Imax aims to bank $1 billion

On March 23, as early numbers for "The Hunger Games" started coming in, Imax CEO Richard Gelfond was plotting a major push into Italy from a posh Rome hotel suite overlooking the Pantheon, the latest expansion effort for the world's leading giantscreen theater exhibitor, which operates 550 venues in 48 countries.

"We are expanding our footprint in Italy, and there is a plan to grow our presence in Europe overall," says Gelfond, before taking a call from New York with the boffo "Games" returns -- $10.6 million of the pic's $155 opening weekend windfall from Imax screens.

The company's success offers insight into the evolving world of exhibition. As traditional exhibs are feeling the one-two punch of global economic downturn and Internet piracy, they are looking for ways to make moviegoing a must-get-out-of-the-house event. Imax is doing this by focusing on big-scale films -- with the studios increasingly eager to cooperate -- and on global expansion.

The results are paying off, with a 33% increase in locations in 2011 and a goal to generate close to a billion dollars in box office this year, Gelfond says. He adds that the plan is to open more than 100 new theatres in 2012, about half under revenue-sharing agreements, and the rest under sales pacts.

In February, as Imax was making a huge leap in China, where it has about 100 active screens and 225 in various stages of development, Gelfond hired former Paramount Intl. prexy Andrew Cripps as Imax prexy of operations in Europe, the Middle East and Africa, where it operates 96 venues.

In a further sign of its expansionist mode, late last month the company upped exec Mark Welton to prexy of Imax Theaters. Among other duties, Welton will be overseeing Imax's new projection technology efforts, following last year's deal with Kodak for technology patents that put it at the forefront of laser projection technology. The plan is now to start installing such projectors starting next year.

In Italy, Imax is advised by consultant Nicola Grispello, a former Warner Village Cinemas exec. It now has a dozen Italo deals under negotiation, preamble to a "significant presence" beyond its current two Northern Italian locations. Expect a Rome Imax theater soon.

As Gelfond gazes over the Pantheon, it's the company's Euro plans that have his focus. "We hired Andrew, needing a more senior executive to help us tailor our programming specifically for Europe, both in terms of Hollywood movies and local product," he says.

Cripps points to "Madagascar 3: Europe's Most Wanted" as a good example of Imax's new content strategy on the Continent. While not targeted as an "Imax Experience" release in the U.S., where the exhib appeals mostly to a fanboy audience, "Madagascar" is being converted to the Imax format for specific European territories "where the 'Madagascar' franchise is extremely popular and where family animation in Imax is still good business," says Cripps. Such territories include Russia, Ukraine, and Poland.

Notably, Imax is also starting to release European movies converted to its format. The first will be popular Gallic toon "Houba! On the Trail of the Marsupilami," helmed by Alain Chabat, about a spotted yellow monkey-like creature, which launched April 4 in Imax theaters in Gaul.

Russian blockbuster "Stalingrad," by Fyodor Bondarchuk, will follow, converted to the Imax 3D format for release in Russia and the CIS in October 2013.

"If you look at the economics, you have to have about 10 Imax theaters in a territory before you can afford to convert local product," Gelfond says. "But I think once we get that critical mass, if we find the right movie, we will definitely do it."

Russia is among Imax's fastest growing territories, with 22 theaters -- up from four in 2010 -- including a new VIP 80-seat Moscow venue run by local exhibitor Formula Kino, where wealthy Russians pay up to $100 a seat. And 46 more theaters are expected by 2014. Imax generated a per-screen average of $3 million in Russia in 2010, the highest for any territory. (In the U.S., the per-screen average was $1.2 million.)

But, while biz in Russia is humming, other parts of Europe could be tougher to crack. Several major Euro multiplex circuits have been exploring their own large-format alternatives, such as Vue Xtreme in the U.K.

Cripps, however, says "Imax copycats" don't enhance the movie itself. "They just stretch it so it fits on a larger screen (and distort the picture in the process)," he maintains. "We take the movie apart in post-production, we remix the sound track, we change the format, we rebalance the color, we re-edit parts of the picture. What's more, in many pictures, the director began working with us before the film was shot and collaborated with us on the set and in post-production."

Gelfond notes that some of those directors have included Steven Spielberg, Christopher Nolan, Peter Jackson, Tim Burton, and Brad Bird. "The studios are supportive," he says. "They aren't going to give their best product to the next guy starting his own theater."

With Hollywood increasingly eager to have its pics blown up, Imax's roughly 25-pic slate for 2012 is especially strong, comprising "The Dark Knight Rises," "Skyfall" (the first Imax James Bond pic), and "The Hobbit: An Unexpected Journey," a slate that may help address complaints that Imax hasn't always provided a steady flow of profitable titles, which impacts the economics of its revenue-sharing deals.

Analysts, in fact, have recently questioned whether Imax moves hot titles too quickly out of its venues, especially "Hunger Games," which it took down after only a week to make room for "Wrath of the Titans." ("Titans" bowed to $4.7 million Stateside in 290 Imax runs, repping 14% of the pic's gross.)

Meanwhile, Imax's long-gestating expansion in China, boosted in February when the Chinese government decided to ease its quota to allow more 3D and Imax pics through its borders, is an example of how quickly the exhib is growing.

"I think part of what happened in China is that people started going to see movies in multiplexes there around 2005 in a significant way, just as we were coming in," Gelfond says. "So Chinese people grew up with Imax as part of their moviegoing experience."

When "Avatar" opened in 2009, there were only 13 Imax theaters in the nation. Since then, local releases are becoming an integral part of Imax's Asian programming, most recently with Tsui Hark's martial arts actioner "Flying Swords of Dragon Gate," Imax's first Chinese 3D pic, which pulled more than $10 million to become its highest grossing local title and the third-highest grossing Imax title in China, behind "Avatar" and "Transformers: Dark of the Moon." Korea's first Imax 3D pic, actioner "Sector 7," broke local box office records in August 2011.

Over the past 12 months, Imax theaters in China have grossed an average of $1.7 million per location.

Imax also has been busy lately establishing a footprint in South America and India, Africa and the Middle East. On March 30 an Imax theater opened in Nairobi's 20th Century Plaza. Another is expected to bow in Cairo later this year. Gelfond flashes the Bat Signal to note the speed and extent of Imax's expansion.

"In 2008, we opened 'The Dark Knight' at 149 theaters. When we open "The Dark Knight Rises" this summer, we will open it in about 600 theaters. "Four times the size in four years: I think that says it all," he says.

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