In a quarterly earnings call held Thursday, October 29, Imax CEO Richard Gelfond cited a “resurgent Asian box office, particularly in China and Japan” as one of the factors making Imax “among the best positioned companies in the industry to manage through” the Covid-19 pandemic and its effects on the global theatrical market.
Worldwide, estimates Imax CFO Patrick McClymont, approximately 1,000 Imax screens—or 65 percent of their total network—were open as of October 29. In the company’s largest market, China, “about 99 percent” (per Gelfond) of Imax screens have returned to operation since the country’s theaters reopened in late July. China’s weekly box office grosses, said Gelfond, sit at “approximately 70 percent of second half 2019 levels,” despite both continued capacity limits (recently raised to 75%) and a lack of new Hollywood titles. Average weekly box office specifically for Imax screens is approximately 95 percent of its equivalent 2019 level.
Imax also enjoys an increased market share in China, Japan, South Korea, and Taiwan, said Gelfond. The company’s Q3 2020 market share of approximately 4 percent in China is in line with their market share over the whole of 2019, again without the Hollywood blockbusters that, in a normal year, make up 70 percent of Imax’s box office take in the country. “Our fans have been among the first back to the multiplex,” said Gelfond. “We’ve gained market share and continue to expand our brand into local language releases.”
It’s the success of those local-language releases that, per Gelfond, has allowed Imax to maintain and even grow its foothold in key Asian markets over the past several months. The Eight Hundred, the first local Chinese title shot entirely with Imax cameras, opened to $107M in China in August, giving the film 2020’s first $100M+ debut. $18M of its eventual cume came from Imax screens. Animated title Jiang Ziya: Legend of Deification, which opened during the country’s National Holidays in October, broke a handful of records in China and gave Imax its second highest opening weekend ever for a local title in that country. Gelfond also cites the success of local titles Peninsula in South Korea and, in Japan, Demon Slayer—which now holds the records for the top two highest-grossing weekends for an Imax title in that country, surpassing Hollywood titles.
Demon Slayer is the first of a planned five films released in Imax under a deal with Japan’s Toho Pictures; the second, Stand by Me, comes out November 20. Throughout the rest of 2020, Imax plans to release at least 10 new local-language titles across Japan, China, and Russia.
Imax will continue to “lean into” more globally diverse content over the coming months, Gelfond said, “as we anticipate the North American box office and Hollywood releases will take a while to come back online.” The delay of new Hollywood titles, with only a handful of major theatrical releases lined up before Christmas, has led to Imax temporarily furloughing 30 percent of their global workforce outside China.
Once the tentpole calendar stabilizes, Gelfond anticipates a resumption of strong box office for Imax in North America as a backlog of tentpoles make their long-awaited big screen debuts. In the meantime, Imax has screened Tenet in the United States and programmed select mid-range titles. These include an October re-rerelease of 2000 Imax documentary Michael Jordan to the Max and the upcoming drama Music, directed by Sia and debuting on Imax screens in January.
Gelfond also addressed the shift of blockbusters from theatrical release to PVOD—something which the CEO is encouraged to note has only happened a handful of times over the past few months, with most studios preferring to shift their blockbusters further down the release calendar. (Exceptions include Disney’s Mulan and Soul.) To date, he argues, PVOD “has been a failed experiment as an option for big budget blockbuster films. Even if we do see a shrinking of the theatrical window, this would have little impact on IMAX. Films typically played at our network for one to two weeks at most, before we move on to the next blockbuster debut.” Similarly, Gelfond argues that a possible contraction of the industry would have “no material impact” on Imax’s bottom line, as their screens “are almost exclusively housed in the most productive and profitable multiplexes” in North America.
“In short, should the industry contract, our theaters are not the marginal theaters, and our consumers are not the marginal consumers,” adds Gelfond. The company’s recent experience in China and additional international markets “has proven that audiences do return to the movies where theaters are open and people feel safe. And as they return… they’re coming back to Imax in greater numbers than before on a percentage basis.”