In a summer where Hollywood has fielded nearly as many high-priced flops as blockbuster behemoths, one sector of the movie business has remained remarkably consistent – IMAX.
Audiences, particularly fanboys, have remained intensely loyal to its mammoth 70mm screens at a time when theatrical attendance domestically has declined.
Overall, IMAX, which has struggled in the past with the seasonal ups and downs of the movie business has been a more consistent performer. In the most recent quarter Imax posted revenue growth of 22.7 percent. That outpaces the industry average of 13.4 percent. Profits increased six-fold to $11.1 million.
And even while the recent shootings at a Colorado theater have cast a shadow over the industry, the last month has been outstanding for the large-screen format. “The Dark Knight Rises” is shattering box-office records for IMAX, earning $50 million in just two weeks of release.
During the Batman’s sequel’s $160.8 million opening weekend, IMAX accounted for nearly 12 percent of the film’s box office, despite making up less than 5 percent of the screens showing the movie. A company that ten years ago was best known for showing science documentaries and only began screening theatrical features with "Fantasia 2000" in 2000, has become a true Hollywood player.
Indeed, at a time where theatrical exhibition is facing fierce challenges from gaming, digital content and elaborate home-entertainment systems that allow consumers to watch films from the comfort of their couch, IMAX provides something that can only be found on its screens.
“They’re in the sweet spot of where studios want to go, because they offer a differentiated product from what’s available in the home,” James Marsh, a media and technology industry analyst at Piper Jaffray, told TheWrap. “They have got a great brand with consumers and they have a great brand with directors, so they’re well positioned.”
It's also worth mentioning that while most moviegoers would be hard pressed to name the company behind 3D glasses or surround sound, IMAX has been able to establish itself as a real brand.
“An IMAX movie takes you somewhere you dream about going to, but probably will never get to,” Greg Foster, IMAX’s chairman and president of filmed entertainment, told TheWrap. “People dream about going to Hogwarts, but they’re probably not going to get there or Pandora or going to Gotham City and saving the day.”
“Aspirational, hopeful, inspiring concepts are what we do best,” he added.
And it's not just audiences. Studios, too, are enamored with the format, to the point where distribution executives tell TheWrap that they take into account the availability of IMAX screens when scheduling the movie.
“When you bring IMAX into the mix, there’s definitely a cool factor that goes hand in hand when you’re thinking of something like ‘The Amazing Spider-Man’ or ‘Men in Black’ or ‘Resident Evil,’” Rory Bruer, president of worldwide distribution at Sony Pictures, told TheWrap.
It helps that on average IMAX films have a much better hold than studio films from week to week. For instance, in its second week of release, “The Dark Knight Rises” saw grosses shrink by 60 percent, but IMAX showings were only down by 53 percent.
The major gripe among IMAX’s studio partners is that with only 383 screens in North America and 280 internationally, the large screen format can usually only handle one movie at a time. That means it is turning down roughly five films for every picture it takes.
“You want to open your action film in IMAX, but there are not enough screens to cover everybody,” a distribution executive told TheWrap. “I just wish there were more screens, so they could play more films.”
But keeping the number of screens down is part of what allows IMAX to place a surcharge on its tickets. Expand too far and it dilutes the brand.
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“We’re not interest in putting IMAX theaters across from other IMAX theaters," Foster said. "We're very careful from a supply and demand balance. When we partner with or sell a theater to an exhibitor they get an exclusive agreement not to have another theater in that area. We don't want to be ubiquitous."
That’s not to say IMAX isn’t interested in increasing its footprint. In recent years, the studio has kept busy announcing the groundbreaking of new theaters in places like Changzhou, China and Katowice, Poland. Nor is the chain done growing domestically. Foster said IMAX, which recently expanded its alliance with AMC to build as many as 18 new installations, has only penetrated 60 percent of the domestic market.
To make money, IMAX sells or leases its big screen technology to theater chains. The company also gets a chunk of theaters' and studios' ticket sales for the films that show on its screens. It also manufactures the IMAX cameras that allow directors like Brad Bird to film Tom Cruise in "Mission Impossible: Ghost Protocol" scaling Dubai's Burj Khalifa Tower.
That allows IMAX to enjoy diverse revenue streams, but it also makes installing one of their screens an expensive proposition, even with the $5 surcharge that tickets carry on average. That, in turn, has led theater chains like AMC, Regal and Cinemark to build their own large screen challengers to Imax. That has some analysts worried.
“The technology gap has definitely closed now that exhibitors can build their own large screen format,” Eric Wold, senior analyst at B. Riley & Co, told TheWrap. “Their revenue sharing arrangement was based on a time when they were the only game in town.”
In recent years, the company has also been slammed for farming out its technology to slightly modified multiplex screens and allowing them to market the experience as a traditional, gargantuan Imax screen. Calling it "fake IMAX," comedian Aziz Ansari called on moviegoers in 2009 to boycott the company. Critic Roger Ebert also wrote pieces taking IMAX to task, pointing out that the smaller versions use dual digital projectors to display the images, instead of projecting through large format 70mm film.
For its part, IMAX insists it isn’t concerned with new rivals or criticism over its varying screen sizes — complaints Foster says he can count on "one hand." Foster argues that IMAX has established a standard for quality in the minds of moviegoers that is unrivaled, noting that is prides itself on a meticulous conversion process to increase the image of a standard 35mm film by 40 percent that cannot easily be replicated.
The creative side of the film business has been a champion for the big screen format, with directors like Michael Bay and Christopher Nolan using IMAX cameras to shoot their blockbusters. More than 70 minutes of “The Dark Knight Rises” was filmed using the technology, and “The Hunger Games: Catching Fire” and J.J. Abrams “Star Trek” sequel will both include scenes shot with IMAX cameras. To meet demand, the company recently said it was stepping up manufacturing of the filmmaking equipment.
“We’ve worked so hard to get filmmakers on board, because we offer a unique experience,” Foster said. “More of the same and Imax don’t go hand in hand”
“Our filmmaking partnerships are really important to us and the people who work with us tend to come back for more,” he added.
