here with Rich Gelfond, CEO of IMAX, returning champion to the show. So, Rich, I have some bad news to start off with. This podcast is now being presented in Infinity Vision. So, I think it's a perfect match, Matt. So, congratulations. Oh, it is. You're talking about the low-quality video that I am providing on this show. YouTube quality. I'm not going there, Matt. You said it. All right. Well, but it does bring up this issue that I've been joking about, you've been joking about. but it is a real business issue. Disney has essentially decided that they don't like that you did an exclusive with Dune for the IMAX screens and they would very much like people to see Avengers Doomsday in premium formats.

3:36Matt Belloni:So they just made up their own title for it. Is that, do you see that? You gotta see that as a little bit of a threat to you. I don't, Matt. I think it's not that they didn't like it, which they obviously didn't. I think it's that they couldn't have it. And you know the Disney organization pretty well. They like to have a lot of things. It's why they've done such a great job. And just going through the history for a second, Avengers Doomsday was supposed to come out over the summer. It didn't for whatever reason. Oh, we knew. It's two words, the Russos. Okay, I'm not going there either. Then we had Dune 3.

4:16I think it's going to be an amazing movie. Denis is filming it in part with IMAX film cameras. You know, Zendaya and Timothee Chalamet. I mean, it's a big deal movie.

4:26Matt Belloni:Oh, yeah. The footage at CinemaCon looked amazing. Spectacular. And then they dated right on top of it. And they said, by the way, they were very gracious. They said, you know, they understood that, you know, they dated second and they couldn't do it. But looking in their own mirrors, they said, it probably would be great if we could have IMAX, but we can't. So what's the closest thing we could do? And they came up with this idea. And the idea was to take pre-existing large format, whatever that is. So everything with an X. And then put a secure process of certification, which is in a black box.

5:09I don't know what it means, but...

5:12Matt Belloni:Oh, it's bullshit. It's whatever PLFs they can get that are of the higher quality PLFs. And then they'll call it, you know, Infinity Vision. So we're playing Avengers Doomsday in China. I hope it's a great movie. I hope it does really well. But no, I'm not losing sleep over it. And by the way, the last four weekends, we did over$50 million a weekend. and we've never done more than one in a year. And that's in a world where Infinity Vision and Dolby and a lot of other things exist. So no, I'm not losing sleep over it. Yeah, no, I didn't mean it that way. I mean it more as a marketing story because the success of IMAX in recent years has been, yes, the technology and you do provide a premium experience, but IMAX has become a key marketing tool for the studios.

6:07Matt Belloni:Disney's doing it right now. If you look at the billboards for the Ridley Scott movie, Dog Stars, has IMAX all over it. And Disney's been very aggressive in promoting IMAX. And that's great for you because it increases the brand equity and the differentiation in the market. But now they've decided to throw their weight behind this other name. And I wonder if that works, if that will become their primary way of promoting the event status of their movies. So I don't think so, Matt, because, you know, we've talked to Disney a lot. So next year with Disney, we have a lot of movies, including Star Wars with Ryan Gosling, one of their premier.

6:50And by the way, at the end of next year, we're doing Avengers. Oh, you are? Oh, that's fun. We are. And we're re-releasing Avengers Endgame this year, which they are in Infinity Vision. So I think they've determined it's in their best interest to market it as a separate event and lean into IMAX for their big tentpole movies. And I think we view it as, you know, fine if they'd like to do it, great. and they're leaning into us as well. So we're fine with it.

7:23Matt Belloni:Okay, so no hard feelings. You mentioned it, but you are on a roll this summer for record weekends. And the box office in general is going nuts right now. It's gotta be a good time for you to sell the company. I mean, we saw a few months ago that you've engaged some bankers and having talks. Don't necessarily need to sell, of course, But where are you right now in the sale process for the company? Who's going to buy you? Well, as you know, Matt, we don't comment on rumors floating around. Oh, yes, you can. No, we can't. My lawyer is sitting next door and he'll barge through the door and yell at me.

8:04But we said at our investor day last year that we're running the company to maximize value in several ways. One, we're generating more earnings, more cash flow. Things, as you said, are going great. And at the same time, if something comes along and it happens to be a blowaway number and it happens to fit, we consider it. And that's kind of what we're doing. And the story was an unfortunate leak by people who weren't fully informed. And there it is.

8:35Matt Belloni:I predicted two years ago in my Puck newsletter that you guys would sell. And you came on the show and said, it's too early. but you're not really saying that anymore. You're saying if the price is right. And I like, there's a button, there's been speculation. We did a whole episode of the show speculating. You can find that, you know, maybe Apple, maybe Amazon, maybe Disney or Comcast NBC universal. Sony is the interesting one because they are moving more into exhibition. They bought Alamo draft house. They just said they were taking over the Cinerama dome. I've heard that Sony is working on some big deal right now.

9:14Matt Belloni:Is that big deal buying IMAX? As I said, Matt, I just can't comment. Okay, but you could say no. I have to say you're incredibly good at like incrementally getting there. You could say no, though, and you're not saying no. Because I don't want to establish a precedent of commenting on these kinds of things. Okay. All right, that's fair. sphere is an interesting one because sphere could start playing imax movies in that format if you worked it out in their gigantic you know mega imax format actually i'm not sure they could map they couldn't we've looked at playing sphere movies in imax and thought it was a way for them to amortize costs oh like wizard of oz right but that's not the direction that they want to go but we did kind of smell around about that idea.

10:09But as you know, it's such a different model. The Sphere costs over$2 billion to build. There's one of them in the world. IMAX costs a million or two to build. There are almost 2 ,000 in the world. The Sphere, although I admire it and it's great, is not close to profitability. We're generating lots of cash flow, lots of earnings. it's just a different business.

10:36Matt Belloni:Well, and you're not, I mean, just to be clear, if you haven't listened to previous episodes about IMAX, you are not building these theaters yourself for the most part. You are a technology company. You license your technology to the theaters that build them themselves and can then call themselves IMAX theaters. And that brought up, that brings up a pretty big topic that has been going around this summer. You went a little bit viral for one of your red carpet comments on this subject. And that is, why the heck are there not more 70 millimeter IMAX film projectors that can project in that 1.43 aspect ratio that Christopher Nolan loves?

11:19Matt Belloni:There are 41 in the world. And clearly the demand is there. People are selling these tickets for$300,$400 online for opening weekend. Why can you guys not help them build more projectors? So first, I like to say we are to some extent because Oppenheimer only had 30. Now we have 41. So that's roughly a 30 % increase. Second thing is basic economics. One film print at one theater costs$50 ,000. So you go to CityWalk, you go to 68th Street, each one. $50 ,000. They also have a trained projectionist there. It costs a lot to film with the cameras. So the economics only work in a select number of really high-end theaters, meaning, as you know, we're sold out until September, mid-September in a bunch of places.

12:23So you really need high occupancy places, big boxes. The TCL in LA is about$3 million in the last four weeks. Chinese, crazy numbers. So you need big boxes, you need big box office, and you could do more than you do more now, but you can't put them at every corner. It just doesn't work. The numbers don't work.

12:48Matt Belloni:And there aren't that many releases that justify it is what you have said before. Yeah, that's correct. But I think it's a little bit of a chicken and egg thing, where if there were more, then there would be more incentive for filmmakers to film in the format and studios to greenlight more of these event-style movies and release them more year-round, right? Well, the good news for you, Matt, is next year we'll have likely four or more films that are IMAX film released on film. Which are those? I don't think we've announced them yet. Oh, you can do it here. I know. You know, you're so generous the way you offer it.

13:34Matt Belloni:It's incredible. I'm just curious. Listen, people want to know this stuff. You know a lot more than you say. I know you do. Well, I pay my legal department a lot to keep me quiet. So, you know, they have to feel worthwhile. But then why were you able to go up 30 % from Oppenheimer to Odyssey? If you were able to, in three years, go up 30%, why can you not go up 30 % by the time the next Nolan movie comes out? Well, as I said, we might be able to go up, you know, a small way like that. because what we do is we scavenge the world for IMAX film theaters that are out there. And a lot of them are theaters that closed a decade ago or something like that.

14:20And then we rebuild them and we find the parts, we make the parts. Nobody's manufacturing this from scratch right now.

14:29Matt Belloni:That's the problem. Chris Nolan should do this. Chris Nolan should start a factory and he can sell you all the parts and the projectors and make a fortune. Chris Nolan is doing a lot for us. I think he's helped us enough. But the point is, we have thought of a new idea, and this we haven't talked about before, where we may be able to get, you know, another maybe 10 or maybe another 10 projectors or another 30 % sometime next year. But no, I can't talk about it yet. We haven't figured it all out. 3D printers? you're just going to have 3D printers maybe Elon would help you if you said that you would play his historically accurate version of the Odyssey in IMAX he would probably make some projectors for you.

15:19You know somehow I don't think that will be a threat to Nolan's Odyssey

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17:20Matt Belloni:D, for more information. Do you get inquiries a lot now from filmmakers who want to shoot entirely in IMAX now that Nolan has done it? Well, we've had inquiries throughout the years. And remember, the movie is just out for a month. So we've gotten some and some people that were shooting in digital have raised the subject. But we have a concerted effort. We're actually trying to persuade filmmakers to do that. We put together a little reel and we're doing a little roadshow. But as I said, next year, there'll be more film releases than there are this year. And we do have some things that are being filmed now with IMAX cameras.

18:06But, you know, it's a process. It doesn't happen overnight. As you know, filmmakers plan out films for years before they go into shooting. But I think that that will happen.

18:18Matt Belloni:Why does someone like Denis not shoot Dune 3 entirely in IMAX? Give us a sense of the added cost. Like on the Odyssey, how much more did shooting entirely in IMAX add to the budget of the Odyssey? So the cost, I don't think is a big deal. Matt, I don't know the answer, but I would. You don't know the answer? Like is it tens of millions of dollars extra or is it a couple million extra? Single digit millions that it costs. So that's not the obstacle. I think some filmmakers are just adverse to trying something new. So if you shot with a Sony Red your whole life, you know, you're not going to switch to doing a film camera.

19:01The reloads, as you know, it has very short times until you have to reload. The noise was a problem until, you know, at Chris's urging, we invented a quieter camera with an accompanying blimp. so you could do real-time sound recording and the cast can act like they would in front of every camera. It's like a silencer? Yeah, that's a good way to put it. It has some alloys that we developed. We worked with Elon and we went to distant planets and we brought it back to create... Stop, stop. I made that up.

19:39Matt Belloni:But you are trying to innovate here so that the filmmakers can feel more at ease to use it. Because I've seen some shots of Nolan, you know, on the Greek islands, and it's a beast, that IMAX camera. It's a pain in the ass to film with that. So, you know, obviously I've never filmed with it, but Chris has said to me, it's one of the best cameras he's ever filmed with, and he loves doing it, and it's not a compromise for him. You know, and Hoyta, his DP, you know, they love it. And I think Danny likes it quite a bit. When one of the Bonds was shot by Kerry Fukunaka using our film camera, he said it was like flying first class.

20:25And I was sad when I had to go back to coach. So I think the people have ventured out. Ryan Coogler in Sinners, he had an extremely positive experience. And I'd be surprised if he didn't use it again. So I think the negative bent around it is highly exaggerated.

20:45Matt Belloni:Is Denis going to use IMAX cameras entirely for the Bond movie? I hope so. You must know. He must have told you. I don't know. You don't know. I mean, he's busy finishing Dune 3. I have talked to him about it, but I think his script isn't done yet. He hasn't cast it yet. So I think we just have to see. Interesting. By the way, apropos of nothing, where are you on the Warner Brothers Paramount merger? This is going to be potentially impactful to you. Two big clients, or not clients, but two big studios that put movies in theaters and often in IMAX. They're merging under the same banner, potentially, if this is approved.

21:29Matt Belloni:Does that help or hurt you? So I don't know. I mean, and if you and I have learned something together over the years, it's that people who are predicting the future are usually wrong. I know, but we do it anyways. Remember when streaming was going to put theatrical out of business? And you do remember that, you know, I think you pitied me when you put me on this podcast. I was like the lone voice saying theatrical isn't dead. And I also remind you when we talked about the Paramount merger when it first came out, I said I wouldn't be surprised to see some kind of consent decree come on around it.

22:10And that's what they're talking about now.

22:12Matt Belloni:Well, Ellison would very much like a consent decree. The state attorneys generals don't seem interested right now. Not horsing around. I don't think we know. So does Paramount sell the physical studio to someone else? And is that someone else who does a lot of films? How do the streamers react to the theatrical windows? How does Ellison react to so many more blockbusters? We have too much content now, more than we can play. Yes, it's easy to see how one studio isn't as good as two on the surface in terms of content. but there's so much change going on in the industry. I'm not smart enough to figure out whether it's good or bad.

22:58Matt Belloni:It's more like the release calendar, I think might be impacted, where you certainly wouldn't have a situation like Dune 3 and Doomsday if they were coming from Paramount and Warner Brothers going up against each other like that. And IMAX might be able to portion them out better if they're both under one studio. Yeah, that's a good point of unintended consequences. And you just, it's hard to tell you. Because that's your big problem right now. You are, you're too popular amongst the studios. They want to secure those screens as fast and as early as they can to make sure that they can muscle out competitors.

23:43Matt Belloni:And I've said this before with you, It must put you in a pretty awkward situation sometimes. So the problem, Matt, is being too popular? I know, I know. But it is an issue for you. It's a good problem to have. Although on the opposite side there, Sony got to$360 million worldwide for a Spider-Man movie with exactly zero IMAX screens. Yeah, I'm sure you've read the data, But their PLF indexing was way below what historically movies of that type have done. And I'm sure they would have liked to have had us. And, you know, we're going to do the Beatles with them where we will have that. Is it true that all four Beatles movies are coming out on the same day in 2028?