China expansion to help Imax hit US$1b box office
Bloomberg in Toronto
Imax chief executive Richard Gelfond forecasts annual box office receipts will almost double to US$1 billion in the next few years as the big-screen cinema firm expands in China, Russia and the Middle East.
"We've identified 1,700 target markets to put Imax theatres into in the world, and about 500 of them are in North America, so over time the vast majority of our revenues are going to come internationally," Gelfond said in an interview at the Toronto International Film Festival.
"China, we used to say we could do 90 theatres; now we have a backlog of close to 400," Gelfond said on Monday. "In the next couple of years, our box office will get to a billion dollars."
Imax, based in Ontario, Canada, had 767 cinemas in 54 countries on June 30. Its global box office receipts were US$620.6 million last year, compared with US$417.2 million in 2011, company documents show.
Imax cinemas present films in two-dimensional and three-dimensional formats on large-format screens with specialised sound systems.
"China is first and foremost on their radar as an opportunity, and it's an underpenetrated market when it comes to cinemas and distribution," said Tony Genua, a fund manager with AGF Management.
Genua said the firm is increasingly leaning towards revenue-sharing agreements, paying for part of the cost of building the cinema in return for part of the box office, providing a source of recurring revenue.
Imax said it signed a revenue-sharing agreement last week to add three Imax cinema systems in Dubai, Qatar and Bahrain.
Gelfond forecast international ticket receipts will account for 60 per cent of the firm's total in the next few years, up from about 56 per cent.
"In China, we first went in about 15 years ago, when we weren't as politically threatening as Hollywood," said Greg Foster, chief executive of Imax Entertainment. "We got in on the ground floor. China is its own market, and if you treat it like Omaha you're going to be in trouble."
An Imax ticket can cost four times as much as a regular ticket in India, and there is at least one cinema in Russia that charges US$80 a ticket "that does very well", Gelfond said.