Bartiromo: IMAX CEO Gelfond Has Global Outlook
By USA Today: Maria Bartiromo on July 21, 2014
The summer of the blockbuster movie is alive and well, but that liveliness might not e so visible in the U.S. Box office receipts here are flat to down during the last few years, as more consumers opt for fancy home entertainment systems and mobile devices to watch their flicks. But internationally, sales are soaring, as movie-goers in China, Russia and Latin America pay up to see blockbusters. In the U.S., the average price of a movie ticket can be anywhere from $8 to $10, but a ticket to an IMAX theater can be up to $13 to $15 because of a more innovative 3-D and IMAX experience. Prices have gone up because of the popularity of 3-D and IMAX films such as Star Trek: Into Darkness and Iron Man 3. But nowhere is the popularity as strong and as pricey as in places such as emerging markets, where consumers are soaking up one of the USA's greatest exports: entertainment. I caught up with the CEO of IMAX, Richard Gelfond to talk growth around the world. Our interview follows, edited for clarity and length.
Q: Transformers: Age of Extinction has been the hot movie of the summer. But it's not just the U.S. Was this a surprise?
A: Transformers was one of the first movies that was really designed for a global audience. Over the last several years, the box office has migrated from one that was primarily North American to one that's now primarily international and as a subset of that, strongly Chinese. This is the first movie that was really designed with China in mind. Large segments of the film were filmed in Hong Kong and in Mainland China. IMAX cameras we used in both Hong Kong and Mainland China for the first time. In China, there was a reality TV show where four contestants became members of the cast of Transformers, so they built in an audience in advance. The two big Chinese premiers in Shanghai and in Beijing were in IMAX theaters. This film was organically designed to be, not only U.S. and not only global, but also China-centric.
Q: What about the U.S?
A: In the U.S., box office has been flat the last (few) years. But internationally, box office has grown significantly, particularly in developing markets, places like Russia, China, the Middle East, Latin America. For IMAX, a large part of our growth has been concurrent with that.
Q: What's in the pipeline down the road? Star Wars should be a big one.
A: Last week, (director) J.J. Abrams tweeted that he's shooting segments of Star Wars with IMAX cameras. He's done that before, in two Star Treks and in Mission: Impossible III. They will be 'interstellar' this November. That all leads into 2015, which I think not only for IMAX, but for the industry in general, will be a very special year. Besides Star Wars, you have the next Fast & Furious, you have the next Bond, you have the next Avengers, you have Jurassic World. I think 2015 and '16 are really going to be the years of the blockbuster.
Q: A blockbuster is the reason people would pay more than in an average theater to see an IMAX film.
A: With all the changes in in-home entertainment - the bigger screens, more variety - people want an excuse to go out to the movies. Certain movies, which are very plot-driven, you could watch on any device. But if it's a very high-budget, visual effects, lots of sound, that's what people really want to see at an IMAX, because it's very different than anything you could get in the home. That's why we're really blockbuster driven.
I've seen a bifurcation at the box office in the U.S. When you have blockbuster movies, people are still going to want to go to a theater and see them. When you have more independent movies, or more movies that rely on plot than on special effects, I think people will see them on devices. It really depends on the mix of movies. Hollywood is going to say, "Am I making this movie more for the theaters, or am I making this more for mobile devices or at-home devices?" You'll see this continued split in the market. That's why you're seeing bigger blockbusters made today and more money going into those big blockbusters.
Q: How does this summer compare with past summers? What are you expecting for Christmas?
A: Avatar was released over Christmas in 2009, and that was the biggest-grossing movie of all time. But typically, studios like to introduce (films) during the summer. This summer wasn't an exception, with Godzilla and Transformers and the new Planet of the Apes movie. This year at Christmas will be the last of the Hobbit series, and I think that will do incredibly well. Next year, obviously, Star Wars is over Christmas. X-Men tends to circle around the summer. Early August, Marvel's got a new movie coming out called Guardians of the Galaxy, which we're extremely excited about. It definitely has breakout potential.
Q: Is growth at IMAX is largely coming from international audiences? And China is increasingly important?
A: Not only China, but Russia, as well, Latin America and the Middle East. The expanding (theater) network around the world will be the drivers for us, enabling more consumers to see IMAX.
IMAX is pretty much debt free and cash positive. We have our line of credit. We expect to generate more than enough cash internally to finance that growth. Our model is that we invest in certain countries, we invest in the IMAX theater and we take a percentage of the gross box office. In other countries, we license our equipment for an up-front fee.
Because of this globalization of the box office, films are increasingly going to be made with international stars and with more international stories. When you think back to the days of John Wayne and the Western, I think there'll be a very different trend today. There'll be these global superstars. Many we know - Tom Cruise on the acting side, or on the directing side, people like Chris Nolan or Jim Cameron or J.J. Abrams. It's a new day, and people throughout the world will coalesce around more global brands rather than domestic brands. There'll be these global superstars.
Read more about IMAX on USA Today's website.