The CEO of Imax talks about what 2020 holds for the movie business, what the company learned from Kanye West's 'Jesus Is King,' and the China market
- Imax Corporation CEO Richard Gelfond talked to Business Insider about the strong 2019 the company had and his plans going forward.
- Gelfond wants to work more with streaming services.
- He is disappointed that the Imax release of Amazon's "The Aeronauts" was scrapped.
- But he is happy with the release of the Kanye West short film "Jesus Is King," though admits his company needs to build a bigger infrastructure to pull off projects like this in the future.
- Gelfond also talked about Imax Enhanced, which brings high-resolution picture quality to your TV at home.
- Visit Business Insider's homepage for more stories.
In an industry in the midst of complete disruption, Imax Corporation CEO Richard Gelfond sees opportunity.
The head of the perennial manufacturer of large-format screens and cameras predicts a record-breaking global box office for his company this year, surpassing 2018's $1.032 billion worldwide take. And at the local-language box office, the company is up over 40% from this time last year. That includes being up 20% compared to early December last year in the all-important China market. And those figures will only grow, as there are movies like "Jumanji: The Next Level," "Star Wars: The Rise of Skywalker," and "Cats" still to come before the year ends.
With more blockbusters being made than ever before (five released next year were shot on Imax cameras, an all-time high), audiences often want to see them on the biggest screen possible - and Imax is happy to oblige. But going forward, Gelfond is also looking to enrich audiences with different types of big-screen entertainment. That includes exclusive content like "Jesus Is King," Kanye West's 35-minute short film that coincided with the release of his new album, to maybe even screening TV shows.
And with the growth of the streaming services, Gelfond believes there's a way for Imax to show that content while still staying loyal to its theatrical partners that respect the exclusive theatrical window.
Business Insider sat down with Gelfond at his office in New York City earlier this week to discuss his company's successes, his thoughts on current issues affecting the theatrical business (from the shortening of the theatrical window and the Paramount decrees), if Imax would ever do a movie-ticket subscription plan, and bringing Imax picture quality to your TV at home.
This interview has been edited for length and clarity.
Jason Guerrasio: I know there are still some very big movies to open before the year is out, but for Imax this year, what are the big takeaways?
Richard Gelfond: We had a tremendous year. I think we'll set a number of records, including box office, hopefully. We have to wait to see, as you said, there are still a bunch of movies to open. But it was a terrific year for us. I think one of the biggest reasons is we're global, especially in China we're up 20% year-over-year.
Guerrasio: That's a huge figure.
Gelfond: The industry was up between 5% and 10% in China. It's a huge figure, yes. When we look around and people are giving the doom-and-gloom in the industry, we're saying, "What are are you talking about?"
Gelfond: One of our investors did a market study and they found out, across all demographics - young, old, male, female, top-tier city, fifth-tier city - people really love Imax. It's just part of the culture there. I think a reason we have been so successful is we got there early, when the whole entertainment infrastructure was just developing. People grew up with our brand and our experience. We have a large network now, we have about 700 theaters open. We do a lot of local content as well, so we know the filmmakers and the studios. We're very embedded in the Chinese ecosystem. So I think it's all of that.
Guerrasio: We know that China is a huge market, but where globally do you have to tap into next to get the biggest return?
Gelfond: The way our cycle works is we sign theaters and then we open them up the next couple of years, so I can tell you areas where we have had a lot of signings recently are in the Middle East, especially Saudi Arabia. Japan has been extremely good. Germany has been heating up. India has turned the corner, finally, after a lot of years of going there. So I think you'll see our footprint expand significantly in those countries. And I think out of successful theaters there you'll see more growth come from that.
Guerrasio: I think this year it became evident that theatrical and streaming can coexist. Some people are going to stay home for some movies and go to the theaters for others, would I be right in that?
Gelfond: Absolutely. Let me put it in terms of Imax, other people can talk about theatrical as a whole. If you want to see blockbusters with other people and you want to go to a cultural event, you're going to go to an Imax theater. You're not going to go sit in your living room. I think streaming has done a very good job of creating a prestige platform for the right kind of movies and they are being recognized that way, including the nominations we've seen recently.
But I don't think streaming creates cultural events. When "The Irishman" came out it was really important to Netflix that they showed it in theaters and to critics. And recently they acquired a theater here in New York, The Paris. I think things recently have proven that streaming needs theatrical releases to really get traction on what they are doing. I also think that beside prestige releases, when people don't want to put up $100 million in marketing, just from the cost point of view as there's not the likely anticipated box-office revenue to make it happen, I think steaming definitely has its place.
I think Imax is hoping to benefit from the streaming ecosystems in a couple of ways. One, I think we can be a place to create buzz around the content when it's originally released. And secondly, we've developed some proprietary technology that uprezes the content in the home. It's called Imax Enhanced and right now we're on all of Sony's large TVs and several other platforms. I think if you want to watch it at home in the way the filmmaker intended with the best possible resolution, you're going to get a different version of Imax in the home. But if you want to see a blockbuster movie theatrically, I think there's no other way to see it than on Imax.
Gelfond: I think the jury's still out. We need to see how that movie performs on streaming. But I was disappointed. I thought it would look really great on Imax and be good for the whole run, even after when it became available on streaming. I think Amazon is in the middle of evaluating what its strategy is. We'll see where it comes out. I hope it comes out in a way that they decide to show their big event movies on Imax, but we'll see.
Netflix has decided they don't want to respect the traditional theatrical window, and while that's less a fight-till-death issue with Imax - we're okay with different flexibility on the window - we're housed in our exhibition partners' theaters, and as long as we're housed there we're committed to complying with whatever their policy is on the window. So until Netflix decides to reevaluate that we won't be doing those kinds of releases with Netflix.
On the other hand, we did a Netflix film called "Anima," which is a short film released with Thom Yorke's new album. Since the exhibitors didn't have a problem with the windowing on that, we released it close to day-and-date with Netflix and it was a good experience and we certainly would like to do more of that with the streaming services. Also, we're expanding our business to show different kinds of content, like live content. The streaming services are big producers of that, so I'm sure we will work with them on that. We have a number of projects that we've been discussing with them.
Guerrasio: Before jumping into that, what are your thoughts on the current theatrical window? AMC and Cineplex reportedly offered a 60-day window to Netflix for "The Irishman," which is below the traditional 72-day. Do you feel we're getting to a point where the window is going to shrink to 60 days or even less?
Gelfond: I think since so many of the studios are getting into the streaming business that over time it's likely they are going to exert more pressure about a shorter window. I think this is a line in the sand for the exhibitors, but my guess is the line in the sand will move towards the direction of shortening the window, especially for certain kind of content. Maybe not the blockbusters, but smaller films. And part of that, maybe, will be a different economic deal. But I really haven't been in the trenches on that.
Guerrasio: You bring up different ticket pricing on different kinds of movies, STXfilms released "Playmobil" doing a $5 ticket price. There have been constant whispers of dynamic pricing, but that movie was really the first time someone pulled the trigger. Do you see that happening more?
Gelfond: Dynamic pricing has been on the table for a number of years, and in fact, in China there is already dynamic pricing. For "Avengers: Endgame," the ticket price for Imax was almost double what the ticket price was for the first "Avengers," so we've seen a market where that works. I'd say it's innovative, the world is changing, I'd like to see more of that, but if anyone could agree on that I'm not sure. One of the problems, as I understand it, are certain constituents in the movie business are concerned if a movie is priced lower than another movie are you signaling that it's not as good? But I would personally like to see more of it.
Guerrasio: And that pricing certainly didn't help "Playmobil." It's a better test if, say, Disney did that kind of pricing on a release.
Gelfond: Exactly.
Guerrasio: What's your take on the Paramount decrees potentially being scrapped by the Department of Justice? Is it an out-of-date policy or will it have an effect on the business if it's gone?
Gelfond: I don't think it's a big deal. I think it made sense at a time and place but I think it's not going to create dramatic different flows in capital or the business.
Guerrasio: Even for smaller mom-and-pop theaters?
Gelfond: I don't know enough about that business to have an educated point of view.
Gelfond: We learned, first of all, that we could definitely expand on the concept of eventicizing something from just movies to music to other things. The number one lesson was that it kind of worked. The first weekend it did over $1 million. We didn't spend anything on marketing that. So it proved out our theory and you'll see us doing more tests in that direction. I think it also proved that we within Imax need to build a little bit more of the infrastructure to do that. We're not used to finding out five days before when the album's dropping or when the movie is coming out.
Guerrasio: And, perhaps, what the running time of the movie actually is, as many were surprised it was only 35 minutes long.
Gelfond: That's a good point, too. So I think we have to institutionalize more what the boundaries are in advance of when you release something and how long it is and things like that. That's something we learned. And I think if we're going to do some more of this we're probably going to have to hire some people with a little more experience in the music area to steer us through it.
Guerrasio: Would you ever go a step further and finance a short or feature pegged specifically for the Imax experience?
Gelfond: We're not in the film finance business, that's not part of our model. However, I do think, not just with music, but there are other things - Coachella, eSports - where people want that community feeling and want to be with other people. You'll see us do more of that. In large part we'll want to piggy back on content that's being financed by the streaming services or the music companies, or whoever. But I could see us selectively investing a small amount to make Imax versions.
Guerrasio: Kanye is a pretty high bar, but are there events, artists, whatever that you really want to release on Imax?
Gelfond: There are a couple things we're working on.
Guerrasio: But you're not going to give me anything?
Gelfond: No.
Guerrasio: [Laughs.] So one big thing that has hit theatrical in the last few years is the subscription model. Where does Imax see itself in building customer loyalty?
Gelfond: I think going into 2020 you have to look at how do you get more data to be directly in touch with your consumer. We have done a couple of things, mostly in China. The largest ticketing service in China is called Maoyan and they sell 55%-60% of all tickets online in China and we invested in that company. We have a good strategic relationship with them, so we're starting to get some access to data there. We started a loyalty program in China, so we are getting some data there.
Guerrasio: A free program?
Gelfond: Yeah. You sign up and earn points and get perks through that.
Guerrasio: Would you ever do a paid subscription plan?
Gelfond: It's complicated because we're housed in different multiplexes. We've been doing subscription models with our partners for years, especially in Europe, where the practice has been around for more than a decade in a number of places. They have been pretty beneficial to us. So we've kind of embraced the programs here in North America. It's more likely we work through our exhibition partners than we do it on our own. But I could still see a loyalty program or something like that.
Guerrasio: With television becoming so huge, are you interesting in trying to get more of that content on Imax screens?
Gelfond: Several years ago we did a project with HBO where we showed episodes of "Game of Thrones" over a weekend, this was just in North America. And I think we did about $3 million. People came in costumes, it was a big thing. We have been approached recently about a number of those kinds of projects and I think we're open minded about that. If we find the right production value and the right content, we would be interested.
Guerrasio: You spoke earlier about bringing Imax quality picture to the home, what has been the takeaways so far from Imax Enhanced?
Gelfond: We just kicked off the offering about a year ago, where we partnered with Sony. But we also have a bunch of content partners also: Sony, Paramount, Rakuten in Europe, we have Tencent, so I'm pretty optimistic that there's a long runway for us there. I think over time you'll see more CE manufacturers come into the space. I think you'll see more content providers sign up. And I think, especially, with all the competition going on in streaming, I think the streaming companies, and their customers, are going to want to see the content in the best way possible.
What the Enhanced does is it really sharpens up the image, high resolution, and I think there's no doubt with bigger and bigger TVs consumers are going to want bigger images. Especially the library content that wasn't filmed with that kind of fidelity in mind, I think there's going to be demand for that. I think we're in a good position.
Gelfond: Yes.
Guerrasio: Have you seen any of it?
Gelfond: I have not. Imax employees have seen parts of it but they have NDAs so they won't share that with me. But I've heard it's spectacular and the special effects are fantastic.
Guerrasio: "Tenet" is one of the movies coming out in 2020 that were shot on Imax cameras, an all-time high. Do you guys actively go out and pitch the cameras to filmmakers and producers or do they come to you?
Gelfond: Both. There's a stable of filmmakers, the one who has used them the most is Chris Nolan, he came to us. But we do actively go out and meet with the studios and the filmmakers and present it. For 2020, there's at least five films that have used Imax cameras, and some are the most anticipated films of the year. The Bond movie, "No Time To Die," "Wonder Woman 1984," Chris' film "Tenet," and "Top Gun: Maverick." We think in the crowded marketplace it's a way to distinguish your offering and I think other prominent directors thinks so, too.
Guerrasio: I know five is a record number for you guys, but for you, would you expect in this day and age of the huge blockbuster that more filmmakers would be using it?
Gelfond: It's hard to say. We just shipped some cameras to China. We have a film next year called "Detective Chinatown 3" that's being filmed pretty much with all Imax cameras, so we have a concerted effort. We get a bigger share of the market when it's filmed with Imax cameras and historically the films do very well because they create an additional buzz around it, so that's definitely one of our initiatives, to get more people to use the camera. "Avengers: Endgame" was completely filmed with Imax cameras and it was a great result for us and obviously it's the biggest movie of all time. So we have pretty good precedent behind us.
Guerrasio: So 2020 and beyond, what are the things that keep you up at night, the things you want to still accomplish with this company?
Gelfond: I'm not going to say it "keeps me up," they don't, but the opportunities I'm especially excited about are the continued globalization of the box office, because we're really one of the few technology companies in the world that really benefits from a global box office. Number two, the brand. A number of our investors have done studies recently in North American and in China, and they show our brand awareness north of 90%, whichever market it's in. The other side of that is I'm a little bit frustrated that we can't capitalize on that fast enough and that's why we're looking at Enhanced in the home, that's why we're looking at different kinds of content to eventicize Imax. I think it's chasing the opportunities. Streaming, ultimately, how can it not be good to have more content if you are the best way to display it in the world? So I would like to figure out more and better ways to work with the steaming services. It's a time of disruption, but I think it's one of the most exciting times to figure out different ways to please the consumer.