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Summer blockbuster openings 'are pretty comparable to what it was before' COVID: IMAX CEO

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IMAX CEO Richard Gelfond joins Yahoo Finance Live to discuss the state of the summer box office following this blockbuster season and opportunities in live event content amid the continued push for streaming.

Video Transcript

DAVE BRIGGS: As we switch to the big screen, is the box office back? Final figures show June 22 revenue coming in at just under a billion dollars at 986 million, according to Comscore. Still down, though, 11% from June 2019. That's pre-pandemic numbers.

Let's talk more about that with Richard Gelfond, CEO of IMAX, who has more than 1,200 theaters in 75 countries. Allie Canal is also still with us here on that. Richard, good to see you. Despite that box office strength, IMAX posted a $2.9 million loss. What did you learn primarily this quarter?

RICHARD GELFOND: Well, the number you used really isn't applicable to IMAX. In fact, we were at 95% of 2019 first half box office. The conventional movie industry was at 65%. So we're pretty much back.

And even though we had a reported loss, that was after asset impairment and a tax valuation charge. And it's now been two years we had over $25 million in EBITDA for the quarter. We beat consensus on revenue and EBITDA. And there are a lot of funky post-pandemic Russia kind of non-cash charges flowing through there.

So we are back. IMAX is back. And it's the first quarter, first time in our history, that we ever had three $25 million openings in a row. So it's not just that the movies are back. It's that they're back for different age groups.

They're back for Marvel fans, for millennials. They're back for older fans, as evidenced by "Top Gun" and "Elvis" and movies like that. They're back for middle-aged parents. They're just back. I mean, we need a little bit more of a supply to come and more of a cadence. But it's pretty comparable to what it was before.

ALLIE CANAL: And Richard, I want to follow up on that because I'm curious to get your take on content right now. A lot of analysts that I've spoken with said there needs to be a higher degree of quality control on blockbuster films. You mentioned Marvel, but they've been slipping, especially in that second weekend. So what's your view when it comes to the Hollywood content pipeline right now? Do we need a refresh heading into 2023?

RICHARD GELFOND: '23 looks fantastic. I mean, I'll come back to Marvel in a second, but overall, there are three Marvel releases next year, including "Guardians of the Galaxy." There's a bunch of DC titles, including "Aquaman" and "Flash." There's another "Mission Impossible" with Tom Cruise. "Oppenheimer" is coming out, the Chris Nolan blockbuster. So '23 just looks as strong as it really could be.

I think one of the issues right now with blockbusters is because of the pandemic, some of the special effects houses got a little bit backed up. So particularly for this quarter, there's not as much product as we would hope there would be.

But also, remember, IMAX is a different business model. We're global. Traditionally, only 1/3 of our revenue is from North America, and the rest is from the rest of the world and then China. And there's a lot of local language content. So in the third quarter, we have 15 local language movies showing, ones that wouldn't be household words here.

But we're opening today in China a film called "Moon Man," which is expected to overall do $500 million at the box office. And we have an Indian film coming out. So we've been diversifying away from just the traditional model of only blockbusters, even though that's our strength. I think there's a lot more depth.

And as you probably know, we have live content now streaming into our theaters. So we've had a Kanye concert. We did the Beatles with Disney+. So I think the key is you have to leverage off these blockbusters, which we've done well, but also provide alternative content. One you guys will like is we're rereleasing "Jaws." I think it's in early September. So if you don't get to see a big shark at your beach, you could see it at an IMAX theater.

ALLIE CANAL: Now, I don't know if I want to see a big shark at my beach, Richard, but you mentioned China. You mentioned China. There's 91% of IMAX locations in China are now in operation, which is, obviously, great news. But what concerns still lie ahead when it comes to improving those China receipts, which we know are crucial to that global box office, as well as your business.

RICHARD GELFOND: Yeah, I think you have to look at the different phases of opening up. So the US really opened up-- forget about technically and COVID-- for movies probably earlier in the summer around May. And then you had these big movies every weekend for different audiences, and they appeal to different sectors. And people really got in the habit of going to movies.

In China, because we had the lockdowns in Shanghai and limited capacity in Beijing, and then not a lot of local movies released and not a lot of Hollywood movies coming in, the box office was definitely depressed for the first six months of the year. So you need these other add-on things, not just a healthy environment to go. But you need the right number of films released in the right way.

And I think we're close to the turning point in China. I don't think we're-- I don't think it's going to happen tomorrow morning. But we're starting to see a pickup of Hollywood films let into the country. We're beginning to see more local language films get data.

So I think when all that happens-- and by the way, there's historical evidence. In '20 and '21, when China came out of the pandemic, the same scenario unfolded. And China led the world in box office in '20 and '21 because that cadence came back. So I think we're waiting to see that right now.

RACHELLE AKUFFO: And I love that you mentioned "Jaws" earlier, the first official summer blockbuster that we ever had and gave me lots of nightmares. But as we look at what's ahead for IMAX, in terms of where the IMAX experience goes from here, keeping in mind things like synergy with streaming, what's next for IMAX?

RICHARD GELFOND: Well, as I said, we're expanding our content base. So the first thing is we do blockbusters. And there's a lot of wind at our backs because that's the way the studio is just starting to program. Then, because we're in 87 countries, more and more of our box office has been local language content.

So you probably don't know this, but in '20 and '21, the two biggest movies in the world were "Wandering Earth" and "The Battle of Lake Changjin," both of which were filmed with IMAX cameras and both of which were released in China. So we'll have more local language.

We're in the process of wiring our whole network so we can do live events. So we did a Kanye West concert. We did another one with Drake. We did Steven Spielberg, a Q&A around "West Side Story." We've done a lot of things. We just, last weekend, we did a Q&A with Jordan Peele.

So I think we're trying to provide more and different content, so we're not just reliant on one source of content and could expand it. And our market share has been improving. We set some records in what we just released last night in terms of our market share. So I think it's working.

RACHELLE AKUFFO: All right, well, great to have you on. Richard Gelfond there, CEO of IMAX, and our very own Allie Canal. Thank you both.