Why IMAX Is Becoming Bigger Than the Movie

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1:11If you drive around LA, you'll probably see a billboard for a new movie. Fun fact, the studio marketing people often put their own billboards near their own studio lots so the executives can feel good about what they're working on when they're driving to work. I've always found that funny. Anyway, more and more, the word IMAX will be on those billboards, often bigger than the title of the movie itself. It's pretty remarkable. The format is now the bigger draw than the movie. We all know why that is. Movies aren't now considered theatrical unless they are special. And what signals to an audience that it's special more than IMAX, which costs a few bucks more and people associate with premium, large, not your home screen, even though there are far more premium large format theaters that aren't IMAX than those that are.

1:54For that reason, the business of IMAX has always been fascinating to me. Remember, IMAX mostly licenses its proprietary technology to theaters. They don't own the theaters themselves. And it's now at about 1 ,800 screens around the world, 372 or something in the U.S. In total, IMAX captures about 3.6 % of total box office now worldwide on only about 1 % of screens. And in the summer, that percentage goes way up. It could be 15 or 20 % on some movies with the, quote, filmed for IMAX label on it. We'll talk about that. IMAX reported earnings last week. Pretty good numbers. And its stock is up 45 % in the past year.

2:32There's been news on IMAX lately as well. Universal just did an interesting stunt with The Odyssey, the Chris Nolan movie. They've sold out 70mm IMAX screenings a year in advance. And some of the non-IMAX theaters are a little sick of all the attention and marketing that IMAX is getting. to some of the largest U.S. theater chains like Cinemark, Regal, Marcus. They talked about jointly marketing a competitive big screen theater to blunt the influence of IMAX, according to Bloomberg. So what does that mean? These chains have their own brands like XD, but maybe if they all united, it would be more powerful.

3:04An interesting question. So it's time to bring back Rich Gelfand, the CEO of IMAX. He's been on the show before, always good. Today is the latest on IMAX, and can the other theaters build their own competitor? From the Ringer and Puck, I'm Matt Bellany, and this is The Town.

3:23Okay, we are here with Rich Gelfand, who's the CEO of IMAX and a returning champion on the show. Welcome back, Rich. It's great to be here, Matt. You're our good luck charm. I know. You guys are having a good summer. I feel like this is your time, and your recent earnings were very good. And I haven't had you on since the trend that I have started noticing around LA, which is for many of these movies. Now, the IMAX branding in the posters and the billboards and the pre-show cards and everything is now bigger than the title of the movie itself. And it's so funny to me that this is where we are in the moviegoing experience, that the experience itself is what the studios are marketing now above the movies.

4:18Do they consult with you at all before they do that? Yeah, sure. We're very involved in the marketing materials and approvals, Matt. And the other thing is, you know, that a lot of people don't realize is, you know, we're involved a long time in advance, not just with the marketing. So it's a lot more than just, you know, a distribution window. It's actually being part of the movie and the studios recognize how important to audiences the IMAX of it is with kind of like a global curator of some of this content and they lean in and it works. Well, you're coding for event. And that increasingly is what the studios are selling when they are selling movies in theaters.

5:01I first noticed it for real. I think I actually emailed you a picture on The Amateur, that Rami Malek movie. That is not a typical event style movie. But 20th Century Fox or 20th Century now, they leaned into IMAX because they were trying to make it an event. And now everybody is doing that. It's just funny to me because sometimes it reads as desperate in my book sometimes when they do it. Fortunately, though, Matt, the results don't come out as desperate. So Godzilla, they did it in a big way. Aliens versus Romulus, they did it in a big way. And both of those movies exceeded the box office predictions going in.

5:45So I think the reason they do it is it works. Yeah. Okay. What does a filmmaker have to do to get the, quote, filmed in IMAX moniker in the marketing? Because we know there are different shades of IMAX, and there's different shades of what is done in the filmmaking process. There's different shades of how IMAX is presented. There's the, quote, fake IMAX. There's the real IMAX. There's 70 millimeter IMAX. What does filmed in IMAX actually mean now? It means it was shot with IMAX cameras. It means that we give it a special at least two-week run if it was filmed at IMAX. And it means the studio and the talent is going to lean into it on the marketing side.

6:33And the fact that it's filmed with our cameras, either the whole movie is, or parts where the aspect ratio, which as you know, is different, it opens up into a different world. It has a different look to it. On the camera side, there are two ways you could qualify. One is either you could shoot with the film cameras, which obviously Chris Nolan does, and Denis Villeneuve is going to do in the new Dune 3 coming up. What about Bond? Has he committed to IMAX for Bond? We haven't had discussions yet, Matt, but obviously he's a big fan, so we're hopeful. or you film it in a digital camera. So for certain kinds of digital cameras, we've created proprietary add-ons that make the filming special and make the aspect ratio special.

7:26But it doesn't have to be the whole movie. It can be a portion and still get that moniker filmed in IMAX. Yes, exactly. And The Odyssey is the first movie to be filmed entirely with this new film version of the camera, correct? There's a digital version and then there's a film version. And the Odyssey is getting a new IMAX film camera, if I got that correct, right? Yeah, we built four new cameras and the first time we use them is on the Odyssey and they have different features. So they allow more flexibility. They're somewhat quieter. They allow different kinds of shots. Oh, does that mean no more mumble dialogue in Nolan movies?

8:11I'm not going near that one. Does he call you if there's like a problem with the camera? Is there like a button he can push and the technician shows up like a plumber? Actually, on some of the shots, we have technical people on the shot. So they work it. And, you know, what I can add in color to it is that with this new generation of cameras that we built, You know, we were hopeful they would work perfectly, but they're being field tested. And as you know from Chris, you know, he's not a guy who doesn't take chances. So, you know, they're being dropped from high places. They're being put in weird environments and they've worked incredibly well in terms of the way he's used them.

8:54That's good to hear. Can't wait to see the Matt Damon scraggly beard in as big a format as possible. Yeah, thinking of those hairs coming out really makes me excited. Okay. Were you guys involved in this stunt to sell tickets a year in advance to the opening in 70mm? I mean, it's kind of brilliant. I don't know why nobody thought of this before because it all of a sudden took a movie that was already an event. People thought it was going to be an event. And now I feel like it's been supercharged and the nerds got their ticket for opening night and everyone else is like, oh, this is the kind of movie that people are buying tickets for a year in advance.

9:35I probably want to see this. Well, you say involved. It was all IMAX theaters that sold the tickets. So of course we were involved. No, but whose idea was it? I heard it was the Universal marketing people. Is that right? I believe Universal are the ones that came up with the idea, but I wasn't personally involved, so I'm not sure. But the reason you could do it, Matt, is because IMAX in general and IMAX particularly where Chris makes a movie, an event, people don't look at it like, oh, it's a movie opening. They look at it like it's an event happening. Yeah, but there's lots of those coming. I mean, why haven't you done it for Doomsday, Avengers Doomsday yet?

10:14I just think there's a special audience and a special magic around IMAX and Chris Nolan. And I think the audiences know that. And you probably know, like in Lincoln Square in New York, in four minutes, it sold out. So it's more like a concert kind of pattern. Scalpers. There's like people reselling them for 400 bucks. Yeah, I've heard 1500 bucks. You guys got to get in on that. You got to do dynamic pricing like Taylor Swift and capture that money. Well, the exhibitors sell them. So that's their issue. Have others reached out to you about doing something similar? Not yet. They're going to. No one in Hollywood lets an original idea go to waste.

10:56They're all going to copy. There is a trend towards doing that and it works. So it wouldn't shock me if people tried it again. Yeah. What was the ultimate gross from the sales of those tickets? I read 1.5 million. I don't know if that's the final number. You know, it's a limited number of shows at a limited number of theaters. So I don't think the objective was to build a gross. No, no, no. Although I'm sure my good friend Adam Aaron at AMC would like the money a year in advance for whatever debt refinance they have to do now. Well, Adam's a financial wizard, as you know. A marketing wizard also.

11:32And a Twitter wizard. I'm sure he's figured out how to use this in some way. Yes. So the trajectory on IMAX, give us an update. What has been the growth trajectory over the past year since we last spoke? How many new theaters? Where are you seeing growth? Did you guys get a windfall from that Chinese animated movie that grows$2 billion without doing much outside the country? Like, give us an update. So first, on the last part of your question, Nezhatu, we did$160 million on it. Oh, my God. So what percentage of the total was that? I don't know, probably seven or eight, something like that. So not 20%, not Oppenheimer, but pretty big.

12:17Yeah, it was very big. But in China, remember, there are 80 ,000 screens. Yes, but you have a particularly big footprint in China. Don't you have 1 ,000 screens there? We have about 800. 800, okay. So you have about 1 % of the screens there. So, you know, the year has gone extremely well. You know, it wasn't only Nezha. And by the way, you'll find it interesting. Nezha is being released in the U.S. in August. A24 bought the distribution rights and we're playing it. And I think A24 is leaning heavily into IMAX's success in China as part of their distribution pattern. But on a broader scale, we had eight film for IMAX movies that were released this year, including Fantastic Four, which just opened.

13:03And on those eight, we've done about 15 % of the box office. And on three of them, we've done 20 % of the box office. And keep in mind in our history, there are only five other movies. We did 20 % of them and three of them were in the last quarter. Oh, wow. So F1, Mission Impossible, and what else? Sinners. Sinners, right. Wow. Yeah, I saw Sinners in IMAX. Interesting. There's kind of been a kind of marked shift in how much people are seeking out the IMAX experience. And that's led, this year, we've signed 123 new theaters so far. And last year, for the whole year, we did 130. We're installing theaters at a higher pace.

13:47We've guided on the street to a box office of about$1.2 billion, and we've done over$700 million so far. So things are going extremely well for us, not just in tickets sold, but in all aspects of our business. So there is this movement that Bloomberg reported on a few weeks ago by the non-AMC theater chains. Most of your theaters in the U.S. are AMC theaters. Not all, but a lot of them are. And a lot of the other theater chains apparently feel like they are threatened by this IMAX marketing that the studios are doing. And I'm sure they are getting customers coming up to their box office and saying, Two tickets for sinners in IMAX.

14:37Oh, we don't offer IMAX. We offer XD or one of the other formats. and there's confusion and there's disappointed fans and these other theater chains like Regal and Marcus and Cinemark, they are talking about putting together a rival brand where it would be, you know, super screen or whatever they call it that they would also try to get the studios to market. What is this and are you threatened? Not threatened at all. I knew you were going to say that, but tell us what it is. And did you know this was coming? Well, the reporter doing the story called me to comment before it came out. And I said, I was thinking of announcing that IMAX was making AI chips to compete with NVIDIA.

15:27And I saw this as like a similar kind of threat as that threat. Well, but don't you feel for them a little bit like their customers are asking for IMAX because it's in the studio posters and billboards. See it in IMAX. And then they go to their local multiplex and IMAX isn't available. What are they supposed to do? Well, Matt, I don't feel sorry for them because anybody could be in the IMAX business. It's not like a closed business. I mean, people make choice in business and the ones who are doing IMAX made the right choice. Yeah, it's like Coke and Pepsi. Well, it's not like Coke and Pepsi because we also have proprietary technology, which you can't just say, oh, we're going to get together and have...

16:08Well, you're talking to a Coke fan here. I believe the Coca-Cola and Diet Coke formula to be the superior product in every way. Well, and in this case, it's not only the technology and it's not only the marketing, as we talked about. It's also we're embedded with the filmmakers. I mean, you know, we talk to them a year, two years in advance. Most exhibition chains, you know, they meet filmmakers at IMAX's forum. Yeah. And you guys spend a lot of money cultivating those relationships. And it is proprietary because these other chains and these other formats would say we're just as good. They don't have anything special.

16:44They are trying to position themselves as being special and proprietary, but it's not really proprietary. Yeah. I mean, Matt, we have something called R &D. Yes. Honey. We have a culture. I mean, most of the PLFs, they take a regular projector and they put it on a bigger screen. You know, I guess the audience doesn't get fooled by that. Some don't, some do, but the nerds, the people who are buying a year in advance, they notice. Well, I think more than the nerds, I just told you the indexing is an awful lot higher. So I, you know, I think the audiences know and maybe most importantly, the filmmakers know and the filmmakers lean in.

17:25So I don't think if a bunch of exhibitors got together and put a new brand on old technology and didn't make the experienced significantly better and weren't involved with the filmmakers, I don't think it would really make any difference. And remember, these guys have been competing with us for 15 years with different offerings, some better than others, but they're still not IMAX and the audience knows it. So I think using your analogy, you know, taking colored water and putting the name Coke on it doesn't make it Coke. No, but Pepsi has a pretty good business and they succeed in part as the alternative to Coke.

18:06And as much as you guys get marketed as see it in IMAX and see it in large form that the other large formats do benefit from that. I think they're just frustrated. They want the benefit of that marketing specifically. Hey, you know, Matt, I'm five foot six and I wish I was six foot three. I'm not. So I guess they have to live with their choices. We could make a Trump South Park joke, but we won't.

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19:50All episodes of FX's The Bear are now streaming on Hulu and Hulu on Disney Plus for bundle subscribers for your Emmy consideration. What is the perfect percentage of IMAX screens you want in the world? According to your earnings report, you guys are about 1 % of screens globally, and then you get 3.6 % of the global box office. So what percentage of screens do you think is the goal and reasonable for the next 10 to 15 years for IMAX? So our total addressable market now is about 3 ,600 screens, and we're at about 1 ,800 now. So double where we are now. However, we revise that number frequently and we revise it upward at some point towards the end of the year.

20:41And I think the percentage of box office is likely going to go up in greater proportion as more people gravitate towards these large format screens. That's my sense of it. Is that yours? I mean, obviously it is. I'm only worried that one thing you said, as IMAX gets more popular, where the other guys, they could do what they want. Yeah, unless these guys suddenly strike a deal with the studios where all of a sudden the billboards say, come watch The Amateur in super-duper screen format across all these other theaters. As I said before, I don't think it's a marketing issue. I think that's part of it, but it's being embedded with filmmakers and it's being involved in the creative process.

21:26And it's having, you know, I don't know if you know this, Matt, but we monitor every theater in the world in real time. So if the sound is too low in the Philippines, we call them and we tell them to turn it up. If the bulb is too dull in Peoria, we go and change the bulb. It's so much more than just a marketing gimmick. And as long as these guys think it's a marketing gimmick, they're going to be left behind. I think it's just a better experience. What if someone like me is nodding off in a screening, as I often do, and snoring? Will someone from IMAX come and tell me to stop snoring? We're working on that AI project, but we haven't got there yet.

22:08Greta Gerwig, she is now doing her Narnia movie. You guys have a deal with her to release it for two weeks in IMAX. Will the theaters commit to play it? I had the Regal CEO, Eduardo Acuna, on a panel at CinemaCon, and he wouldn't commit to playing Narnia in his theaters. And that's a problem potentially for you guys. I know they're a small footprint, but the whole premise of Greta Gerwig getting two weeks in theaters from Netflix for her movie was that these theaters would actually play it because they don't normally play Netflix movies. and now there seems to be a pushback on that. Where are we with Greta Gerwig's Narnia?

22:53We're in a really good place. By the way, even Eduardo, he's told me personally, he goes, look, I haven't decided. I'm not against playing it. So what I think, and I know a lot more about this movie than has been made public, but the story, the way it's being filmed, the distribution pattern, the way Greta's leaning into it, And, you know, by the way, you know, a little bit of new news, Matt, I think Netflix is leaning into it. I mean, I think Netflix is really excited about this release. You're telling me Ted Sarandos is excited about theaters. Mr. Theaters are not the preferred method of distribution for most customers.

23:37They've moved on. I'm telling you the Netflix organization is excited about it and leaning in. And when you see the marketing, which is much more like a traditional theatrical release. Well, that's in her contract. She got that in her deal that they had to market it in the same way they would market a theatrical release. But to not overstate it, you know, we're in contact with Netflix about how this is going and we've only gotten really good vibes from them. And nobody's walking around our meeting room with contracts. They're thinking about it, how hard to lean into it. And I think people don't know the scope of it, the story.

24:18And I have insight into some of that. Please share. Yeah, I think you got to dial 1-800-GRETA to get that one. That number doesn't work on my phone. But once it's unveiled, what this looks like, how it's going to be, I think people are going to line up to be part of it. And I think, you know, anybody who isn't a part of it, I think is going to miss out in a significant way. They should do a year in advance ticket sale. Great idea. Maybe I'll put on sale this afternoon. That would be great. I'm sure Netflix would be excited. I mean, honestly, if they do this, first of all, it'd be contractual. They have to market it this way.

24:58And it's an interesting experiment for them to see if eventizing a movie for two weeks in theaters will juice numbers on the service because they haven't done that in a while. You know, the second Knives Out movie got a week in theaters and did very well a month later on the service. Maybe this will help them. I've always said the top movies on the biannual reports on Netflix are typically movies that got theatrical releases from other studios and then appeared on Netflix because they got the full marketing campaign. People knew them and then they clicked on them. So I've never understood why Netflix doesn't at least do nominal theatrical releases, but they are doing them.

25:43Ted has his feelings and this will be an interesting experiment. So Matt, look at it. You're talking about Narnia today. It's over a year away. Lots of people are talking about Narnia. Well, I'm talking about it because it's an interesting business issue. Are real people in the real world talking about the Narnia movie? Yes, a lot of people are talking about it. And it's going to create an event. And that's what IMAX does, is create events. And it's not just one movie, as you know. It's a series of movies. And I think IMAX is an ideal way to launch an event. and I know you like doing over-unders.

26:18I'm giving you some inside information. Take the over on Narnia and you'll win. A year in advance, you're telling me to take the over. I am. Okay. What are you nervous about? You say you're not nervous about the rival format challenge. You're not nervous about Narnia. You're not nervous about Odyssey. What are you nervous about? I'm nervous about what I don't know about, But in a way, I think of IMAX like the old pinball games. So I get a lot of pleasure of playing pinball when all the things are set up and when the ball goes into play. You know, you just keep it bouncing around. And when you look at our backlog for 26 of movies, including Denise Dune, including Nolan's Odyssey.

27:03Is Spielberg filming an IMAX or no? I don't think he's filming an IMAX. but it seems set up better than I've ever seen it. What I'd be nervous about is the same thing for everyone in the exhibition business, is that you don't control ultimately your product. The number of movies, the size of the movies, the quality of the movies is out of your control. And you can do whatever you do to increase your footprint around the world and increase your share of the box office and market better and have the filmmaker relationships. But if the studios decide to pull back on titles, you ultimately will suffer.