Los Angeles, New York, Shanghai, Toronto: When Imax opened up virtual reality centers in a handful of cities around the world last year, the company painted it as a first step toward a possible massive global initiative. The iconic brand was looking for a chance to expand beyond cinemas and become a major player in the nascent market for location-based VR.
One year later, the future of Imax VR looks a lot less certain. The company closed one of its two VR centers in New York at the end of June, and shut down its VR center in Shanghai in early July.
Imax CEO Richard Gelfond first opened up about the company’s struggles to make VR work during the company’s Q1 2018 earnings call. “The consumer reaction was extremely positive, but the numbers just weren’t there,” he said. Gelfond said only one of the seven centers open at the time was meeting the company’s financial expectations.
Imax CFO Patrick S. McClymont even suggested that the company may pull the plug on the remaining five centers, telling investors during the company’s Q2 earnings call: “Regarding our VR and home theater ventures, in order to continue to focus on reducing costs from new business, we expect to reach a decision on these initiatives during the next few months.”
“As we’ve said since launch, this is a pilot program for us to test whether VR centers in multiplexes is a viable business that could be launched worldwide,” a spokesperson added via email. “We’re still in the review process.”
It’s true: Imax did bill Imax VR as a pilot program from the very beginning. “We want this to be a true experiment,” said the company’s chief business development officer Rob Lister when the company opened its first center in Los Angeles in January of last year.
The plan, as outlined by Lister, was to open five to 10 such locations to gauge the interest in VR — and then possibly commit to a much bigger roll-out that could ultimately mirror the company’s engagement in the theater space, where it operates more than 1,000 locations. Last summer, Lister still said that Imax VR was “off to a promising start.”
So what went wrong in the following months? Market insiders told Variety that Imax struggled to get its hands on enough titles with name recognition to attract sizeable crowds. In the theater space, the company is known for showing blockbusters. Just last week, Imax announced that it would bring all of Marvel’s movies to its theaters to celebrate the studio’s 10th anniversary. Other titles coming soon to Imax theaters include “Fantastic Beasts: The Crimes of Grindelwald,” “The Nun,” and “Venom.”
In the VR space, there aren’t simply as many blockbusters that would appeal to a wider audience beyond hardcore gamers. The company anticipated some of that, which is why it set up a $50 million fund with participation from CAA, China Media Capital, and the Raine Group to co-produce VR experiences.
However, up until now, Imax has only invested $4 million into VR content production, which has resulted in the launch of just a single title: “Justice League, An Imax VR Exclusive,” debuted in Imax VR centers in November. The company’s exclusive window for the title lasted merely two weeks. After that, it was made available to consumer VR headsets, where it has received mixed reviews.
This points to another problem: Imax VR was built around the idea of bringing VR to audiences that don’t own headsets yet. Virtually all of the games and experiences you can use at Imax VR centers are also in one form or another available to the in-home VR market. Imax has tried to customize some of these experiences with special motion chairs as well as better VR headsets, but these differences may not necessarily warrant paying $10 or more for 10 minutes of fun.
Imax has experimented with selling bundles to multiple experiences, and even introduced a day pass for one of its centers earlier this year. However, an industry insider told Variety that the big studios are resistant to such pricing models, which forced the company to exclude at least one title from the promotion.
There are also some doubts as to whether the combination of VR and traditional theaters will actually work. The theory behind Imax VR, and similar efforts by other companies, was that VR headsets could help lure younger audiences back into theaters, effectively working as a promotional vehicle for the big screen.
At least in one instance, a theater had to resolve to flipping that model altogether: The Odeon Cinema in Manchester, which hosts Imax’s first European VR center, has been giving theatergoers vouchers for free VR experiences with every movie ticket this summer.
Correction: 2:40pm: A previous version of this post stated that Imax closed a VR center in Singapore, whereas it actually closed its Shanghai location.
