IMAX’s Richard Gelfond & Axios’ Kerry Flynn

A lot of things explain it. First of all, a lot of the movies were filmed for IMAX this year. So you could take regular movies and repurpose them or you could film them with IMAX cameras. And this summer, we had like eight or nine in a row of movies that were filmed with IMAX cameras. And they were such IMAX kind of films like F1, Mission Impossible, Sinners — fantastic. So, you know, we planned it out. Second thing would be we've been gaining market share every year. So post pandemic, pre-pandemic, some people went to movies, some people streamed, then they were forced to stream kind of all the time. And I think people really got tired of streaming. So when they left the home or when they had a night out, they just didn't want to sit in their living room with screaming kids and bathroom flushing and food spilling over themselves. So they decided they wanted the best there was. So premium entertainment really took off. So you saw even concerts, premium sporting events. So our market share is up like 35% in the last 3 years. And then the other thing I would say is we're really geographically diverse. We're in 90 countries and the brand is really well known. And I think again there's been a move to branding even within the subunits of other content. And I think all of that combined, they said, you know, we want to get out there and want to see it in IMAX. With no disrespect to the prior panel, you know, NASCAR, but if you saw that in a small place and it was quiet, but we did F1, we had done a NASCAR, but when you see it in IMAX, you feel it, you're in it, you're part of it. It's just a whole different thing.

Well, by design it does. So two-thirds of our box office is outside of the United States and that's been going up every year. And during the pandemic, we made a strategic decision to diversify away from Hollywood because look what happened during the pandemic. And also, there's only five studios — have to look at the time, maybe it's four if you believe what you read in the newspapers. So we want as much content from as many sources. So we've doubled down on streaming content. So F1 was made with Apple. This year we're doing Narnia with Netflix. So we're diversifying there. And then internationally, we're diversifying. So for this year 35% of our box office is local language content and it doesn't only play in the country of origin. So Demon Slayer is a good example. It's a Japanese-oriented film but IMAX is playing it in 73 countries and we're up to close to $70 million. And it's weird because you try explaining that to American analysts or stockholders and they're like, 'Wait, there's no Marvel movie this weekend. You know, what are we gonna do?' But then I try to tell people, 'Well, Demon Slayer's going to be big.' And they go, 'Yeah, yeah, sure. It's going to be big.' But, you know, there are a lot of other countries and a lot of other tastes and a lot of other people. And I think one of the mistakes that the studios have made is they have not diversified globally. And you know, the studios saw the shiny object was streaming. So the strategy is let's do everything in streaming. But meanwhile since pre-pandemic Hollywood's share of the global box office is down 40% — from like 80% to 60% — and they keep doubling down on streaming. But you know, only two real companies — Netflix has obviously done that in the home and IMAX outside the home. We've really leaned in to local language content and I think that's really in order to our benefit.

So there was a film called Ne Zha 2. Catchy. I'm sure you really want to see it. But it did $2.1 billion in China, which just think of that concept. Ticket prices are lower, things like that. But IMAX did $160 million on Ne Zha 2. And then again, Dragon Slayer was a recent example. So you have a natural diversification because also in Hollywood, it's the summer and Christmas. Chinese New Year is in February. So that's not a big movie-going month. So it really flattens out your business model. And also these films, as I was talking about Demon Slayer, they play in a lot of countries. So we'll show Indian movies in England or believe it or not, we showed a German movie this will make sense in Austria or in other German-speaking territories. But you know, we'll have movies in India and Canada where there's a big expat population. So personally I think there are two directions that the movie business is going to go in. One, I think streaming product is going to play a bigger role. So, you know, there was this war going on or it's still going on a little bit between theatrical and streaming, but I think ultimately it's going to end up where something's going to go theatrical and streaming. And the other is local language film. I think a lot of the studios and exhibition will lean in to local language. So, I think in the next — it's happening quickly. Last year our local language box office was like 20%. So our company's 55 years old but imagine in one year we went from 20% to 35%. So I think these changes are happening pretty rapidly.

We're exclusive. So, instead of a movie opening on, I don't know, 10,000 screens or whatever it is, Narnia is only opening in IMAX screens in the world and probably about a thousand of our 2,000 because I'm not sure how widely we'll go in China. But think of like on — I was just talking about Demon Slayer, we had to compete with regular theaters. Now, it's only in IMAX you could see it. And Netflix has realized along with other streamers that if you lean into theatrical first it creates a lot of runway for the streaming run. So the early numbers only are in but I think F1 which did 620 million theatrically, I think that's going to do even better than it would have done because it has a brand now, F1. So I think the streamers are really learning that if you establish your marketing and you think of the theatrical run — actually it's a terrible analogy — but almost as like the trailer for the streaming run. And also as part of the Narnia partnership Netflix is really going to lean in as are we on the marketing side. So the movie is going to be advertised as see it in the theaters theatrically, see it at home on Netflix. So, you know, we're trying to break down that wall. And again, as I said a few minutes ago, I think it got off on the wrong foot and they got off as enemies. We did an original documentary called Blue Angels and we released it theatrically first and it was the number one doc of a long period of time.

Yes. And then it went on streaming with Amazon and it became the number one streamed documentary through Amazon. So we think you could really create a win-win. And I think the public and I think business originally thought, you know, there were limited dollars. So the consumer was going to decide whether to spend them theatrically or spend them on streaming. But I think as after the pandemic, people learned that seeing them in a theater makes you want to see it more at home. And the reverse phenomenon is surprisingly true. So people who bought F1 on PVOD then wanted to see it theatrically because they were saying, 'Wow, it was so cool in the home. If I see it in IMAX, imagine what it would look like.' So I think you're going to see much more of a complimentary ecosystem.

I'd like this to be the first one because Greta has a certain vision and she's filming it with IMAX cameras. As a matter of fact, if this was next week, a week from now, I'd know more because I'm going to wonder where she's filming next week to see it. But the way she describes it in scope and scale and I think once she realized she was making this for streaming she called up and she sort of said, 'You know, Rich, I think this is bigger than just streaming and I think we could create a franchise.' And one of the things IMAX is really good at is creating franchises. So we don't see ourselves really as a theater. We see ourselves as a platform and our platform really helps build loyalty and build these franchises. I think Netflix realized — I think there are eight or nine books — that they're not just launching a movie, they're launching this longer-range franchise. And you know, I'm incredibly excited about it. I wish I could tell you more of what she's doing, but she would probably have my head cut off if I did that. But, you know, Narnia people know as a kid story, a Christmas story. She's going to do a much broader demographic in a much more modern way. That's going to be really — I think the IMAX core audience is going to really like it a lot. So, you know, I'm really excited. I think the numbers could be things that people don't even realize how big it can be. You'll remember we did Oppenheimer, which was a biopic about a physicist and did $160 million in IMAX and there was competitors in other theaters. So, I think if this is well executed, which it will be, and there'll be great music around it, I think it'll be really an amazing experience.