Consumers 'Are Back' to Cinemas for Blockbuster Films, Says Imax CEO
“It's no longer a question of whether global consumers will come back to the cinema for blockbuster movies," said Imax CEO Richard Gelfond on a Q2 earnings call Thursday. “They are back,” he said. Imax's domestic box office in June surpassed pre-COVID-19 pandemic June 2019, he said. Q2 was on par with Q2 that year, he said.
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Revenue in Q2 was $74 million vs. $51 million in the year-ago quarter, the company said; net loss narrowed to $2.9 million from $9.2 million. Gross box office reached $247.7 million from $108.6 million in Q2 last year, said the earnings release. Imax's share of the global box office was 2.4%, down from 2.6% last June; it had 5.1% domestic share, up from 4.4%. Shares closed 3.5% lower Friday at $16.81.
Results were buoyed by three consecutive $25-million-plus global openings for the first time in Imax history, said Gelfond, citing Top Gun: Maverick, Doctor Strange in the Multiverse of Madness and Jurassic World: Dominion. It will bring Top Gun: Maverick back to theaters in August, he said. A “consistent cadence of releases is critical to getting audiences back” in theaters, he said.
Imax is seeing “strong results” amid rising concerns over inflation and a potential for recession, Gelfond said, adding that tracks with previous trends. “Imax is historically a recession-resistant business,” said the executive, calling movie-going an “affordable luxury” vs. travel or live events. The company’s fastest pace of network growth occurred during the 2008-2009 recession, he said.
Box office momentum in Q2 occurred largely without a contribution from China, which was on COVID-19 lockdown for much of first-half ’22, Gelfond said. The environment in China “remains challenging,” but he cited encouraging signs, saying 91% of Imax theaters there are operational, some with capacity limits. Gelfond cited “incremental progress” with Hollywood movies gaining entry into the China market, saying, “There’s no question that the bar for approval remains higher now given the broader issues between the West and China.” Jurassic World: Dominion, The Batman, Fantastic Beasts: The Secrets of Dumbledore and Ambulance gained approval, he said.
Two developments should help clear the way for more Hollywood films to gain entry into China, Gelfond said. "The failed experiment of day-and-date streaming releases for blockbusters has been abandoned,” he said, calling it a “misguided effort that unleashed rampant piracy in China.” Also, the backlog of Chinese films that built up throughout the pandemic is “running its course, which should create more space for Hollywood content in the slate.”
The company is again looking to expand the footprint of Imax Enhanced across streaming platforms and high-end devices, Gelfond said, noting that it’s growing its presence on Disney+ with the Imax Enhanced release of Doctor Strange in the Multiverse of Madness in June. It recently added LG to its device partner roster and is expanding its partnership with Philips. The company is looking at building out its tech stack “to further drive the Imax experience on streaming platforms and incorporate software tools that would yield recurring revenue in our streaming partnerships,” he said.
Imax is planning September announcements for live events, including music events, said Megan Colligan, president-Imax Entertainment. It will have an announcement with an “ongoing partner” that it will announce in early fall, she said. Some 100 theaters are capable of live performances now, and 200 are expected by year-end, she said.