The 2024 box office is tough. But Imax's appeal is a bright spot

When Warner Bros. film executive Jeff Goldstein saw the enormous sand dunes and sweeping desert vistas of Denis Villeneuve's first “Dune” film, he thought to himself, “This was made for Imax.”

The same went for the sandworm sequences of the sequel, “Dune: Part Two,” a box office hit for the studio earlier this year that earned nearly 24% of its domestic box office revenue from Imax. The dystopian wasteland of this weekend's big action tentpole, 'Furiosa: A Mad Max Saga', brings even more fodder for the big screen.

Imax's giant screens are expected to account for a larger-than-average share of the George Miller-directed prequel's box office sales. (Analysts say the film will gross more than $40 million domestically for its four-day weekend opening.)

“It immerses you, so you're there,” says Goldstein, president of Warner Bros. domestic distribution. Pictures. “The public sees Imax as something special.”

While studios and exhibitors lament the slow return of audiences to theaters since the pandemic, Imax has been one of the few bright spots. This year's box office is down 20% from last year, when films like “Fast X,” “Barbie” and “The Super Mario Bros.” Movie' boosted ticket sales, and yet studios are clamoring for Imax screens.

Audience behavior has now changed, and getting people out of their homes and back to the cinema requires something special that they can't get at home. That put Imax in a fortuitous place.

The 57-year-old Canadian company, which operates out of Playa Vista, is having one of its best years, with Christopher Nolan's 'Oppenheimer' helping to boost total worldwide box office revenue – marking Imax's second-highest grossing year in its history. Movies shown at Imax get bigger box office numbers, helped in part by higher ticket prices, and that's a powerful draw for studios and filmmakers.

Next year, thirteen Hollywood films will be shot with digital cameras or Imax film, breaking a previous record set in 2021 when seven so-called filmed for Imax films were released.

The company hopes that brand awareness will eventually become so great that viewers will be the first to come to the screens.

“Instead of saying, 'What's happening at the theater?', I want them to say, 'What's happening at Imax?'” said Rich Gelfond, CEO of Imax Corp.

As for Imax, its financial performance in the first fiscal quarter of 2024 exceeded expectations. The company's net profit was $3.3 million for the three-month period ending March 31, up 33% from the prior year, although revenue fell about 9% to $79.1 million. Shares of Imax are up about 10.9% so far this year.

“While there are exceptions like 'Barbie,' it's very, very difficult to be a blockbuster without being in Imax,” says Greg Foster, a former CEO of Imax Entertainment who now runs an entertainment consulting firm.

Imax's current mainstream success is what Gelfond and his business partners envisioned when they took over the company in 1994. Back then, Imax was essentially a museum staple, albeit one that allowed viewers to immerse themselves in the latest nature film or science documentary.

The company adapted its screens and sound systems to fit commercial multiplex theaters, allowing the company to grow quickly and keep costs down (Imax does not own theaters itself, but instead supplies its screening technology to movie theater chains). Imax also developed technology to convert films to the Imax format to make it more economically attractive to filmmakers and took advantage of the advent of digital film, making it more cost-effective.

By 2019, the company had already seen several years of year-over-year global box office growth and expanded its global market share to spread its box office almost evenly across North America, China and the rest of the world.

Like the customers of its cinema owners, Imax was hit hard by business closures due to COVID-19. But because the company has few assets and little debt, it remained partially insulated from the financial fallout faced by the rest of the industry. The company used the time to update its technology, including a new laser projection system and sound system, worked on its marketing and leaned more on local-language films, Gelfond said.

Now, in a post-pandemic world, moviegoers want something premium and special for their time, and they're willing to pay for it. That is a bonus for Imax and so-called premium large format screens from the theater chains.

“In an industry that is constantly evaluating its present and future in terms of competing with new media and bringing back audiences, Imax has been at the heart of the conversation when talking about sectors of the industry that have recovered. says Shawn Robbins, founder of analytics site Box Office Theory. “It's been a way for studios to have reliability in an often volatile theatrical market.”

Walt Disney Co. has made a strong case for Imax and other premium large formats.

The marketing campaign for “Kingdom of the Planet of the Apes,” released earlier this month, featured the Imax logo prominently on billboards, bus stop signs and other advertisements. During its opening weekend, 41% of the film's domestic box office came from premium large format screenings, with 13% coming from Imax, Disney said. Normally, a blockbuster not filmed with Imax cameras, such as “Apes,” would take about 10% at the box office, Gelfond said.

As an industry, “we need to give audiences a great experience every time they go to see a movie,” said Tony Chambers, executive vice president and head of theatrical distribution for Walt Disney Studios. “When you go to a film in premium large format, you increase engagement and frequency.”

From 2022 to 2023, premium large formats made up 19% of Disney's total domestic revenue; just before the pandemic, that total was 15%. Some of that came from 3D screens, which have declined in popularity.

The company enjoyed box office success with James Cameron's 2022 sequel, “Avatar: The Way of Water,” which generated $1.6 billion in premium large format revenue out of a total of $2.32 billion (about 11% of which came from Imax). Marvel's 'Guardians of the Galaxy Vol. 3” brought in 31% of its box office revenue last year from premium large formats.

Especially since the pandemic, there is now more competition for people's time and attention through streaming and social media, making it crucial for studios to give audiences a good reason to leave their couches.

“We need a way to cut through some of the clutter and make people understand that you can't wait, you have to see this on the big screen,” Chambers said. “One of the ways to do that, from a marketing perspective, is to lean heavily on the premium wide format.”

For many people, he said, that means Imax. In fact, Imax executives get angry when people lump them in with the other so-called PLFs, including Dolby Cinema and ScreenX.

Imax box office represents 13% of Warner Bros.' total domestic revenue, compared to an industry-wide 5% to 7%, according to the studio. Industry wide, opening weekends are typically 10% to 12% Imax. But some are a bigger draw. “Dune: Part Two”’s Imax share of the domestic box office was 22%.

“It's the whole idea of ​​how you get to critical mass,” Goldstein said. “Imax will help you reach critical mass faster.”

Imax's future depends on continued growth, especially internationally. In 2023, the company had 1,772 screens worldwide, including institutional theaters and museum screens, slightly more than the previous year.

The company also plans to expand, especially into markets it believes are underserved, such as Australia and Japan.

“It has tremendous growth potential globally and is certainly not saturated in most of its global markets at this point,” said Alicia Reese, media and entertainment analyst at Wedbush Securities. “They should trade at a higher multiple given their growth potential.”

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