IMAX to Begin Producing Home Theaters in China
By The New York Times: Keith Bradsher on October 29, 2013
HONG KONG — IMAX Corporation, the Canadian company that has long designed and manufactured large-screen cinema equipment on the outskirts of Toronto, plans to announce on Tuesday in Los Angeles that it has set up a joint venture with a Chinese multinational to develop and manufacture $250,000 home theater systems in China.
IMAX’s decision to set up a joint venture with the Shenzhen-based TCL Multimedia Technology Holdings Limited is the latest sign of the powerful lure that China has become for Hollywood and its suppliers. Nicole Kidman, John Travolta, Leonardo DiCaprio and Zhang Ziyi showed up last month in Qingdao, a beach resort in northeastern China, to attend the announcement of a movie-themed real estate development that is to include 20 movie sound sets.
IMAX decided on a joint venture with TCL for the new systems primarily because it expects China to be the largest market for them, Richard L. Gelfond, the chief executive of IMAX, said in a telephone interview. IMAX also concluded that it needed an alliance with a large television manufacturer in order to handle the distribution and service issues associated with selling to a broader range of households, he said.
While acknowledging that low production costs in China had also been an attraction, Mr. Gelfond said that they had not been central. “It’s not because of the low-end cost structure but because it’s the market,” he said.
IMAX already makes $2 million home theater systems for extremely wealthy households at its base in Mississauga, Ontario, and will continue to do so.
China is now the world’s largest market for flat-panel television sets, just as it is also the largest market now for everything from cars to cellphones. But two peculiarities of the Chinese box office have made it particularly attractive for manufacturers of high-end home theater systems.
The Chinese government only allows 34 foreign movies to be distributed each year through its cinemas, at least 14 of which must be 3D or IMAX versions. But the latest Hollywood movies are widely distributed in China on DVDs and in other formats, prompting Chinese families to spend heavily to see them at home in style.
Another unusual feature of the Chinese market is that Western and Chinese studios have not tried to block the immediate release of movies there in formats suitable for top-priced home theater systems at the same time that the movies are released in cinemas. By contrast, Hollywood studios strictly prohibit the distribution in the West of top-priced home theater versions of first-run movies until they have been showing at cinemas for 30 to 60 days.
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