China change means big win for Imax

With more 3D films allowed, company is key beneficiary

While the Chinese government made the decision to allow more 3D and Imax films through its borders only last week, Imax has been working to expand its mainland footprint for years.

The large-screen exhibitor — a primary beneficiary of the new deal as it mostly screens 3D films — has operated theaters in China for 12 years. There are currently 74 Imax screens in China, with 217 theaters open or contracted to open by the end of 2015. Just this week, Imax signed a deal with China’s Broadway Theater Co. to open an additional four locations.

“We’ve got the beginnings of a good network,” Imax CEO Richard Gelfond told Variety. “Now, what we’re seeing is the upgrading of the Chinese moviegoing experience, and developers are really pushing for the Imax experience.”

While the company’s expansion has helped service foreign films that China imported under its previous 20 film per-year quota, Imax has also established a wholly owned Chinese subsidiary, Imax China, to provide a base of operations. Imax recently released local-language pic “Flying Swords of Dragon Gate,” which has grossed more than $10 million since its Dec. 15 opening at 61 theaters.

Some analysts think there’s more of a need than ever to boost the number of theaters in the country.

“Clearly, this is going to incentivize the entrepreneurial sector in China to build more screens,” said MPAA chief Chris Dodd.

Last summer, some analysts predicted that allowing just 10 more films into China per year could mean half a billion extra dollars for Hollywood annually. And since the increased quota focuses on higher-priced premium films, that number could be even higher. (The average 3D upcharge in mainland China last year was $5.61, with tickets costing 60% more than those for 2D pics.)

“If there is more money coming out of China, there is going to be more investment,” Gelfond said.

During the past 12 months, Imax theaters in China grossed an average of $1.7 million per location.