Movie theaters: ‘Reports of our death were premature,’ IMAX CEO explains

IMAX CEO Richard Gelfond speaks with Yahoo Finance Live about the success of his company's film "Avatar: The Way of Water," box office sales in China, 2023 blockbusters, and why horror movies are becoming increasingly popular.

Video transcript

DAVE BRIGGS: James Cameron's "Avatar-- The Way of the Water" has now crossed the $2-billion mark in the world box-office grosses, $227 million of which has been on IMAX screens.

Here now to discuss the business of blockbusters is IMAX CEO Richard Gelfond, and Yahoo Finance's Allie Canal here with us as well. Richard, good to see you, Allie as well. How significant was yet another massive blockbuster hit from James Cameron?

RICHARD GELFOND: Well, I think particularly at this time very significant because if you remember coming out of the pandemic and China being closed, there were a lot of odds against movies coming back to prepandemic levels, and the studios made that worse with PVOD and streaming. Like, if there was ever a plague where everybody tried to kill us, they did.

And I think reports of our death were premature. And obviously a film that's done this kind of business-- and in IMAX, we did 12% of the world's box office on 1/2 of 1% of the screens. So I think it's kind of like a statement. It's like the Eagles this weekend or the Bengals. It's like--

DAVE BRIGGS: Playing to your audience here, Rich.

RICHARD GELFOND: --yeah, come at me. Come on.

ALEXANDRA CANAL: Go Birds. I've just got to throw that out there. But you mentioned China, and "Avatar" doing well in China. Those tickets outpacing there. But China, it's a difficult market, right? It's hard to do business there.

You guys have a lot of visibility. What is it like having a business in China? What do you think the future holds for this? Because you have seen some successes lately as well.

RICHARD GELFOND: Well, we've been in China for about 20 years. And we have 800 screens in China, which compares to 400 in North America. And I think by some measures we've been the most successful kind of Western company in China.

And recently there's been a lot of good things that have been going on in China. So obviously the COVID restrictions were lifted. People got sick, but they didn't die. And I think the movie industry is largely back.

Also, two Marvel movies got in, "Ant-Man" and "Black Panther," in the last couple of weeks, and "Shazam," a Warner Brothers movie, got in. So I think we're seeing that go back to normal.

And this has become one of only two movies we've ever had in China over $50 million, "Avengers-- Endgame" and "Avatar 2." So I think it's looking a lot better, certainly, than it did a couple of months ago.

ALEXANDRA CANAL: And when we think about the 2023 box-office slate, do we have a film that will perform as well as "Top Gun-- Maverick" did in 2022? And if we don't, what does that say about the box-office total for this year, and will we be able to reach those prepandemic levels again?

RICHARD GELFOND: So I think you never know, right? Even when "Top Gun" came out, you didn't know where it was going to go. But there are a number of really anticipated films this year. There is "Ant-Man," which comes out soon, and it's now part of the MCU. They repivoted a little bit. And then you have "Mission Impossible" now that Tom not only has transcended his former audience, has picked up a whole new audience. There's "Fast 10." There's "Oppenheimer." "Guardians of the Galaxy" was voted the most anticipated film this year. There's "Aquaman."

So especially for IMAX, we're in the blockbuster business, and the question is, how many blockbusters are there? So even if there's not one that does [? $1,500,000,000, ?] I think there's so many that, you know, we feel very good about the year.

DAVE BRIGGS: It seems like if there's a part of movies that's gone [INAUDIBLE], it's probably romantic comedies. In its place, is horror what can replace it, bringing people back to theaters? Certainly those big action blockbusters can, but what else can bring people out to the theaters?

RICHARD GELFOND: So, you know, I'm not sure that the movie industry is going to go back to where it was before because there are a number of different challenges coming up like obviously streaming is one of them, budgets to go out and market smaller movies.

I think, fortunately for us, the business of blockbusters is a really strong business. And, you know, so I think '22-- we haven't reported yet, but our outside China box office was pretty similar to what it was in '19. So for us, that's where we focus.

But, you know, I think there are challenges in the traditional movie business, and I think there will probably be less screens, particularly in North America, and I think they're going to have to find different audiences.

We have an IMAX live offering. I think live content may replace some of what was lost before, and I think you're going to see people try different things-- maybe gaming over time, you know, sports maybe. But I think, like many businesses, there are going to be changes, and hopefully for the better.

DAVE BRIGGS: You said the magic word. I would love to see more sports in theaters. I know the college-football playoff was aired at something like 75 screens. I think that's a huge opportunity.

Amazon we learned today has an Easter release of Ben Affleck, Matt Damon's Nike biopic. In terms of their impact on the business-- 12 to 15 theatrical releases a year, around a billion in spend. How significant is their entry for the movie industry?

RICHARD GELFOND: I think there's no question it's a good thing. And so what you're referring to is Amazon saying they're going to premiere their movies theatrically. I think because of what you said, losing some of those midlevel movies, being able to bring in streaming content like from Amazon-- Netflix did "Knives Out 2," and I think the Apple is going to have some windows around some of its movies. And thank you for reminding me. I kind of missed that one as another thing that will make up for some of those movies diminishing, but I think-- I think it is a big deal.

ALEXANDRA CANAL: And, Richard, you sort of hinted at this, but you've repeatedly said that IMAX at its core is a technology company. It's not an exhibitor. As the industry has changed, what are you looking ahead towards when we think about technological advances and how that can add to value for both your partners as well as consumers?

RICHARD GELFOND: Well in the context of the core IMAX business, we're always innovating. You probably don't know this, but IMAX invented stadium seats. It invented the modern era of 3D. In "Top Gun-- Maverick," which you referred to before, we helped with the team that was shooting invent special cameras that fit in the nose pit.

So we're always, like, thinking of the next-- we have a new sound system that came in. Our new technology is laser, which is bigger and sharper and looks really good.

But outside the core business, we've done some other things too. So we recently bought a company called SSIMWAVE which makes streaming content better in the home, and it also makes it cheaper to send because you can figure out how much to compress it. So you could save the streamers money while contributing the same level of content. So we're always looking to follow the consumer, actually lead the consumer in many ways that we can. And, you know, that's our niche, and I think it's worked very well.

DAVE BRIGGS: Fantastic. Richard Gelfond, great to have you here in studio. Appreciate you coming in.