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Speaker 1: Welcome to Strictly Business Varieties, weekly podcasts featuring conversations with

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Speaker 1: industry leaders about the business of entertainment. Today's guest is

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Speaker 1: Richard Gelfond, CEO of Imax Corporation, The company that Gelfond

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Speaker 1: has headed since operates more than large format screens in

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Speaker 1: eighty countries. In preparation for the film industry's annual CinemaCon

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Speaker 1: conference in Las Vegas this week, Gelfond spoke with Brent Lange, Varieties,

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Speaker 1: Executive editor of Film and Media, about the box office

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Speaker 1: success of Captain Marvel, the rise of Netflix, and the

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Speaker 1: future of the exhibition business. So I'm here in our

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Speaker 1: New York office with rich Gelfond, who is the chief

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Speaker 1: executive officer of Imax Corporation, and we're sitting down. Um,

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Speaker 1: it's just a couple of days after Captain Marvel has

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Speaker 1: totally dominated the box office. So I guess, Rich, first

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Speaker 1: of all, I mean, what what was your sort of

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Speaker 1: take on the results? Were you expecting Captain Marvel to

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Speaker 1: be as big as it as it was? I was

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Speaker 1: certainly expecting Captain Marvel to be big, Brent. I had

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Speaker 1: seen it a couple of weeks before it came out

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Speaker 1: and I thought it was one of the best Marvel

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Speaker 1: movies I've ever seen, particularly an Imax and the way

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Speaker 1: it tied into Avengers, I was quite bullish. But with

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Speaker 1: that said, for Imaxes opening weekend internally we had it

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Speaker 1: had at about thirty million dollars worldwide, and it did

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Speaker 1: thirty six million dollars worldwide, so I was surprised. I

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Speaker 1: think the place I was the most surprised was the

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Speaker 1: international outside of China, where we did about twelve million dollars,

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Speaker 1: and in countries like Russia and France where I wasn't

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Speaker 1: quite sure how a female superhero would play, it played

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Speaker 1: extraordinarily well. So I was a little surprised. Why do

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Speaker 1: you think this film was so successful? What was it

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Speaker 1: about it that that people responded to? I think the

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Speaker 1: character was really special because, um, Bree Larson played kind

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Speaker 1: of an ordinary person. Um. I know, it's been compared

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Speaker 1: to Wonder Woman and we did very well, and Wonder

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Speaker 1: Woman also, but Gal Gadot is much more glamorous and

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Speaker 1: much more kind of extroverted, and Brie Larson is more

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Speaker 1: sort of I could be your next door neighbor, but

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Speaker 1: a very tough next door neighbor. And I think people

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Speaker 1: related to that. I think fanboys also were very curious

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Speaker 1: how it would tie in to The Avengers, which is

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Speaker 1: coming in around a month, and um, I think all

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Speaker 1: of that work well. There are plot twists, UM. I

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Speaker 1: think there were social statements um about women's um uh

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Speaker 1: empowerment that I think we're very timely but where we

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Speaker 1: are today, um, and it was just a very good movie.

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Speaker 1: Are you are you seeing that are our stories that

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Speaker 1: are more inclusive, that uh have underrepresented groups with lead roles?

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Speaker 1: I mean, are they playing well? I mean, is is

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Speaker 1: this an area that that you think Hollywood should mind

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Speaker 1: more in terms of your own box office? Well, certainly

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Speaker 1: if you look at the last two years, with Black

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Speaker 1: Panther last year and Captain Marvel this year, the answer

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Speaker 1: would be unequivocally yes. And I think even um um,

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Speaker 1: I'm trying to remember. I think it was Coco, the

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Speaker 1: Disney animated movie, which did extremely well. So I think absolutely,

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Speaker 1: I think, um, you know, it's proven, it's it's long overdue.

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Speaker 1: They should have tried, not just they, everyone should have

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Speaker 1: tried movies outside of the traditional mainstream of characters. And

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Speaker 1: it appears to be really working. Well, you know, people

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Speaker 1: for years have been talking about comic book fatigue, superhero fatigue.

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Speaker 1: You know that they're there with all of these different

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Speaker 1: companies launching movies about costumed heroes that that you know,

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Speaker 1: there could be kind of fatigue around that the audience

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Speaker 1: could reject it. You look at something like Captain Marvel

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Speaker 1: or are you seen evident of this? Well, Captain Marvel

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Speaker 1: was one of our top five films of all time,

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Speaker 1: and the other four or the two Star Wars recent movies,

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Speaker 1: Jurassic World at Avengers. So this is the best origin

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Speaker 1: story we've ever done, so certainly that's not showing evidence

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Speaker 1: of fatigue. Every year we have something called the CEO

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Speaker 1: Forum that IMAX runs and we invite exhibitors from all

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Speaker 1: over the world of the world's box office. The CEO

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Speaker 1: has come and several years ago we had Kevin Fagy,

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Speaker 1: I think it was three or four years ago, and

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Speaker 1: someone said at that point, are we seeing superhero fatigue?

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Speaker 1: And Kevin gave one of the best answers that I

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Speaker 1: had heard. He said, you know, a comic book is

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Speaker 1: just a book, and movies have been based on books

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Speaker 1: for decades, and you don't run out of book. So

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Speaker 1: the question is you know, do you run at a

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Speaker 1: comic books. I do think maybe there's a related question,

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Speaker 1: which is are there limits to sequels and how long

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Speaker 1: they could play? And I think there probably are limits

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Speaker 1: to sequels and at some point, you know, they die

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Speaker 1: a natural cycle. But I think that comic books there's

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Speaker 1: so many different ideas, and you know, back to your

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Speaker 1: last question, Brent about diversity, I think we've only begun

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Speaker 1: to mind some of the diverse kinds of characters, so

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Speaker 1: I think this has a long way to run. Well,

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Speaker 1: that's interesting you were talking about sequels and franchises, because

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Speaker 1: in any given year, those seem to be the films

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Speaker 1: that are dominating the box office. Franchises seem to be

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Speaker 1: the kinds of movies that studios want to make. In

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Speaker 1: the past, we've also seen some some indications that maybe

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Speaker 1: there are some franchises that are getting a little long

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Speaker 1: in the tooth. Does that worry you at all that

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Speaker 1: the businesses so reliant on uh sequels and franchises. I

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Speaker 1: think you have to separate out sequels from franchise blockbuster

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Speaker 1: type properties. As you know, i'm ax is really dependent

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Speaker 1: on blockbusters. Were not an exhibitor. Sometimes people say we're not.

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Speaker 1: We're North America an exhibit or well, the irony is

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Speaker 1: we're not North American. Seventy of our revenues are outside

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Speaker 1: of North America, and we're not an exhibitor because we

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Speaker 1: don't play a lot of movies. We just play blockbuster movies.

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Speaker 1: So obviously we have a special interest in making sure

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Speaker 1: that blockbuster movies keep up. But if you look at

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Speaker 1: you know, even this year, what's going on. Captain Marvel

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Speaker 1: is a new UM franchise that's being established. UM. Lion King,

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Speaker 1: although it's related to other films, is kind of a

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Speaker 1: standalone franchise coming coming along. Wonder Woman last year was

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Speaker 1: a new franchise, A Leader, which did very well for us.

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Speaker 1: We did close to percent of the U S box

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Speaker 1: office in the Chinese box office. Was a new character

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Speaker 1: and a new franchise. So yes, you have some franchises

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Speaker 1: like Avengers Endgame UM, which was filmed completely with iMX cameras,

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Speaker 1: being at the end of their cycle, and you have

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Speaker 1: this Star Wars segment at the end of the year

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Speaker 1: being the end of the cycle. But again, if you

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Speaker 1: look ahead UM to of Top Gun being revitalized, you

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Speaker 1: have Chris Nolan doing a new movie. And as you know,

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Speaker 1: other than Batman, Chris tends to create new franchises, and

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Speaker 1: Chris really likes working with us in Imax and using

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Speaker 1: our cameras. I look forward to that, um you know

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Speaker 1: the next yes he will and m So I think franchise.

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Speaker 1: I think franchises will end, but new ones will start.

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Speaker 1: And you know, you look at some of the um

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Speaker 1: new things this year. It it's it too, but it

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Speaker 1: just you know it started last year us. Um. I

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Speaker 1: mean there are different kinds of projects coming in as

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Speaker 1: some of the franchises fade out, and fortunately I think

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Speaker 1: the public has an appetite for really good ones um

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Speaker 1: that work. Um you know, going back just to December,

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Speaker 1: look whatid Aquaman? I mean that was not a franchise

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Speaker 1: that existed, and we were heavily involved with that. It

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Speaker 1: was h terrific film. Jason Momo is excellent. And now

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Speaker 1: they've announced um Aquaman too for a few years from now.

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Speaker 1: So I think there's a constant replenishment. Uh So, let's

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Speaker 1: talk a little bit about what is IMAX. What do

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Speaker 1: you see? Obviously I know about the technology, A lot

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Speaker 1: of people have been to the theaters. How would you

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Speaker 1: kind of describe the perfect IMAX film, how do you

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Speaker 1: define your brand? I think the perfect IMAX film is

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Speaker 1: something that takes you somewhere you otherwise couldn't go. So

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Speaker 1: I think in Aquaman, you went to the bottoms of

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Speaker 1: the ocean. I think in some of these super hero movies,

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Speaker 1: you're immersed in the experience. I think it's much more experiential,

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Speaker 1: much more um first party than third party. So when

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Speaker 1: people go to the movies, they tend to watch other

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Speaker 1: people involved in the action, and the director focuses their

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Speaker 1: I on the part of the movie that they want

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Speaker 1: them to act, they want them to look at. Where

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Speaker 1: an IMAX I think it's just much more like your

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Speaker 1: part of the experience. So the screen is bigger, the

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Speaker 1: resolution is higher, the image is brighter, the sound is louder.

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Speaker 1: So when you go to an IMAX and I won't

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Speaker 1: even call it a movie, I'll call it an Imax experience,

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Speaker 1: it's a whole different visceral reaction. And as a matter

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Speaker 1: of fact, some of the services UM whether it's in

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Speaker 1: China that does online testing or exit surveys, it shows

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Speaker 1: consumers like the movie much better when they see it

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Speaker 1: in Imax. And the reason for that is UM. In

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Speaker 1: a way, it becomes partly their own movie, not just

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Speaker 1: the director's movie, because the director is creating this incredible

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Speaker 1: world and UM sort of directing you way to look

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Speaker 1: at it. But you can go multiple times and you

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Speaker 1: look at the world in different ways. As a matter

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Speaker 1: of fact, I'm almost embarrassed to admit this, but I

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Speaker 1: liked Captain Marvel so much. I saw it twice before

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Speaker 1: it even open, and the second time I saw it,

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Speaker 1: I liked it even better than the first time because

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Speaker 1: I was more familiar with the story, so I could

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Speaker 1: enjoy the visual experience even more so. I think the

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Speaker 1: common elements when you said, you know what would be

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Speaker 1: the ideal one would be visual splendor. Place you can

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Speaker 1: feel you're traveling to that you couldn't go. And by

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Speaker 1: the way, that's one reason the Imax documentaries works so well.

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Speaker 1: Apollo eleven just came out in Imax and the numbers

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Speaker 1: were very impressive. Free Solo, which won the Academy Award UM,

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Speaker 1: came out in Imax. Historically, our space films are underwater films.

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Speaker 1: I think Imax is a truly transportive mechanism, and you

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Speaker 1: can't get anything like that on the couch. And I

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Speaker 1: think that's one one reason why, when the rest of

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Speaker 1: the movie business is sort of chugging along at relatively

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Speaker 1: slow growth rates, were growing so rapidly because the consumer

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Speaker 1: can see lots of things in the home that are

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Speaker 1: not that distinguished from what they're seeing at a move V.

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Speaker 1: But I think they're incredibly distinguished from what you see

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Speaker 1: at IMAX. You've also spawned imitators. Uh, A lot of

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Speaker 1: companies have their own premium large formats or whatever they're called.

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Speaker 1: I mean, what's your response to those kinds of experiences. Well,

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Speaker 1: you know, copying is the greatest form of flattery. It's

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Speaker 1: obviously going to happen. I think the whole industry has

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Speaker 1: gone more premium, and I think that's partly because of

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Speaker 1: in home entertainment. So for people to leave the home, Um,

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Speaker 1: they want something else that they can't get in the home.

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Speaker 1: But if you look at some measurements like percentage of

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Speaker 1: box office that IMAX does so um, you know, typically

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Speaker 1: if we have our d n A in it, meaning

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Speaker 1: our cameras or aspect ratio or some other element, um

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Speaker 1: where somewhere around twelve of the film on a typical

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Speaker 1: and that's in North America. In China, it's kind of similar.

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Speaker 1: The rest of the world. In territories where we are

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Speaker 1: it's similar, but we're not in every country, although we're

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Speaker 1: in a lot of them. But UM, the point is

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Speaker 1: our indexing has gone up. In the last several years,

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Speaker 1: has been more and more of these knockoff IMAX theaters,

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Speaker 1: and I think that says something. The whole category has

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Speaker 1: obviously grown a great deal, but I think as people

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Speaker 1: get educated to seeing a premium way to see a movie,

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Speaker 1: they realize that there's an enormous IMAX difference, so um,

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Speaker 1: you know, they'll seek out IMAX. Now, a lot of

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Speaker 1: these copycats don't have UM proprietary technology, almost all of them.

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Speaker 1: All they do is take a regular UM uh D

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Speaker 1: C p UM digital one and they play it on

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Speaker 1: a bigger screen. And as any kid knows has ever

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Speaker 1: put their hands on a xerox machine or tried to

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Speaker 1: blow things up, UM, the bigger it is the worst

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Speaker 1: it looks. And I think, you know, a lot of

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Speaker 1: people thought by putting X in their names that they

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Speaker 1: could confuse consumers and have consumers say, you know, well,

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Speaker 1: it's got an excit and it's a big screen, it

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Speaker 1: must be like IMAX. But again, if you look at

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Speaker 1: the empirical evidence, Um, I think I'd add to that,

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Speaker 1: which is probably even more important is the directors themselves.

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Speaker 1: So you know, when Chris Nolan releases a movie, or

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Speaker 1: when the Russo brothers are releasing Avengers, which they film

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Speaker 1: with IMAX cameras, you know, they don't go see it,

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Speaker 1: say see it in brand X. They all say, go

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Speaker 1: see it in IMAX. And I think a lot of

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Speaker 1: the fan boys and fan women follow that lead. So

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Speaker 1: you know, at some level, maybe it's good for the

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Speaker 1: business to educate people, um to the way to see

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Speaker 1: a movie is, you know, not at home, not on

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Speaker 1: a small device, and not even on a small screen.

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Speaker 1: But at the end of the day, people aren't full

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Speaker 1: they know IMAX is the real thing. You were talking

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Speaker 1: about im X DNA having parts of the IMAX DNA,

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Speaker 1: and I assume you're you're talking about IMAX cameras. How

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Speaker 1: many films typically use your cameras? Are there any that

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Speaker 1: are coming up that that have relied on them heavily?

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Speaker 1: So it's not just the cameras, although that that's part

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Speaker 1: of it, Brent so Um, it could be things UM

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Speaker 1: like aspect ratio. Regular cinema is much more vertical UM

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Speaker 1: to three five aspect ratio. Typically Imax is much more vertical.

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Speaker 1: So our aspect ratio could go anywhere from one six

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Speaker 1: five to one nine. And a number of the movies, UM,

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Speaker 1: including Captain Marvel which just came out, have more Imax

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Speaker 1: UM footage in them, and that just means it fills

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Speaker 1: more of the IMAX screen. It depends on the movie

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Speaker 1: and it depends on the theater. UM. But you know,

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Speaker 1: one of the things we say is twenty six percent

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Speaker 1: more image when we're doing the aspect ratio, and many

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Speaker 1: filmmakers covered to that. I'm X aspect great show UM

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Speaker 1: when they shoot beyond that. As you said, UM, there

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Speaker 1: are instances where we use Imax cameras and there are

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Speaker 1: a number of films this year that are using Imax

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Speaker 1: cameras as well as next year. UM. I mentioned to

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Speaker 1: next year, Chris Nolan is using it. UM. The Russo

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Speaker 1: Brothers used Imax cameras to film the entire UM Avengers

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Speaker 1: Endgame that's coming out soon. UM. There are a number

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Speaker 1: of other movies UM that we haven't announced yet that

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Speaker 1: that are using them. We have announced wonder Woman is

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Speaker 1: using Imax cameras. So over the next couple of years,

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Speaker 1: if you asked me, I would say, you know, probably

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Speaker 1: four to six will use the camera, and more than

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Speaker 1: that will have special Imax DNA in it. The cameras

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Speaker 1: themselves are are pretty heavy, right, I mean, is that

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Speaker 1: have you been able to to slim them down it

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Speaker 1: at all? Well, there are two kinds of cameras. There

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Speaker 1: are digital cameras and there are film cameras. So the

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Speaker 1: digital cameras what we've been working on a special lenses

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Speaker 1: that fit on cameras that filmmakers are used to working with.

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Speaker 1: So those are just regular cameras that can and then

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Speaker 1: they're enhanced by Imax to enable them to capture the

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Speaker 1: Imax um aspect ratio and the IMAX characteristics. They're also

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Speaker 1: film cameras, which you're referring to, which are heavy cameras. UM. No,

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Speaker 1: we can't lighten them because uh, fifteen seventy film is

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Speaker 1: really big and really heavy. Um. But filmmakers UM, primarily

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Speaker 1: led by Chris Nolan um have learned how to maneuver

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Speaker 1: those cameras. So I can't say I wasn't nervous at first,

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Speaker 1: but Chris has figured out, you know, how to put

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Speaker 1: them in airplanes. Um, we figured out how to take

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Speaker 1: them underwater. Um. You know we've done scenes handheld. As

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Speaker 1: you may remember years ago, they were carried to the

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Speaker 1: top amount Everest. So they are not ideal to work with.

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Speaker 1: But on the other hand, the output is so phenomenal

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Speaker 1: and the response is so great. So you know, on

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Speaker 1: some of these movies where we've used our cameras, we've

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Speaker 1: indexed over of the box office. So I think the

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Speaker 1: filmmakers find it worthwhile. And if it's just too much

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Speaker 1: for the way they've designed the movie because of the

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Speaker 1: way they'll use a digital camera. Uh, as we sit down.

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Speaker 1: Just moments ago, actually, uh, Disney announced that it's gonna

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Speaker 1: be closing its Steel to acquire Fox on March. UM,

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Speaker 1: I wonder what consolidation means for you. Are you worried

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Speaker 1: that there's gonna be a fewer one fewer studio providing

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Speaker 1: content for your theaters? Do you think? Uh, there will

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Speaker 1: be new players who will emerge who will fill that void.

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Speaker 1: So in our case, I'm not worried, and that's because

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Speaker 1: Disney is one of our best partners in the world.

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Speaker 1: And um, Disney and Imax have developed an organization wide

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Speaker 1: close working relationships. So UM for Captain Marvel, Disney produced

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Speaker 1: special art with IMAX's frame around it and uses us

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Speaker 1: as a marketing tool for the campaign. And I think

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Speaker 1: Disney really understands that the brand association between Disney and Marvel,

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Speaker 1: are particularly on a global basis because we're in eighty countries,

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Speaker 1: is a good thing for Disney. I think UM the

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Speaker 1: Imax name helps in a way curate a very crowded field.

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Speaker 1: It says to the audience, this is a special movie.

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Speaker 1: Maybe it was filmed a special way. It's certainly shown

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Speaker 1: a certain way, and the filmmakers will talk about it.

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Speaker 1: And I think as Disney acquires Fox, UM Disney will

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Speaker 1: UM do even a better job than Fox at eventicizing

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Speaker 1: some of the Fox movies. So the most obvious ones

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Speaker 1: are the UM the reuniting of the Marvel universe, and

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Speaker 1: I think UM Disney and Kevin Figi will do a

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Speaker 1: really good job of further promoting that. But we already

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Speaker 1: had a very good experience with Fox. Some Bohemian Rhapsody

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Speaker 1: was a huge upside surprise for us, and Alito was

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Speaker 1: another one that was some UM you know, surprise upside

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Speaker 1: for us. So I think Disney will further try and

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Speaker 1: evmtasize the Fox properties, and given our relationship and given

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Speaker 1: our position as the place to evmtasize content out of home,

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Speaker 1: I think that will be very positive. I'm the second

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Speaker 1: part of your question about additional content. UM. I do

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Speaker 1: think because um the theater the studios are going into streaming,

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Speaker 1: and the streaming companies are going into theatrical, there'll be

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Speaker 1: an abundance of new content. And I do think, again,

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Speaker 1: going back to the point I just made about curating,

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Speaker 1: I think people are gonna try and separate themselves in

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Speaker 1: the field. So when you know one of the streaming

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Speaker 1: service as spends over a hundred million dollars UM to

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Speaker 1: make a film online, I think it's going to have

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Speaker 1: to have a theatrical run at some point. And I

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Speaker 1: know your next question will be about windows, UM, but

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Speaker 1: I think they're gonna come to terms what they're needing

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Speaker 1: to be some windows if they want Theatrical and Imax

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Speaker 1: to play them. So I think, you know, in addition

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Speaker 1: to Disney UM Fox being part of a broader good trend,

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Speaker 1: there's just a lot more content. And again, when you

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Speaker 1: go in the future and whether it's released theatrically or

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Speaker 1: whether it's released streaming wise, UM, how are you going

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Speaker 1: to curate all that content? And I think you know,

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Speaker 1: particularly over the past five to ten years, IMAX has

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Speaker 1: played a pivotal role in curating and and kind of

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Speaker 1: pointing audiences with UM with our blue frame and saying

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Speaker 1: this is where you see it in a special way.

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Speaker 1: So I think I don't know exactly how it'll play

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Speaker 1: out bround, we have to see that, but I think

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Speaker 1: it's going to be good for us. Well, you you

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Speaker 1: absolutely correctly anticipated my next question, which is about when

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Speaker 1: doing I mean, what do you think UM is going

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Speaker 1: to happen with this debate? I mean, we've already seen

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Speaker 1: a lot of very heated emotions around this issue, around

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Speaker 1: the issue of Netflix and when and if they're going

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Speaker 1: to be any kind of theatrical release with its films.

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Speaker 1: Is there gonna be some middle ground found here? UM?

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Speaker 1: If you ask my guests, the answer would be yes. Again,

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Speaker 1: because of UM we're housed in UM and multipoxes, and

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Speaker 1: our partners or exhibitors will only play films if our

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Speaker 1: exhibition partners agree to it. Period. End of it. But

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Speaker 1: with that said, I do think it's going to come

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Speaker 1: to a middle ground at some point. Um. You saw

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Speaker 1: Netflix with Roma started to chip away at it. UM.

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Speaker 1: I don't know if you saw the ad during the

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Speaker 1: Oscars for The Irishman with Netflix, but they made a

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Speaker 1: point to say there was a theatrical release. And I believe, um,

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Speaker 1: there'll be a bigger windows than they were around Roma.

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Speaker 1: Whether they're good enough for exhibitors and therefore whether we

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Speaker 1: play it as an open story, but I do think

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Speaker 1: they're gonna move in that direction. And I think if

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Speaker 1: they do move in that direction, eventually, UM, some of them,

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Speaker 1: some of the studios are gonna meet in the middle somewhere.

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Speaker 1: With that said that theatrical experience is crucial. UM. I

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Speaker 1: went with my wife to Pompeii UM this summer and

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Speaker 1: there was a theater built thousands of years ago. And

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Speaker 1: you know, the theatrical experience is something that's existed, um

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Speaker 1: for extremely long time as part of human civilization. And

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Speaker 1: there's been all kinds of changes in the movie industry. Obviously,

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Speaker 1: there's been talking, there's been television, there's been DVD, there's

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Speaker 1: been VHS, there's been and now there's streaming and movies

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Speaker 1: have survived all of those. In the theater is still

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Speaker 1: a very very special experience, and I think it's gonna

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Speaker 1: remain so, you know, way way into the future. But

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Speaker 1: you know, whether the right number is twelve weeks or

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Speaker 1: whatever it is, I do think they're gonna be economic

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Speaker 1: pressures where UM the exhibitors are going to agree over

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Speaker 1: time to some middle ground. I mean, do you think

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Speaker 1: the theatrical window is too long at ninety days or

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Speaker 1: whatever it is? Roughly it seems like studios maintain it

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Speaker 1: is too long. So you know, Fortunately for IMAX, I

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Speaker 1: don't have to get into that debate because we play

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Speaker 1: movies for one week or two weeks, and in an

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Speaker 1: occasional case it will be three weeks. We're not in

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Speaker 1: the UM movie business per se. We're in the blockbuster business.

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Speaker 1: So you know, whatever the windows are, UM people are

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Speaker 1: gonna want to see Captain Marvel, Avengers, Star Wars, Lion King,

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Speaker 1: Wonder Woman, et cetera in IMAX, So you know, I

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Speaker 1: don't have to weigh into that debate. I think, you know,

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Speaker 1: wherever they all work out, it's going to be fine

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Speaker 1: for US UM three D. A few years ago, people

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Speaker 1: were very high on it. They thought it was a

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Speaker 1: great way to differentiate film between kind of home entertainment.

404
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Speaker 1: What happened. It seems like it's just sort of a

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Speaker 1: non event these days, at least domestically. I think. UM.

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Speaker 1: I think studios worldwide got carried away with three D,

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Speaker 1: and I think the early successes like Avatar and uh

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Speaker 1: Alice in Wonderland, the numbers were so strong that I

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Speaker 1: think studios thought we could put a lot of things

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Speaker 1: in the three D and it would work. And I

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Speaker 1: think the consumer was just smarter than that, and the

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Speaker 1: consumer knew what was generic three D and what was

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Speaker 1: phony three D. And I think phony three D was

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Speaker 1: done to drive up ticket prices. UM, I don't expect

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Speaker 1: you to remember this brand. But as a matter fact,

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Speaker 1: when three D first came out UM at CinemaCon, I

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Speaker 1: stood up and I said, UM, I don't want to

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Speaker 1: take the vodka out of the punch bowl, but I

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Speaker 1: don't think UM three D is a silver bullet. And

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Speaker 1: I said that because Imax had had a lot of

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Speaker 1: experience with three D, we weren't new to the game. UM.

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Speaker 1: I think it still remains in certain territories like China

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Speaker 1: and Russia very popular. But I also think if it's

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Speaker 1: um embedded in the film and in what the filmmaker

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Speaker 1: was thinking, there's still a place for three D. So

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Speaker 1: if you look at you know, I mentioned again Jim

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00:25:34,680 --> 00:25:38,600
Speaker 1: Cameron and UM did a lead of Battle Angel UM.

428
00:25:38,760 --> 00:25:41,040
Speaker 1: We played that in three D and it did very

429
00:25:41,080 --> 00:25:44,399
Speaker 1: well because it was a generic three D movie. A

430
00:25:44,480 --> 00:25:47,800
Speaker 1: Ready Player one which Spielberg did, was designed to be

431
00:25:47,880 --> 00:25:50,840
Speaker 1: a three D movie, and you know, that did extremely

432
00:25:50,920 --> 00:25:54,080
Speaker 1: well in three D. UM. I think, you know, around

433
00:25:54,080 --> 00:25:57,560
Speaker 1: the corner at the end of we have Avatar coming,

434
00:25:58,119 --> 00:26:01,879
Speaker 1: which Jim Cameron is clearly signing as a three D movie,

435
00:26:02,160 --> 00:26:04,440
Speaker 1: and I think we're all gonna have to respect that.

436
00:26:04,760 --> 00:26:07,760
Speaker 1: But I think it just got flooded with taking movies

437
00:26:07,800 --> 00:26:10,600
Speaker 1: that really weren't envisioned the right way or film the

438
00:26:10,680 --> 00:26:13,399
Speaker 1: right way, and they were um put into three D,

439
00:26:13,480 --> 00:26:17,399
Speaker 1: and I just don't think particularly domestic audiences had an

440
00:26:17,400 --> 00:26:21,320
Speaker 1: appetite for that. You know, we'll see whether foreign audiences

441
00:26:21,400 --> 00:26:24,840
Speaker 1: continue to prefer three D over two D in a

442
00:26:24,880 --> 00:26:28,439
Speaker 1: really broadway or whether that whether that comes in and

443
00:26:28,480 --> 00:26:31,919
Speaker 1: I think we'll follow where the consumer taste go. Do

444
00:26:31,960 --> 00:26:36,600
Speaker 1: you think UM another Avatar film could reinvigorate three D.

445
00:26:36,640 --> 00:26:38,960
Speaker 1: Do you think that that could kind of have another

446
00:26:39,040 --> 00:26:44,080
Speaker 1: rediscovery of that format in a way? I I hope not.

447
00:26:44,400 --> 00:26:47,600
Speaker 1: I mean, I hope it invigorates interest for Avatar and

448
00:26:47,720 --> 00:26:51,440
Speaker 1: three D if that's what UM, Jim Cameron and John

449
00:26:51,520 --> 00:26:54,480
Speaker 1: Landell are trying to do. UM, I hope it doesn't

450
00:26:55,119 --> 00:26:58,040
Speaker 1: reinvigorate you know, take any movie and put it in

451
00:26:58,119 --> 00:27:01,520
Speaker 1: three D, because personally, I think that's the best way

452
00:27:01,520 --> 00:27:05,199
Speaker 1: to experience UM those types of things. I think if

453
00:27:05,240 --> 00:27:08,520
Speaker 1: it's intended to be UM, you know, then grade. But

454
00:27:08,560 --> 00:27:10,760
Speaker 1: if it's not intended to be I don't think we

455
00:27:10,800 --> 00:27:14,520
Speaker 1: should force consumers to watch what they don't want because

456
00:27:14,560 --> 00:27:18,560
Speaker 1: we wanted to hire ticket price. You've been very successful

457
00:27:18,560 --> 00:27:21,119
Speaker 1: in China. I was looking at your most recent quarter.

458
00:27:21,280 --> 00:27:23,480
Speaker 1: It seems like the Chinese box office has been very

459
00:27:23,520 --> 00:27:27,720
Speaker 1: good to IMAX. UM. Other entertainment companies have not had

460
00:27:28,280 --> 00:27:32,520
Speaker 1: as positive and experience in China despite you know, the

461
00:27:32,880 --> 00:27:37,680
Speaker 1: box office growth there. What's gone well for IMAX and

462
00:27:37,720 --> 00:27:40,439
Speaker 1: what's gone wrong for for other players in that space.

463
00:27:41,160 --> 00:27:43,880
Speaker 1: So in the first quarter of this year, UM, we're

464
00:27:43,960 --> 00:27:47,840
Speaker 1: up sixty percent year over year in China and our

465
00:27:47,920 --> 00:27:51,920
Speaker 1: Chinese New Year UM was up year over year over

466
00:27:52,040 --> 00:27:56,040
Speaker 1: last year's China New Year, So a lot of things

467
00:27:56,080 --> 00:27:58,040
Speaker 1: have gone well for I'm at. So I'll start at

468
00:27:58,040 --> 00:28:01,320
Speaker 1: a higher level and then getting the needs. UM. We've

469
00:28:01,320 --> 00:28:04,960
Speaker 1: been in China for about twenty years, and UM we

470
00:28:05,080 --> 00:28:09,560
Speaker 1: really constructed a company around local taste and local management.

471
00:28:09,960 --> 00:28:14,800
Speaker 1: So we're not a North American company that's exporting um

472
00:28:15,080 --> 00:28:18,560
Speaker 1: our ideas to China. We have over a hundred people

473
00:28:18,640 --> 00:28:22,200
Speaker 1: that work in China. We have a Chinese CEO, UM

474
00:28:22,200 --> 00:28:25,480
Speaker 1: where a public company on the Hong Kong Stock Exchange,

475
00:28:25,800 --> 00:28:28,720
Speaker 1: of which we own seventy of it. We have lots

476
00:28:28,760 --> 00:28:32,600
Speaker 1: of Chinese shareholders, we have lots of Chinese partners on

477
00:28:32,680 --> 00:28:36,080
Speaker 1: the studio side UM as well as on the exhibition

478
00:28:36,160 --> 00:28:40,240
Speaker 1: side and the talent side. And we've approached China and

479
00:28:40,280 --> 00:28:44,360
Speaker 1: as a market unto itself, meaning UM, you know, we

480
00:28:44,480 --> 00:28:47,680
Speaker 1: don't treat China like we treat the rest of the world,

481
00:28:47,720 --> 00:28:52,200
Speaker 1: and we apply you know, different rules, different marketing techniques,

482
00:28:52,800 --> 00:28:56,360
Speaker 1: different perspective. So that's kind of the high level answer

483
00:28:56,360 --> 00:28:59,600
Speaker 1: to your question. At a lower level, UM, you know,

484
00:28:59,680 --> 00:29:03,240
Speaker 1: taste have changed rapidly in China in the last couple

485
00:29:03,240 --> 00:29:06,800
Speaker 1: of years, so we've gone much more to local programming.

486
00:29:07,120 --> 00:29:10,960
Speaker 1: So even in the last couple of years, in seventeen

487
00:29:10,960 --> 00:29:15,560
Speaker 1: we had of what we showed in Imax theaters was

488
00:29:15,720 --> 00:29:20,160
Speaker 1: local content, and in eighteen it was thirty three, and um,

489
00:29:20,200 --> 00:29:22,920
Speaker 1: you know, I I see that continuing to go up.

490
00:29:24,000 --> 00:29:26,960
Speaker 1: The other thing in China is that it's very difficult

491
00:29:27,040 --> 00:29:30,600
Speaker 1: to predict what the number one film is. I think

492
00:29:30,680 --> 00:29:34,680
Speaker 1: because of the way tracking works in North America and

493
00:29:34,800 --> 00:29:39,040
Speaker 1: the existence of sequels, it's easier to say, um, you know,

494
00:29:39,080 --> 00:29:42,080
Speaker 1: Avengers is going to be a really big movie when

495
00:29:42,120 --> 00:29:46,280
Speaker 1: it opens, whereas in China um on on something like

496
00:29:46,440 --> 00:29:50,640
Speaker 1: Chinese New Year, it's just much more difficult to assess.

497
00:29:50,680 --> 00:29:54,680
Speaker 1: So what we're doing now is we're playing multiple movies um,

498
00:29:54,760 --> 00:29:58,160
Speaker 1: rather than one movie on Chinese New Years. So this year,

499
00:29:58,640 --> 00:30:02,160
Speaker 1: UM there were there were three movies. We played Crazy Aliens,

500
00:30:02,760 --> 00:30:07,120
Speaker 1: Pegasus and Wandering Earth, and everyone said Crazy Aliens was

501
00:30:07,160 --> 00:30:10,000
Speaker 1: going to be number one, and some people said Wandering

502
00:30:10,000 --> 00:30:13,120
Speaker 1: Earth would be number four. So funny thing happened on

503
00:30:13,120 --> 00:30:16,120
Speaker 1: the first day. It started to play out by that,

504
00:30:16,520 --> 00:30:19,520
Speaker 1: but by the second day it was clear that Wandering

505
00:30:19,520 --> 00:30:23,360
Speaker 1: Earth was by far um the most popular film. So

506
00:30:23,520 --> 00:30:27,480
Speaker 1: we changed our programming with our partners UM much more

507
00:30:27,560 --> 00:30:30,160
Speaker 1: so towards Wandering Earth, and it ended up being our

508
00:30:30,200 --> 00:30:33,320
Speaker 1: biggest release in our history in China, where we did

509
00:30:33,400 --> 00:30:38,160
Speaker 1: forty million dollars UM in box office. So that flexibility

510
00:30:38,200 --> 00:30:42,040
Speaker 1: and programming UM was a really big deal for us. UM.

511
00:30:42,080 --> 00:30:45,200
Speaker 1: We also changed our marketing a little bit. UM in

512
00:30:45,400 --> 00:30:50,160
Speaker 1: China of the tickets are sold online UM, which is

513
00:30:50,360 --> 00:30:53,280
Speaker 1: much greater than almost anywhere in the world. So in

514
00:30:53,360 --> 00:30:56,600
Speaker 1: North America, if you did a marketing campaign, you do

515
00:30:56,800 --> 00:31:00,520
Speaker 1: bus shelters, you do big posters, you do tell television.

516
00:31:01,040 --> 00:31:04,600
Speaker 1: But in China, it's much more important to be allied

517
00:31:04,640 --> 00:31:09,240
Speaker 1: with the ticketing platforms. The largest ticketing platform in China

518
00:31:09,320 --> 00:31:14,040
Speaker 1: is called malo Yan, which has a six market share,

519
00:31:14,440 --> 00:31:17,680
Speaker 1: and they recently went public in Hong Kong and we

520
00:31:17,800 --> 00:31:23,160
Speaker 1: participated in that and became a cornerstone investor. And since

521
00:31:23,240 --> 00:31:27,000
Speaker 1: that investment a little bit before actually we've been starting

522
00:31:27,040 --> 00:31:30,280
Speaker 1: to have more of a strategic relationship with them, so

523
00:31:30,360 --> 00:31:34,160
Speaker 1: that means more access to data. Was starting a frequent

524
00:31:34,360 --> 00:31:38,480
Speaker 1: flyer kind of program for our customers, and we're going

525
00:31:38,560 --> 00:31:41,080
Speaker 1: to try and use the data to help us even

526
00:31:41,080 --> 00:31:44,320
Speaker 1: in the selection process. So I think you really had

527
00:31:44,400 --> 00:31:49,320
Speaker 1: to adapt to the changing China market. A few years ago,

528
00:31:49,400 --> 00:31:51,800
Speaker 1: it was easy. It was growing at forty percent a year,

529
00:31:52,280 --> 00:31:55,640
Speaker 1: and um, you know, the tide was um flowing so hard.

530
00:31:55,680 --> 00:31:57,680
Speaker 1: All you had to do was get in front of

531
00:31:57,680 --> 00:32:00,240
Speaker 1: it and it would lift you up. But I think

532
00:32:00,320 --> 00:32:03,280
Speaker 1: you had to learn to deal with I'm not only

533
00:32:03,320 --> 00:32:07,160
Speaker 1: more local content, but what kinds of local content and

534
00:32:07,200 --> 00:32:10,200
Speaker 1: more of the particulars of that market. And I think

535
00:32:10,240 --> 00:32:13,360
Speaker 1: we've done that and that's why we've been pretty successful.

536
00:32:13,920 --> 00:32:16,640
Speaker 1: You were talking about a frequent flyer program. I wondered,

537
00:32:17,280 --> 00:32:19,680
Speaker 1: is there any role for a subscription service at Imax,

538
00:32:19,800 --> 00:32:23,800
Speaker 1: either domestically or or overseas. Would you ever think about

539
00:32:23,840 --> 00:32:26,320
Speaker 1: doing some kind of movie pass type thing but geared

540
00:32:26,360 --> 00:32:29,600
Speaker 1: at at Imax customers. Um, At the present, we're not

541
00:32:29,760 --> 00:32:32,800
Speaker 1: thinking about that. UM. As I said in China, it's

542
00:32:32,840 --> 00:32:37,200
Speaker 1: more if you go multiple times, you get prizes or

543
00:32:37,320 --> 00:32:40,640
Speaker 1: extra times to go that sort of thing. Um. We're

544
00:32:40,720 --> 00:32:45,800
Speaker 1: embedded in a number of theater operators existing programs. So

545
00:32:45,920 --> 00:32:50,600
Speaker 1: in Europe we're in Cineworld's program, We're in Odeon's program,

546
00:32:50,680 --> 00:32:53,800
Speaker 1: we're in path As program, We're in a number of them.

547
00:32:53,840 --> 00:32:57,520
Speaker 1: In the US, we're in Cinemas program and A m

548
00:32:57,560 --> 00:33:01,000
Speaker 1: C has just put in place an interest program called

549
00:33:01,360 --> 00:33:05,280
Speaker 1: a List where if you subscribe to their program, you

550
00:33:05,320 --> 00:33:09,680
Speaker 1: can go to either regular theaters or Imax theaters. And

551
00:33:09,760 --> 00:33:13,600
Speaker 1: it's a different kind of model. Um, we're experimenting. I

552
00:33:13,600 --> 00:33:16,720
Speaker 1: don't know which one is better, but I do know

553
00:33:16,880 --> 00:33:21,480
Speaker 1: that our indexing, our percentage of box office continues to

554
00:33:21,600 --> 00:33:24,440
Speaker 1: go up and UM with the A m C program,

555
00:33:24,480 --> 00:33:27,480
Speaker 1: it's even gone up more than with other programs. So

556
00:33:27,800 --> 00:33:31,760
Speaker 1: I think embedding ourselves and I'm trying different programs and

557
00:33:31,880 --> 00:33:35,480
Speaker 1: understanding what works and doesn't work is ultimately going to

558
00:33:35,560 --> 00:33:38,640
Speaker 1: be good for IMAX. But I think these programs will

559
00:33:38,680 --> 00:33:41,400
Speaker 1: get more refined and we'll learn more about what are

560
00:33:41,440 --> 00:33:47,400
Speaker 1: the best kinds. Um. Your stock is is improving recently,

561
00:33:47,600 --> 00:33:49,840
Speaker 1: but it's had kind of a rough go of it,

562
00:33:49,920 --> 00:33:53,520
Speaker 1: and it's not just Imax. All sort of exhibition stocks

563
00:33:54,080 --> 00:33:55,840
Speaker 1: have gotten had a rough go of it in the

564
00:33:55,920 --> 00:33:59,520
Speaker 1: last few years. Why has the streat been so pessimistic

565
00:33:59,680 --> 00:34:04,000
Speaker 1: about this space and what are they getting right or wrong? Well,

566
00:34:04,200 --> 00:34:07,040
Speaker 1: you know you're right, but first let's talk about Imax.

567
00:34:07,080 --> 00:34:11,040
Speaker 1: When you say this space, Imax isn't in that space,

568
00:34:11,360 --> 00:34:14,319
Speaker 1: as I said earlier, We're not North American and we're

569
00:34:14,360 --> 00:34:16,880
Speaker 1: not an exhibitor. As a matter of fact, IMAX in

570
00:34:16,960 --> 00:34:21,040
Speaker 1: eighty countries is in more places than Starbucks. So I'll

571
00:34:21,040 --> 00:34:24,560
Speaker 1: address IMAX first, which is UM. You know, we have

572
00:34:24,680 --> 00:34:28,919
Speaker 1: no debt and over a hundred million dollars UM in cash. UM.

573
00:34:28,920 --> 00:34:32,319
Speaker 1: We don't put money into real estate or facilities. We

574
00:34:32,520 --> 00:34:38,000
Speaker 1: license our intellectual property. We have extremely high margins UM.

575
00:34:38,080 --> 00:34:41,839
Speaker 1: We play only Blockbuster films. UM. So I think with

576
00:34:41,920 --> 00:34:45,239
Speaker 1: respect to IMAX, and I understand it a little because

577
00:34:45,280 --> 00:34:48,960
Speaker 1: there aren't comparables, and the street has trouble value in

578
00:34:49,120 --> 00:34:52,520
Speaker 1: things when there aren't comparables. But you know, I think

579
00:34:52,520 --> 00:34:57,120
Speaker 1: IMAX is more like a technology company or a licensing company,

580
00:34:57,400 --> 00:35:00,520
Speaker 1: and I think, UM, the street gets confused about that.

581
00:35:00,600 --> 00:35:04,359
Speaker 1: But as you said more recently, as we've broken out

582
00:35:04,400 --> 00:35:07,600
Speaker 1: of the pack, and while the rest of the industry,

583
00:35:07,640 --> 00:35:11,319
Speaker 1: of the exhibition industry is kind of UM, you know

584
00:35:11,600 --> 00:35:15,200
Speaker 1: down this quarter, we're up because of our global presence,

585
00:35:15,520 --> 00:35:21,000
Speaker 1: particularly over last year and against UM analyst estimates UM.

586
00:35:21,040 --> 00:35:24,480
Speaker 1: As for the exhibition industry, you know, I think the

587
00:35:24,560 --> 00:35:29,000
Speaker 1: street gets a little confused as to the role of

588
00:35:29,000 --> 00:35:33,040
Speaker 1: of streaming going forward, and I think there's an irrational

589
00:35:33,520 --> 00:35:37,719
Speaker 1: fear factor that streaming is going to be sort of

590
00:35:37,760 --> 00:35:42,000
Speaker 1: an existential event UM for theatrical which I don't think

591
00:35:42,120 --> 00:35:44,680
Speaker 1: is going to be the case. Most of the studios

592
00:35:44,719 --> 00:35:48,520
Speaker 1: have gotten more into the blockbuster business, which I don't

593
00:35:48,560 --> 00:35:52,680
Speaker 1: see as UM particularly threatened by streaming, and I think

594
00:35:52,880 --> 00:35:57,640
Speaker 1: UM the exhibition business is also diversifying and will continue

595
00:35:57,680 --> 00:36:03,080
Speaker 1: to diversify into different types of alternative content, premium UM,

596
00:36:03,120 --> 00:36:07,600
Speaker 1: different food offerings. So I think they're just UM overlooking

597
00:36:07,800 --> 00:36:10,920
Speaker 1: the evolution that's going on and and marketing, I mean,

598
00:36:10,960 --> 00:36:14,280
Speaker 1: the brilliant marketing things that a lot of those companies

599
00:36:14,320 --> 00:36:17,800
Speaker 1: are doing. And I'm just circling back to where I started.

600
00:36:17,840 --> 00:36:21,040
Speaker 1: To the extent they're confusing that, I think they're even

601
00:36:21,080 --> 00:36:25,000
Speaker 1: confusing it more with IMAX, because as I mentioned to earlier,

602
00:36:25,000 --> 00:36:28,080
Speaker 1: I think streaming has nothing to do with IMAX, because

603
00:36:28,120 --> 00:36:30,400
Speaker 1: I think in the first two weeks people are going

604
00:36:30,440 --> 00:36:34,080
Speaker 1: to see blockbuster movies, whether they could see them, you know,

605
00:36:34,320 --> 00:36:37,520
Speaker 1: six weeks later on their phone or twelve weeks later

606
00:36:37,560 --> 00:36:41,400
Speaker 1: on their phone. So sort of been closing. I'm interested

607
00:36:41,440 --> 00:36:45,879
Speaker 1: in hearing your thoughts on what's the biggest obstacle that

608
00:36:46,200 --> 00:36:52,000
Speaker 1: cinema faces and what's the biggest opportunity. I think the

609
00:36:52,000 --> 00:36:57,760
Speaker 1: biggest obstacle UM cinema faces is probably figuring out how

610
00:36:57,800 --> 00:37:01,719
Speaker 1: to market to Gen X and millennials. And I think

611
00:37:01,840 --> 00:37:05,080
Speaker 1: Cinnamon General has been, you know, a little bit caught

612
00:37:05,480 --> 00:37:10,120
Speaker 1: in a place where it's still marketing. Starting to change

613
00:37:11,000 --> 00:37:13,760
Speaker 1: um in the last couple of years. But one studio

614
00:37:13,840 --> 00:37:17,200
Speaker 1: executive who I won't mention, told me that he told

615
00:37:17,719 --> 00:37:21,160
Speaker 1: his team that for the next movie, he um, he

616
00:37:21,200 --> 00:37:26,160
Speaker 1: doesn't want to hear double trunk ads, bus stop ads,

617
00:37:26,640 --> 00:37:30,279
Speaker 1: posters on the wall, TV ads, And the team came

618
00:37:30,280 --> 00:37:33,120
Speaker 1: back with the next movie and it was exactly the

619
00:37:33,200 --> 00:37:35,840
Speaker 1: same thing, and it was pulling his hair out of

620
00:37:35,880 --> 00:37:38,520
Speaker 1: his head. He didn't have much, so that's a giveaway.

621
00:37:38,560 --> 00:37:40,759
Speaker 1: But um, he didn't. He didn't have much hair to

622
00:37:40,880 --> 00:37:44,839
Speaker 1: pull out. But I think the system is really embedded

623
00:37:45,120 --> 00:37:48,239
Speaker 1: in a way of doing things that is very hard

624
00:37:48,280 --> 00:37:51,560
Speaker 1: to change, and I think it's got to change. And um,

625
00:37:51,600 --> 00:37:54,640
Speaker 1: I mentioned to you before. We have a CEO conference

626
00:37:54,680 --> 00:37:58,319
Speaker 1: every year and ours is right before CinemaCon this year.

627
00:37:58,440 --> 00:38:00,640
Speaker 1: One of the big topics we're going to try and

628
00:38:00,680 --> 00:38:05,279
Speaker 1: tackle is how could studios and exhibitors work together and

629
00:38:05,360 --> 00:38:08,440
Speaker 1: sharing data and targeting it. So I'd say that's the

630
00:38:08,480 --> 00:38:12,799
Speaker 1: biggest obstacle UM. I think the biggest opportunity is how

631
00:38:12,880 --> 00:38:15,600
Speaker 1: much content there is coming out right now. And I

632
00:38:15,640 --> 00:38:19,080
Speaker 1: think people just have to think of content in different ways.

633
00:38:19,120 --> 00:38:24,400
Speaker 1: And I don't only mean UM studios and streaming services,

634
00:38:24,520 --> 00:38:27,120
Speaker 1: but I mean, you know, on a broader level, things

635
00:38:27,160 --> 00:38:31,839
Speaker 1: like the sports, things like concerts, things like UM all

636
00:38:31,960 --> 00:38:35,919
Speaker 1: kinds of live events that are going on. Destination entertainment

637
00:38:36,239 --> 00:38:41,680
Speaker 1: is exploding, and particularly IMAX is a form of destination entertainment,

638
00:38:41,880 --> 00:38:44,520
Speaker 1: and I think all of us have to think outside

639
00:38:44,920 --> 00:38:49,040
Speaker 1: the box UM intended pun and think of how to

640
00:38:49,120 --> 00:38:53,640
Speaker 1: turn yourselves more into a destination entertainment company. And that's

641
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Speaker 1: something we're doing well. Rich thanks so much for joining

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Speaker 1: me today. Thanks Brian, thanks for listening. Be sure to

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Speaker 1: tune in next week for another episode of Strictly businessm