WEBVTT - Imax CEO Richard Gelfond Talks the Box Office

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<v Speaker 1>For more on the future of the movie business. I'm

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<v Speaker 1>thrilled to say we're joined now by Richard Gelfon. He

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<v Speaker 1>is the CEO of IMAX. It's great to see you

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<v Speaker 1>in person.

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<v Speaker 2>Nice to see you. It's been a while, it has been.

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<v Speaker 1>And things have obviously changed in the last couple of years.

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<v Speaker 1>So let's dive into this year's current box office because

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<v Speaker 1>I was reading right now, we're down about twenty percent

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<v Speaker 1>compared to last year. But then you take a look

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<v Speaker 1>at IMAX's most recent earnings report, you beat expectations. Your

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<v Speaker 1>shares are pretty much on par with the S and

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<v Speaker 1>P five hundred this year. So I'm curious how you

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<v Speaker 1>disconnect IMAX from just the general health of the box office.

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<v Speaker 2>Well, the simple answer is our earnings aren't really leverage

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<v Speaker 2>to box office. The comps that she just went through

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<v Speaker 2>are North American exhibitors. We're not North American and we're

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<v Speaker 2>not an exhibitor, so we're global. Two thirds of our

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<v Speaker 2>revenues are from outside of the United States. Our business models,

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<v Speaker 2>we license our technology, We don't sell popcorn. We have

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<v Speaker 2>very little to do with the kind of model that

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<v Speaker 2>exhibitors are. And when you look at our sources of content.

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<v Speaker 2>They're very different. So over twenty percent of our revenues

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<v Speaker 2>come from foreign language films. You know, the North American

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<v Speaker 2>exhibitors are zero. You look at last year twenty twenty three,

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<v Speaker 2>it was about equal to our best year ever, which

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<v Speaker 2>is twenty nineteen, and exhibitors or twenty percent off that,

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<v Speaker 2>and even our percentage of the box office. So she

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<v Speaker 2>was talking about Memorial Day, we did over twenty percent

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<v Speaker 2>of the global box office and even for Furiosa, and

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<v Speaker 2>even higher than that in North America. So we're not

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<v Speaker 2>we you know, it's one of these things I was

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<v Speaker 2>hearing this morning that somebody said you have to say

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<v Speaker 2>something sixteen times before anybody pays attention, but I'll make

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<v Speaker 2>it seventeen. You know, we're not an exhibitor. Our model

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<v Speaker 2>is just very different, and I think post pandemic. Also,

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<v Speaker 2>there's been this push to premium, whether it's premium sporting

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<v Speaker 2>events or concerts, and imax is the best way to

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<v Speaker 2>experience things. So of the people went to Furiosa, they

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<v Speaker 2>wanted to see in an imax in a disproportionate amount.

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<v Speaker 2>And then the last thing I would say looking backwards,

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<v Speaker 2>because I think we're at a pivot moment is that I

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<v Speaker 2>think people have forgotten about the actors' strike and the

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<v Speaker 2>writer's strike last year. So when you compare it to

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<v Speaker 2>Memorial Day, you need to put an asterisk back. You know,

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<v Speaker 2>it's still only halfway open and in the process of

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<v Speaker 2>reopening because a lot of those films got delayed and

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<v Speaker 2>we're now at kind of a turning point where I

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<v Speaker 2>think for the second half of this year and twenty

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<v Speaker 2>five and twenty six, it's going to be dramatically different.

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<v Speaker 1>So a lot to get into there. Let's start with

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<v Speaker 1>that point, though, that you've made seventeen times, you might

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<v Speaker 1>have to make it an eighteenth time because my next

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<v Speaker 1>question is, I mean, there's been estimates that there might

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<v Speaker 1>not be a blockbuster that surpasses a billion dollars this summer.

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<v Speaker 1>And I hear what you're saying in terms of your

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<v Speaker 1>business and how it functions, but even still, I mean,

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<v Speaker 1>does that impact you. What would that look like if

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<v Speaker 1>we really do just have a dot of a summer?

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<v Speaker 2>So, first of all, I don't think there will be one,

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<v Speaker 2>because you have big movies coming out like Despicable Me

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<v Speaker 2>for and you have Deadpool versus Wolverine and even Bad Boys,

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<v Speaker 2>which is next week, is tracking to pretty good numbers,

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<v Speaker 2>so I don't think that's right. But you know, there's

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<v Speaker 2>no magic around the billion dollar number. I mean, if

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<v Speaker 2>you're an exhibitor, I think there might be because you'll

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<v Speaker 2>have multiple screens and you need to have those kind

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<v Speaker 2>of breakout hits to work. But I'max as a single

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<v Speaker 2>screen company. Our last seven movies in a row have

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<v Speaker 2>all done double digit indexing. So what that means is

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<v Speaker 2>over ten percent a less than one percent of the screens.

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<v Speaker 2>So it's just a different business proposition. It's like comparing

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<v Speaker 2>us to you know, a company that shoots rockets to Morris.

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<v Speaker 2>I mean, it's not the same kind of thing. But

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<v Speaker 2>when you look at twenty five, for example, I mean,

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<v Speaker 2>the slate is ridiculous, and I'll go out on a

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<v Speaker 2>limb and I'll say, you know, not only for IMAX,

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<v Speaker 2>but I think the industry is going to see twenty

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<v Speaker 2>nineteen or better numbers. They're just stacked up like planes

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<v Speaker 2>waiting to land. And it just hasn't been anything resembling

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<v Speaker 2>normal coming out of the pandemic, going into the strikes.

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<v Speaker 2>I mean, I think we're finally getting to that period now.

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<v Speaker 1>And when it comes to the twenty twenty five slate,

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<v Speaker 1>that's even with the of course lagged impact of the

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<v Speaker 1>writer and actors strike that we saw last summer.

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<v Speaker 2>No, I think enough time has gone by where that'll

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<v Speaker 2>be over by then. And one of the points I

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<v Speaker 2>should make is that one of the great things that's

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<v Speaker 2>gone on at IMAX is special filmmakers so like Chris

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<v Speaker 2>Nolan or Denis Villeneu have shot using IMAX cameras, and

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<v Speaker 2>on those movies we really index, some people really come out.

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<v Speaker 2>So between next May and next September, there are eight

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<v Speaker 2>movies in a row that are shot using iMX cameras,

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<v Speaker 2>and they include things like Top Gun, Formula One, A

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<v Speaker 2>Mission Impossible, two Marvel movies Superman. So I think we're

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<v Speaker 2>pretty much getting back to normal for the exhibition industry,

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<v Speaker 2>but for IMAX it should be much better than it

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<v Speaker 2>was pre pandemic.

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<v Speaker 1>And you did make the point that when you take

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<v Speaker 1>a look at your business, it's not just North America.

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<v Speaker 1>Of course, you're very exposed internationally as well, And with

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<v Speaker 1>that in mind, I'm really curious to hear how China

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<v Speaker 1>is faring from your perspective.

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<v Speaker 2>So China, this will surprise a lot of your audience.

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<v Speaker 2>But China last year was eighty five percent of its

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<v Speaker 2>pre pandemic high, which don't you think that would surprise

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<v Speaker 2>people when they hear about the Chinese economy and how

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<v Speaker 2>you know, various sectors aren't doing well. The movie sector

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<v Speaker 2>did really well last year. In terms of this year,

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<v Speaker 2>I think it's going to be back and waited. Chinese

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<v Speaker 2>New Year had a kind of a more eclectic mix

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<v Speaker 2>than in other years, so it did okay. I think

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<v Speaker 2>it was the third best one. But this summer there's

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<v Speaker 2>a lot of really good movies coming out. There a

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<v Speaker 2>film called Najah, which is one of the biggest movies

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<v Speaker 2>they've had. There's a sequel, there's a new Jackie Chan

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<v Speaker 2>movie coming out with Bona. So again, I think you'll

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<v Speaker 2>see that manifest itself later in the year.

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<v Speaker 1>And you mentioned that, you know, some of the big

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<v Speaker 1>name filmmakers that have been shooting on Imax cameras. You

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<v Speaker 1>have a lot of demand from Hollywood. I am curious

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<v Speaker 1>whether big tech is also calling as well. When you

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<v Speaker 1>think about Amazon, Apple, Netflix, for example.

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<v Speaker 2>So Amazon is a great starting point. We made a

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<v Speaker 2>documentary called Blue Angels, and we made it with a

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<v Speaker 2>bed robot, JJ Abrams and Glenn Powell, and we sold

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<v Speaker 2>that to Amazon. So we launched it in Imax theaters

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<v Speaker 2>and it became the number one doc of the year

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<v Speaker 2>on all two hundred Imax theaters. A limited run. It

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<v Speaker 2>opened this last weekend on Amazons streaming and was the

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<v Speaker 2>number one movie of any kind on Amazon streaming. Now,

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<v Speaker 2>I'm not just talking documentaries of talking any movie. So

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<v Speaker 2>that's an example how we're working with the streamers and

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<v Speaker 2>leveraging with the streamers. Also, the Formula one movie which

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<v Speaker 2>I just mentioned, which is being shot by Joe Kazinski

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<v Speaker 2>and stars Brad Pitt, I mean Race Cars and Imax.

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<v Speaker 2>I think it has a lot of potential. That's an

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<v Speaker 2>Apple movie, and they struck a deal with Imax for

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<v Speaker 2>the release before they even announced the distributor. So I

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<v Speaker 2>think that's a really good quadrant for us because especially

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<v Speaker 2>you know, Imax really eventticized the whole movie chain. So

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<v Speaker 2>I think the streamers recognize that, and I think by

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<v Speaker 2>having a theatrical release through Imax, it enhances the value

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<v Speaker 2>to them on streaming.

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<v Speaker 1>Well, I'm sad to say unfortunately we have to leave

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<v Speaker 1>it there. Really enjoyed this conversation. Have to have you

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<v Speaker 1>back soon. Let's not wait a couple of years here,

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<v Speaker 1>thanks of course to Richard Gelfon of IMAX