Imax, theater chains stage battle of the big screens
Large-format theaters, whether Imax or another brand, have been rising in popularity as big chains try new ways to grow in the United States and Canada, where attendance has been softening for a decade.
The New York Times
LOS ANGELES — On the surface, it’s just an old-fashioned game of Hollywood tit for tat. Cinemark, the nation’s No. 3 theater chain, promotes its growing network of extra-large movie screens, and Imax, the standard-bearer in the format for decades, has reacted with popped claws.
“The moviegoing public absolutely loves our premium large-format screens, and studios are noticing the impressive results,” said Timothy Warner, Cinemark’s chief executive.
Richard Gelfond, Imax’s chief executive, said in response: “If you blow up a movie or put it on a larger screen without the proper technology, which is what is happening, you create a blurry, worse image and in a way mislead the customer.”
Move beyond the saber rattling, however, and a more complicated picture emerges — one that has less to do with a business threat for a still-surging Imax, analysts say, and more with the big chains’ desperation to find new ways to grow in the United States and Canada, where attendance has been softening for a decade.
“Cinemark and the other chains realize that U.S. attendance isn’t increasing long term, so they need to get more money out of the same person to grow the core business,” said Townsend Buckles, a media analyst at JPMorgan Securities. “Adding large-format screens and other premium offerings at an upcharge is one way to do it. It’s a smart strategy.
“But we’re not worried for Imax, which has built a brand moviegoers recognize as being the best visual experience,” Buckles said. “It brings the fan who wants to see a movie in the absolute best format and is willing to drive across town to find it.”
Imax has steadily expanded beyond its origins as a museum curiosity to become a multiplex fixture in 58 countries. Its theaters have become so popular in China that when the Chinese agreed in 2012 to let more Hollywood movies play there, government officials named the Imax format as one that would receive special consideration from censors. Last year, Imax had $727 million in ticket sales, a 17 percent increase from 2012.
Large-format theaters, whether Imax or another brand, have been rising in popularity even as the broader moviegoing public sours on 3-D. (About 75 percent of Imax’s releases are in 3-D.) These theaters, analysts note, offer much more than oversize screens. They typically feature significantly better sound systems and more comfortable chairs.
As much as Imax would like to have the extra-big-screen market to itself, “There is room for both,” said Phil Contrino, chief analyst of BoxOffice.com. “The big picture, no pun intended, is about how the big chains, more than ever, are trying to offer an experience that is miles ahead of the one you can have in your living room.”
Cinemark and the country’s two biggest theater chains, Regal Entertainment and AMC Entertainment, together operate hundreds of Imax auditoriums, which use proprietary technology to project movies in extra-high resolution on floor-to-ceiling screens. Ticket buyers pay an extra $3 to $5 to watch movies in them. Imax collects fees from its chain partners totaling about 20 percent of ticket sales.
Five years ago, the chains — led by Cinemark — started using off-the-shelf digital technology to build their own large-format theaters, which they operate under a grab bag of brands, including BigD, ETX, Prime, RPX, UltraAVX and XD.
Just as with Imax, moviegoers pay a premium to watch movies in these auditoriums. Unlike with Imax, the chains do not have to share revenue with another exhibitor.
There are now 365 nonmuseum Imax venues in North America. Together the chains operate 325 of their own large-format screens. Recognizing that the mishmash of formats — ETX, RPX, XD and so on — confuses consumers, Cinemark has started referring to the new group of large-format theaters as PLF, or premium large format, which may or may not help.
Imax has also been sparring with a competing large-screen system in China that, Imax has charged in several courts, relies on technology stolen from its Canadian offices. The last thing Imax wants is the appearance it is under fire on two fronts.
But analysts say that for the most part, Imax has nothing to worry about in the United States until at least 2021, when large clusters of its leases begin to expire and theater chains must decide whether to renew or convert to their own label, as Cinemark did at one location in Los Angeles.
Studio executives note that Imax also enjoys a strong relationship with marquee directors like Michael Bay, Brad Bird and Christopher Nolan, who have come to insist their films be released in the format. (Put another way, Imax releases are now how directors determine if they are in Hollywood’s big-boy club.)
“I view all the others as just really big screens,” said one studio president, speaking on the condition of anonymity because he did not want to be dragged into the public ruckus. “Great. Super. We’ll take that money. But Imax is still Imax.”