Riding high on the box office revenues of Avatar and Alice in Wonderland, and the optimism about the future of 3-D movies, the chief executive officer of Imax Corp. says his company is headed for a bubble.
But Richard Gelfond isn't talking inflated stock prices; he means an actual bubble, and says it's the future of the Imax theatre.
"Think of this as a tennis bubble. It is a big, big structure," he said during a conference call with analysts yesterday.
It's called the Imax Portable Theatre, and the Mississauga-based company is hoping to use the inflatable structures to help it expand into new markets and promote the brand.
The Imax Portable would be the rubber dinghy to the multiplexes' ocean liner; it could be set up anywhere, from Times Square to a rural Chinese village, giving the Imax brand the possibility of running special events for big premieres and also expanding into locations that might not have the infrastructure for a traditional theatre. Each portable would seat roughly 450 people and cost more than $1-million (U.S.) to build. Imax will launch some of them on a test basis during the last six months of 2010.
The instant theatres could work as "the world's biggest billboard" on the outside, Mr. Gelfond said. He hopes that making deals with advertisers to brand the bubble could offset the cost of building each structure.
As Imax expands, it has identified Asia as a major target market. This week, the company announced a joint venture deal to build out its presence in South Korea with as many as 15 new theatres there. Mr. Gelfond also identified Taiwan and especially China as markets that Imax will target. Imax has arranged to format a Chinese film called Aftershock for its screens this July.
"In China we've been very successful in the big cities, but there's a big rural population ... you're really missing vast population areas," Mr. Gelfond said in an interview. Those rural populations might not have money for an Imax ticket, which goes for about $20 (U.S.) in China for a 3-D film. But he said the government might be willing to subsidize rural entertainment projects, and some of the price could also be paid by a sponsor eager to market its brand there.
"It would certainly be novel," said Gabelli & Co. analyst Brett Harriss. "You go to whatever the equivalent of a football field is, you set this thing up and for a couple of weeks it's the biggest thing in that town."
This kind of expansion is possible for Imax thanks to the conversion to digital projectors, which make it affordable to distribute more movies. While a typical print of a movie for Imax theatres cost roughly $20,000 on celluloid - and twice that for a 3-D movie - a digital print of the same movie, either format, costs about $125. The capital it took to make the switch plunged Imax into losses at the end of 2008, but the company reversed that year-earlier loss to post a profit in the fourth quarter.
The digital conversion also pays off for Imax because the new 3-D releases are made for digital projectors. The format is a major boon for Imax this year. To date, the Imax version of James Cameron's 3-D blockbuster Avatar has generated more than $218-million worldwide. The film pushed new customers into Imax theatres, Mr. Gelfond said, and good early results from Alice inWonderland suggest they may be sticking around. Box office revenues so far in 2010 have already hit a record $187-million, up more than 10 times the number for the same period a year ago.
"Initially I was a little bit cautious," Mr. Gelfond said of the 3-D revival in an interview yesterday. "But you have some of the world's best directors behind it, Jim Cameron and Tim Burton and Robert Zemeckis, and the tools have evolved ... At this point there's no doubt in my mind that it's bringing audiences to cinema in general and Imax in particular."
Close: $16.29, down 10¢
Q4 / 2009 / 2008
Profit / $4-million / ($9-million)
EPS / 6¢ / (21¢)
Revenue / $54.2-million / $27.4-million
Source: Company reports