EXCLUSIVE: As the rolling process of cinema reopenings continues across various markets, IMAX has recently enjoyed strong grosses with local-language movies in Asia as well as the reissue of Christopher Nolan’s Interstellar in China. This week in the Middle Kingdom, it’s set to have a particularly vibrant frame with war epic The Eight Hundred. Already, from five days of previews, the film, which is the first Asian release entirely shot with IMAX cameras, has grossed about $33M. There are more than 600 IMAX theaters operating with only one show of the film per day during sneaks and they have contributed about 7% of the total gross so far. The screenings have been 65% full, which is 2.5 times the attendance for the non-IMAX/standard auditoriums. IMAX Corp CEO Rich Gelfond is bullish on the future.
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He recently chatted with Deadline about the return of China as well as how the rest of international is shaping up and what he characterizes as a “gutsy” move made by Warner Bros to release Nolan’s Tenet (also shot with IMAX cameras) overseas ahead of domestic, beginning August 26.
DEADLINE: How has IMAX managed through the COVID era?
RICH GELFOND: Okay under the circumstances. The pandemic started for us in late January because of China and then the rest of the world shut down. It’s been a difficult six months for us with no revenue. However, we have a really strong balance sheet, so it wasn’t life threatening. It was just managing through a difficult situation. And now, as you know, China is opening up followed by the rest of the world, so hopefully we have a business to talk about.
DEADLINE:And one part of that business is Guan Hu’s The Eight Hundred which has already made over $30M in China before its official launch tomorrow. But the movie was supposed to come out last summer and then you had Detective Chinatown 3 ready for the Lunar New Year in January. With the success that The Eight Hundred has seen this week, and being so involved in that movie, do you consider this, pre-Tenet, a very positive turn of events in China?
GELFOND: Actually, last year was a record box office year for us in China even though a number of things happened. We were up about 10% last year from our highest ever. So last year was a pretty decent year and this year right before Chinese New Year we were forecasting a record for the New Year, then all of a sudden, just a few days before, it all went away.
The Eight Hundred was shot with IMAX cameras, so we were really geared up to get behind it last year when it was coming up. Typically when we use our cameras we overindex. For example, in China for a Hollywood film we usually do around 10% of the box office for the country and for a Chinese film, half of that. But I think this will be better than our typical performance. We’re looking towards a great weekend. The only unknown is because we are single screen and it’s opening pretty much on every screen there so that’s the variable.
DEADLINE: Just a few weeks ago, IMAX had its first $1M worldwide weekend in the reopening process. It feels like a good time to be in the IMAX business given the eventized nature of some of the reissues like Interstellar in China, and some Hollywood titles that have finally opened there. How much of this has been by design, or was it just the fates that aligned?
GELFOND: It’s more the fates. It was China Film that picked the titles, but I’ve been really pleasantly surprised at how well it’s gone with the library films. So, you’re right, it was a few weeks ago was our first over $1M, then a week later we did $1.4M and this past weekend we did over $2M so its really been building up quite nicely. And, as you know, now we go into the release of new films. It’s been encouraging.
DEADLINE: As a general rule, how does IMAX recoup in China? What is the split?
GELFOND: We get 12.5% from the Chinese studios on a Chinese film? It’s lower on a U.S. film, and the reason for that is the U.S. studios are paid only 25%. We also get royalties from the exhibitor partners, so that varies depending on the kind of deal it is. If it’s a joint venture where we contribute the equipment, that could be around 20%. If it’s a sale deal it’s like 5%.
DEADLINE: Outside of China, in the other 80 markets where you are entrenched, what are you seeing in terms of what’s been happening and what’s going to happen?
GELFOND: Korea was particularly strong, as you know because you wrote about it. Peninsula was one of our best Korean releases ever for IMAX and that was with limited capacity, so that was a really nice surprise and it also played in Taiwan and other places in South East Asia so that also was surprising.
Japan has been a little up and down in terms of theaters being open because of some repeat COVID cases, but there were a couple of local movies that did extremely well. France also has gotten off to a nice start. The UK has been a little slow with library films, but I’ve been told that pre-sales for Tenet are quite good especially in IMAX.
DEADLINE: Speaking of Tenet, as well as other upcoming movies, how difficult was the release date jockeying? What is it like to live that as a company?
GELFOND: It’s been very challenging because in other industries you just kind of open and you control a lot of your own destiny. In the movie business, there’s so many players involved. First of all you have the different jurisdictions, and we’re in 81 countries, so that’s been complicated on its own. And, obviously, it’s not enough to just open theaters. You have to have something to play there… When you put all those complexities together — the local jurisdiction, opening the theaters, how do you open them safely, what’s the protocol and what content are you going to play — it’s a little bit like three-dimensional chess. There are lots of ups and downs and it’s very difficult to forecast the business.
I had a board meeting a few weeks ago and said to my board there are probably 100 different scenarios that I can come up with for which countries open, what films they have… I also think there’s been a little bit of, you know, when you’re closed it’s hard to really have a narrative — you don’t have anything to talk about other than when’s it gonna open. So, I think the fact that a couple of movies moved to streaming has created this narrative that a lot of movies are going to go to streaming and in the case of blockbusters I just don’t believe that to be true. And again, what do you say when nobody’s open? But I think starting this weekend with The Eight Hundred in China and then going into Tenet, I think people are going to see that people, where the virus is low, are going to return to movies in fairly significant numbers.
I know it’s popular to say the world is forever changed, but I don’t think that 100 years of history gets changed in five months. Just like people have kitchens in their houses, they like going to restaurants. Just because people have a streaming service, I think they’re still going to want to go to the movies.
DEADLINE: I also wonder in terms of domestic versus international. Given that over 70% of the theatrical business comes from overseas, I don’t feel like that’s going to change.
GELFOND: I agree with that. The one thing we’re all going to learn is about piracy because once you have a perfect download from a streaming service or PVOD, you don’t have to go into a theater with your cell phone. You’ll have a perfect copy, so that’s the only question.
DEADLINE: And how are you feeling about Tenet, which was also shot with IMAX cameras?
GELFOND: I think it’s been very challenging for Warner Bros dealing with these issues. For example, New York is still closed which is really ridiculous given that gyms and bowling alleys are open. I mean, cinema is a respiratory passive experience. You watch a screen with a mask, but bowling alleys where people are high-fiving or gyms where people are sweating… I don’t understand it. It’s a lot of slogging. Think of it as hand-to-hand combat on a territory-by-territory basis and I think it’s difficult to get around that. I had a conversation with a studio head, not at Warner Bros, a few weeks ago, who said “I live in the Hollywood hills and looking down on LA I see the COVID cases and I don’t understand how I can open a movie.”
But this goes back to your point before, 70% of the box office is outside North America. Even though LA is important, it’s about 10% of the North American box office, so I think the industry suffers a little bit from its own myopia. I’m not the first one to say that, but I think what they know is what they see outside their windows and I think in fact that’s not the reality. Where the virus is under control, the numbers are really quite good. I mean, people wanted to go to beaches when they reopened and wanted to go to bars and restaurants. As long as it’s safe, I expect them to want to go to cinemas.
I think it was just challenging to be the first ones to go and I really give Warner Bros a lot of credit and Chris Nolan. I think this whole idea of a rolling opening that’s not North America-centric is quite unique and gutsy. I think it’s going to work and pay off, but they were the only ones who really thought outside the box.
DEADLINE: Audiences have been turning up in stronger and stronger numbers over the past few weeks overseas — particularly for new titles. How much looking forward has the outlook changed in, say, the past month for you guys? You have a certain slate coming up and I guess everything is tenuous, but has it been a much more positive swing?
GELFOND: Very much so. I think we’re still waiting to see what the results are, but particularly in China I feel good. In Asia I feel quite good also. I thought for a long time the theaters just have to get open and I think once they’re open unless it’s really dramatic they’re not going to close again unless theres a severe uptick.
I believe that the strong international results are going to convince people in the U.S. that they should go. Usually it’s the other way around when movies open in the U.S. first and I think if you look back, I don’t know of any case where COVID spread has come out of movie theaters so I don’t really understand. I understand people are cautious, but personally I think movie theaters are safer than restaurants.
DEADLINE: Regarding Tenet, what kinds of promotional activity has IMAX been doing internationally?
GELFOND: We’ve been doing a fair amount because Nolan and IMAX are kind of simpatico in a lot of ways. Chris wants his movies to be seen in IMAX and he shoots with our cameras, we’ve been partners with him for over 10 years. We’re much more involved in Chris’ movies than in others. Each year we pick out certain titles that we’re going to market harder and invest more in and this was one of those titles.
DEADLINE: In terms of other movies that you’ve been doing with IMAX cameras, what else is on the docket?
GELFOND: A lot of Hollywood movies besides Tenet. The Bond movie was shot with our film cameras, Wonder Woman was shot with our film cameras, Black Widow has special aspect ratio even though it wasn’t all done with our cameras. Top Gun: Maverick, which moved out of this year, was shot with our cameras so it’s a very active year.
DEADLINE: How does that work financially when they use your cameras?
GELFOND: There are two models. Sometimes people pay us to use the cameras, but it’s not a big money maker for us because we like to encourage the filmmakers to do it so we’ll do it at cost generally, or in certain instances we’ll subsidize it.
But it creates a marketing buzz for the movie so it’s almost a natural curation. When you hear “filmed with IMAX cameras,” it means something special. But also for us the indexing is a lot higher, I think for Dunkirk we did something crazy like over 20% of the box office and that was because it was filmed with our cameras. So even though it’s not a money maker, we do make more money because people do seek it out in IMAX.
DEADLINE: What’s happening with IMAX’s work with local-language movies? As we’ve seen in the reopening process, many of the titles that are making the biggest impact can be local as with Korea, Spain and France.
GELFOND: We’re doing a lot more local-language films in different territories. We’re doing one or two Russian films, one or two Indian films, we just did Peninsula in Korea. We’re going to lean more heavily on our international markets with local content.
DEADLINE: Looking towards the rest of the year, you feel bullish?
GELFOND: I’m bullish about China and Korea and a lot of the Asian territories. Europe we just have to see because it’s just getting going. The U.S., where it’s safe, I think people will come. We did a little bit of research and we looked at whether COVID is going up or down and looked at box office and there’s a pretty strong correlation. When the virus goes down, people come out to go to the movies.
DEADLINE: And looking forward to 2021, it feels like there could be a big new movie virtually every weekend. There are probably some shifts still to come, but what is your outlook on next year? If there’s a tentpole every weekend, how do you manage that?
GELFOND: You try. If they’re from the same studio they are usually amenable to sharing screens. So if there’s a tentpole that’s more family oriented we can play that during the day and the other one later. We’ve done things like that before.
It certainly looks like an exciting year on paper. Marvel has something like five films scheduled for next year. My guess is they’ll move some of that around, but that’s a lot. Jurassic World is next year and then Top Gun got moved to next year. I think Mission: Impossible is next year, so there’s an awful lot going on. That’s a high class problem, right?