Company cuts a 20-picture deal with Warner Bros.
Thanks to continued 3D success and a robust international expansion, Imax is expected to have a record-breaking first quarter when it announces its earnings today. On Wednesday, Imax announced a substantial three-year pact with Warner Bros., further bolstering the company’s position.
While the Toronto-based company’s outlook has not always been so rosy — its stock was valued at a mere 50¢ in 2002 — the company has managed to successfully transition from primarily a nature docu exhibitor to one of the keys to the current 3D surge. Its stock now trades at $20.30.
Imax CEO Richard Gelfond credited advancements in digital cinema, as well as the 3D phenomenon for the company’s strong recent performance.
“We’ve been able to contribute in a small way and help event-ize a studio’s film,” Gelfond said. “As a result, the studios don’t have to pay a lot and can make money on shorter runs.”
He said traditional Imax film prints can cost upward of $60,000. With digital cinema, that price has shrunk dramatically to a mere $200. Imax currently has some 300 screens worldwide that play commercial films, more than half equipped for digital projection.
Imax’s digital capability is one factor that led to what should be a lucrative deal with Warner, Gelfond said. The pact calls for release of up to 20 titles in the Imax format through 2013. Imax is in negotiations with the other majors for similar deals.
The Warner agreement secured Imax launches for such major projects as “Batman 3,” the final two “Harry Potter” installments and “The Hobbit,” tentatively skedded for a December 2012 release date. Warner’s “Legends of the Guardians: The Owls of Ga’Hoole 3D” reps the first title to bow under the agreement, on Sept. 24.
While Imax has long maintained an relationship with Warner, the deal marks a significant move for both, since agreements have typically been struck for just one or two titles at a time.
Warner’s “The Dark Knight” is the third-highest grosser for Imax, with a $65 million worldwide from large-screen engagements.
Greg Foster, Imax prexy and chairman, said the success of recent 3D and tentpole films helped finalize the deal. Twentieth Century Fox’s “Avatar” ranks as the company’s top grossing title, with $231 million worldwide on 260 screens.
“In the Imax world, a couple of things have happened,” he said. “One is that we now have the opportunity to pick the ripest, most exciting films that are perfect for the Imax experience.”
Still, Foster admitted there’s room for improvement.
With a limited number of commercial screens, Imax is forced to turn down certain films or limit existing runs. “I hate that we have to say no to films we’d love to say yes to,” Foster said. “But as our network continues to grow, fortunately that will become less of an issue.”
Last month, Imax was contracted to a six-week run of Paramount and DreamWorks Animation’s “How to Train Your Dragon,” preventing Imax screens from playing Warner’s “Clash of the Titans,” which bowed a week after “Dragon.”
A typical launch for Imax totals approximately 185 domestic runs, with an additional 84 overseas.
And while the exhib continues its aggresive international rollout, having struck deals in major markets like Japan, China and France, several major territories are without Imax locations, including Italy.
Imax is aiming to double its domestic locations within the next five years, from 200 to approximately 400, while international growth will be even more substantial, rising sixfold to about 600 locations. Those screens include the smaller multiplex versions for which Imax has been criticized.
“People were highly satisfied with Imax screens; the bigger issue was transparency,” Gelfond said.
Yet, with the success of 3D films like “Avatar” and Disney’s “Alice in Wonderland,” moviegoers have proven they are willing to pay for the Imax experience.
“Avatar” brought “new consumers to Imax for the first time, and I think the other films did so well was because they came and they liked what they saw,” Gelfond said.