3-D push ups the ante for Imax
Exhibitor looking for validation of new model
By Etan Vlessing
March 26, 2009, 06:26 PM ET
TORONTO -- Hollywood is looking to this year's influx of 3-D films to prove the viability of the format. But Imax, encouraged by recent outsized boxoffice performances, looks to use it to build further momentum toward profitability.
With DreamWorks Animation opening its 3-D tentpole "Monsters vs. Aliens" on Friday on 200 of the company's giant screens, Imax co-CEO Rich Gelfond said the large-format exhibitor's digital rollout has begun to show financial benefits in recent quarters, and 3-D could further validate the new model.
"Imax hasn't had a great business model," he said at a recent investor conference. "2009 is really the year for Imax."
As evidence, he highlights that Imax has attracted disproportionally big audiences who are willing to pay premium ticket prices for key recent releases, including "Jonas Brothers: The 3-D Concert Experience" and "Watchmen." They have captured 10% or more of the film's overall boxoffice on less than 2% of the total North American screens, Gelfond touted.
Jeff Blaeser, an analyst at Morgan Joseph & Co., said 3-D is an added selling point for Imax, though much depends on the quality of the movies.
"The Imax experience is the reason for the strong (boxoffice) showings of late," he said. "The movie 'Watchmen' drew 14% of its boxoffice at Imax on a fraction of the theaters, and that movie doesn't (even) have a 3-D element. Consumers must want to see the movie in the first place, and the 3-D is an added benefit."
The 3-D push could shine a brighter spotlight onto Imax at a time when its management team said financial trends look to be turning a corner. For 2008, Imax reported a loss of $33.6 million, up from $26.9 million in 2007. However, the company began seeing losses narrow compared with the year-ago periods during the back half of the year.
Imax's digital business model is a key.
The firm traditionally used 70mm film to distribute and exhibit studios' movies. By converting to digital, Imax has removed print costs -- about $22,000 for a 2-D print and $45,000 for a 3-D print -- from the equation.
Additionally, its joint-venture model has cut the market-entry costs for exhibitors to $150,000 to retrofit a theater with a digital-projection system. Imax and exhibition partners then split boxoffice revenue.
Given all this, Blaeser predicted that Imax slowly will return to strong profitability as it continues its digital rollout, which includes 3-D presentations.
Consumers have to cough up more money for those. Ticket pricing varies from market to market, but while traditional 35mm 2-D tickets are in the $10 range, Imax charges $13-$14 for 3-D films, with non-Imax 3-D prices at about $12.
Gelfond said that even during a recession, Imax fans are willing to accept such premiums, touting the format's qualitative difference, which stems from a larger viewing pyramid created between a viewer's seat and the four corners of the screen. It means that 3-D objects seen through Imax polarized glasses appear lifesize and come further out into the audience than in rival digital 3-D theaters.
After "Aliens," Imax has scheduled Warner Bros.' anticipated "Harry Potter and the Half-Blood Prince," with select exclusive scenes in Imax 3-D, for the summer, "Disney's A Christmas Carol" in November and James Cameron's "Avatar," from Fox, in December.
The company's 2010 slate already includes 3-D fare like Warner Bros./Imax's "Hubble 3-D" and two DWA titles: "How To Train Your Dragon" and "Shrek Goes Fourth." 3-D push ups the ante for