IMAX CEO on 'The Odyssey,' Chris Nolan, and Company's Sudden Ascent | At Barron's

Great to see you, Andy.

Well, IMAX is the definition of a global business. We're in 92 countries. We have about 1,800 theaters. I bought the company when there were 50 theaters in like eight countries 30 years ago. So we've really built it globally. And not only is the footprint global, but most people don't realize that our content is global. So we have 120 pieces of content a year. And they're not only Hollywood movies exported around the world, they're Chinese movies, they're Indian movies, they're Korean movies. Believe it or not, we even have Indonesian movies, although I can't pronounce the titles, Andy. Don't ask me. But we look at the world truly as a global company. And in addition, I think we support a lot of the things the UN supports and we've done projects with them over the years. So it's a pleasure to be here.

So it's an end-to-end solution. So when people see a movie in an IMAX theater, that's kind of the end product. The beginning product is either we film movies with IMAX cameras, which we did for The Odyssey and Oppenheimer and one of the Bond movies, or we film them with regular cameras and we have proprietary technology which upreses them and enables them to look good in such a large format. Now, in the middle, and most people don't realize this, we have real-time feedback in the theaters. So all those 1,800 theaters in the world, we monitor 24/7 to make sure the image looks good, it's not deteriorating, if the bulb needs changing, even if the sound isn't loud enough, we call them and we say, 'Crank it up.' So it's the only really end-to-end entertainment solution that's global.

So we're an asset-light model, which means that the exhibitors are our partners and they build the building and they pay for our equipment. And the payment varies. In some cases there's an upfront payment and we get a small royalty, and in other cases we give them the equipment but we get a larger royalty. We also get a royalty from the studio when the film comes out. So, you know, if you cut through it, it took a long time to build the critical mass, but it's a pretty good business model, meaning that, you know, we don't put up a lot of money and we get a percentage of the box office. And as you mentioned, Odyssey has been a huge success. It's over 100% our biggest box office ever. We've done over $500 million, which if you think about $500 million is a big movie, but, you know, on 1% of the screens, that's sort of an incredible performance. So when you add up the leverage that comes from the exhibitor side and the leverage that comes from the studio side, it's kind of where you want to be. As I said to you earlier, Andy, we're an overnight success. I've only been doing this for 32 years.

Yes.

No. The biggest movie of all time is Avatar.

Yeah. Yeah. It will be hard to make that, Andy.

The reason is, like you said, really... like you're disappointed. Yeah, but there are...

Right. But there are other movies in the world like...

Right. Right.

Yeah. But that accounts for only a small amount of the difference. It's probably roughly $5 more in IMAX. But the real difference is size of footprint. There are 40,000 screens in North America and there are 400 IMAX screens. There are 80,000 screens in China and there are 800 IMAX screens. So that's the big reason the number can't be.

He really is a genius. So about a year and a half before The Odyssey opened, I got a call from Chris. And his last movie, of course, was Oppenheimer, which he filmed mostly with IMAX cameras. But Chris said he wants to make a movie all with IMAX cameras. But the cameras we have, because the film frame is so big, it's quite noisy because to pull a film frame that size through the camera — and by the way, it goes horizontal instead of vertical, which is kind of interesting — he said, 'I need a new camera if we're going to be able to make a whole film with IMAX cameras.' So we talked about it, and you know, Chris is a genius and he thinks of all kinds of things. So he's like, 'And while you're at it, we need a new kind of viewfinder, and we need to store footage in the cloud, and we need this, and we need that, and we need parts depositories throughout the world.' And it was a list of like 10 things. And he said, 'You know, can you do that? And by the way, can you do it in the next six months or so?' So, of course, being a typical CEO, I said, 'Sure, no problem.' Then I got off the phone and I called the people who actually know what they're doing and do the work, and they're like, 'Rich, we can't do that.' And I said, 'I'll find someone else who can if you can't.' And guess what? They did it. I mean, and it was amazing. And I was just with the DP, the director of photography, whose name is Hoyte van Hoytema, and I said to him — I was in LA last week — and I said... the other part of it, before I get back to that, is we built a blimp. And a blimp, not like the Goodyear blimp, it's a small box and you put the camera in the box. So when you do close-ups, because if you were doing a real... so the new generation of camera we made quieter, but not quiet enough to go on a boat with Matt Damon, you know, one foot away. I mean, that was... so we built this blimp and we developed new alloys to do it, and it worked great. And as a matter of fact, I asked Hoyte, you know, what should we do different? He said nothing. He said maybe tweaks here and there, but it really works spectacularly.

And the reason is because when you blow something up, you lose resolution. Now, again, we develop algorithms that allow us to do it. Just a sidebar for a second, but when you blow it up, you would blow up the grain also. So that looks like boiling oil. So we figured out a way to blow it up and eliminate the grain. So it looks pretty good. But if you want — and you know, when you film in digital or with a regular non-IMAX system, it's about 2K or 4K. IMAX is about 16K. So the simple way of thinking about it is it really captures a lot more information. And when you project it that way, you see a lot more information, including the grain, which is part of the experience.

Yes. Do you have a problem with that, Andy?

We can do it relatively quickly, though.

Yes.

It depends. The smallest is usually about 50 feet high. And the biggest — but by the way, the biggest is in Germany outside Frankfurt and it's the size of a 737.

By the way, you didn't ask this, but go ahead, you can ask your own question. Technology. So the screens are one of the key things, and how we paint the screens. It's a secret formula, like the Coke formula, like nobody knows. I could make it up and say it's in a vault in the bottom of the ocean and we need Tom Cruise to retrieve it, but that would not be true.

Actually, yeah, it was. But to paint the screen at some of these theaters, we have to rent out like a hockey or basketball arena and we have to lay it out and, you know, paint it, and then when you roll it up, there's all kinds of issues. And then we have to air freight it to wherever it is. So it's complicated.

Well, I'll look at it a little differently. We like to make things the most difficult for our competitors to copy.

Theoretically you could, and there is competition, but most of the competition the exhibitors have are theaters that the only thing really technologically special is they have an X at the end of the name because they thought, what a good idea, if we have a big screen and it has an X, consumers will think it's just like IMAX. But I know this will shock you as a keen reporter, the public doesn't get fooled that easily. But there's a lot of components, but we don't do it to make it hard to compete with us. We do it because we're driven to create the highest quality image possible. And, you know, that's one reason Christopher Nolan was attracted to IMAX. We had someone pass away at IMAX named David Keighley, who was our chief quality officer, and he and Chris were the only ones who could see some imperfections. So they'd watch a movie and they'd say, you know, 'Did you see at 11 minutes and 20 seconds in the right corner there was a little speckle?' And, you know, and David would say, 'I'm sorry, Chris, we got to fix that.' But that's the culture they developed together, and it's all about providing the best image possible.