IMAX CEO: People want to 'see premium experiences'

The box office saw record numbers this summer with the releases of Barbie and Oppenheimer, and now Taylor Swift’s concert film is selling out movie theaters ahead of its release in October. IMAX CEO Richard Gelfond sits down with Yahoo Finance Executive Editor Brian Sozzi at the Goldman Sachs Communacopia & Technology Conference to discuss IMAX’s business.

Gelfond says, "the future of the moviegoing experience" is "through the lens of IMAX." Gelfond notes "the traditional movie business has been down from its peak in 2019, we’re tracking to that level now cause people really want to see premium experiences." Gelfond says Taylor Swift’s concert movie was "a breakout… cause people wanted a premium concert experience." "People are flocking to IMAX also because they want something different than sitting in front of their home screen and streaming," Gelfond adds.

On the Hollywood strikes, Gelfond explains that IMAX (IMAX) is "much more agile than almost any company in the entertainment space. And, in fact, we sort of see ourselves as a port in the storm." Gelfond notes that a lot of IMAX’s content is not impacted by the strikes and they are "very flexible." Gelfond adds that IMAX is a "very talent-friendly company" and they "really want" the Hollywood strikes "to settle in a way that talent feels good about."

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Video Transcript

BRIAN SOZZI: Yahoo Finance is at the Goldman Sachs Tech and Media Conference, and of course, everybody's talking about artificial intelligence and what's next for media, but there are other things to talk about. In this case, let's talk about the business of movies. We have lots of focus on all things "Barbie", what might come for that franchise after that big release. Lots of eyes, of course, on "Oppenheimer" and what may happen to that franchise moving forward.

Let's talk some movies here and the future of that business with IMAX CEO Rich Gelfond. Rich, always great to get some time with you. We appreciate it.

RICH GELFOND: Yeah, happy to be here.

BRIAN SOZZI: I mentioned "Barbie", I mentioned "Oppenheimer", but I really have to start on what you're doing with Taylor Swift. where are you at with Taylor, how many theaters have sold out, and what are ticket sales up like?

RICH GELFOND: Well, IMAX has about 350 sellouts for the opening weekend. I think there's still capacity left, but the total pre-sales overall are over $65 million. I mean, it could be $100 million weekend, which is just mind-boggling. So I think the idea was the Swift family knew the concert was so successful, but they wanted to make it more accessible.

So rather than going direct to streaming or a pay window, they wanted to make it like you were there but make it really affordable for a lot of people. So they went to AMC and they negotiated to do all of AMC's theaters, and then AMC went out to other players who they thought would add value, and in the case of IMAX, we're going to kind of take the movie and enhance the sound and enhance the visual. So we're hoping it'll be just like you were there, and couldn't be more excited.

BRIAN SOZZI: Can you take us inside that technology to the extent you could? How might watching Taylor Swift on the big screen look different because of that technology you possess?

RICH GELFOND: Well, in IMAX, what we'll do is we have a 12 channel sound system. So that's not typically what a cinema has. So we have to upgrade the sound and do different things to it to make it really optimized for the IMAX system.

And then on visual images, what IMAX does for any film not shot with IMAX cameras, we up-res the film. It's called DMR. So it goes through a process where we enhance the image, so when it's showing so large, instead of looking blurry, it looks super sharp. So I think it'll be really exciting to see "Barbie" up to eight stories high with incredible sound.

BRIAN SOZZI: Well, I know the Swifties back in the Yahoo Finance newsroom will be very excited to hear that, Rich. Let me ask you this too. Are we looking at the future of the movie theater experience changing, looking through the lens of what Taylor Swift is doing here? Whereas, I mean, we're not just going to a theater to see a movie. There's other things that can happen in the movie theater.

RICH GELFOND: Well, I think you're looking through the future of the moviegoing experience through the lens of IMAX. So while the traditional movie business has been down from its peak in 2019, we're tracking to that level now because people really want to see premium experiences. So you can marry your two parts of your question.

The Taylor Swift concert in itself was a breakout, and I think that's because people wanted a premium concert experience. There was a premium price. It did over $1 billion. And in the case of the movie business, I think people are flocking to IMAX also because they want something different than sitting in front of their home screen and streaming.

But even you know, rereleasing "Barbie" later in a different way is something new. We're doing a movie with A24 about the Talking Heads. That comes out next Monday, and there's a live Q&A around it that's going out. So I do think you'll see different variations and different alternatives to the traditional moviegoing experience.

BRIAN SOZZI: I got to spend some time at the conference here, Rich, with Paramount CEO Bob Bakish, and I didn't get the sense that this Hollywood strike is ending anytime soon. Now, he seems-- my interpretation, was they have a good amount of content in the backlog, but what happens to summer 2024? You know, as someone operating in the movie theater business, are you concerned that these players like a Paramount and Disney can't get the content they need to support the movie theaters?

RICH GELFOND: So IMAX is much more agile than almost any company in the entertainment space. And, in fact, we sort of see ourselves as a port in the storm. So about 20%, 25% of our content is local language content unaffected by the strike. Some of it is alternative content, the type we just talked about. Unaffected by the strike. 65% of our content is outside of North America, largely unaffected by the strike.

And we're very flexible, so we have-- this month coming up we have "Killers of the Flower Moon" from Apple. We have "Napoleon" from Apple and Sony. So streamers are actually generating content. So I think after pandemic, there are a lot more sources of content than there were.

Now, with that said, IMAX, we're very talent friendly company. We really want this to settle in a way that talent feels good about it and creates as they would. And, you know, I'm an eternal optimist, so I refuse to put a negative head on it.

BRIAN SOZZI: You mentioned overseas. Now, I think investors may be not familiar with the fact you have a big business in China. Now, a lot of headlines we've been getting lately, China slowdown. Have you seen that in your business?

RICH GELFOND: No. I mean, China just came out of the pandemic in December of last year, and when everyone came out kind of a year before that, it took some time to get back to normal. So our China business is way better than it was during the pandemic, but it's on the road to normal. It's not there yet.

And in terms of content, we play local content as well as content from outside of China, and right now we're playing a movie called "Creation of the Gods". We've done $35 million in China. We released "Oppenheimer" in China. The opening weekend in IMAX, we did 30% of the box office, or about $9.5 million. And we had another movie this year in China called "Wandering Earth 2", which we did over $50 million. So, no, the mix might be a little different away from Hollywood films to local content, but we play both. So for us, we haven't seen major obstacles.

BRIAN SOZZI: We've seen a lot of just tensions between the US and China. Now, your company made an early bet on China has been-- and has been winning. I mean, do you ever just get worried about your business not being able to operate the way you would like to operate in China because of these tensions?

RICH GELFOND: I mean, you know, I get asked that question a lot. But Apple does OK in China, Starbucks does OK in China, auto companies do OK in China. I've been to China over 50 times, so I have a familiarity with it. So I think once you've been there and you see the weekly results, you don't react the way that it's kind of caught up in the political landscape. I'm not particularly worried about China.