Name: IMAX CEO weighs in on streaming versus theater experience
Uploaded: 2020-05-22
Duration: 7 min 54 s
Description: Rich Gelfond says most people are eager to get back to seeing movies the traditional way.

[MUSIC PLAYING] SUSIE: Hi, Rich. Great to see you again. You know, this is the time of year that so many people get excited to go to movie theaters and see those summer blockbuster films, and especially the ones on the big IMAX screens. But that's not going to happen this year. Just about every single movie theater in the country is shut down because of coronavirus. What does all this mean for IMAX? RICH: It's not only the country Susie, it's the world. So IMAX has got about 1,600 screens in 82 countries. And we've been pretty much closed since mid-March. And in China, we had closed since January. So it means no revenues and it means trying to reimagine how to open them and how to open them the right way and how to make sure people are safe. But for now everything's closed. SUSIE: To what extent has consumer behavior changed during this shutdown, that they're more comfortable staying at home and in fact they're content watching Netflix movies in their living rooms? RICH: So, Susie, I don't know who you've been talking to, but most of my friends are bored watching Netflix movies. They've found their favorite shows. They've been through them two or three times, and they can't wait to get out of their home. So I don't think consumer behavior has really changed at all. We've seen the tip of that iceberg with states that have started to open, and people, you've got to kind of hold them back from doing what they want to do. And internationally, some theaters have started to open. So in the Netherlands, they're at diminished capacity. But in the Netherlands, at that diminished capacity, our first 10 days of shows have sold out with interstellar reruns. And in the US and Texas, where Santikos theaters opened, their second weekend was up 30% from their first weekend. So we've got to do it safely and we've got to make sure people feel safe in the environment. But I think a lot of people are going to go back to the movies. SUSIE: Well, so tell us about the movie titles that IMAX is counting on to be box office hits the rest of this year. What are the movie titles? And are they going to be exciting enough to lure people in to IMAX theaters? RICH: So one of the few silver linings of this horrible situation is that you take films that were scheduled to be released all year this year and you're going to compress them into a six-month time period. So I don't think it'll be a big problem to find good films currently scheduled for the summer. And all these things could move around a little bit. Or Chris Nolan's new movie called Tenant, which is a blockbuster time travel action adventure is supposed to be really great. Wonder Woman 2, which is also Gal Gadot again. Both of those were filmed with IMAX cameras. Bond in November, filmed with IMAX cameras. Top Gun 2 over Christmas, Tom Cruise. And then there's a lot of other movies around that. So there's a pretty good slate. And I think when the theaters open there should be lots of things to show. SUSIE: Let's talk a little bit about some changes that have also been impacting the movie industry during this unusual time that we're going through. Let's take the case of Universal Pictures, which decided not to wait for theaters to open and went ahead to release its animated film Trolls World Tour. And it went straight to video on demand. And as you know, it created this big brouhaha. Is that the wave of the future? RICH: Absolutely not. And it's important to say that although that got a lot of headlines, every blockbuster has been redated theatrical. So the ones I just went on with you, and also a movie by Universal called Fast and Furious was redated for next year. Bond, which Universal is distributing worldwide globally outside the US, was redated theatrically. So that was the exception, not the rule. And the reason it happened was Universal reportedly invested about $50 million in marketing, and it was supposed to open in early April. So if they had moved the date of that movie to later, they would have had to spend all that marketing money relaunching it. So they made a decision to put it on streaming right away. And it did pretty well on streaming. SUSIE: Well, actually, it was a financial success story. I mean, the numbers were phenomenal. If other studios do what Universal did, this would impact your business. RICH: So let's be clear, it wasn't a financial success story, and it wasn't phenomenal. What Universal said was that for the first three weeks it netted them about the same results as a North American release would give them. But if it was a theatrical release, it then goes to streaming, it goes to television, it goes to electronic sell-through, and they lost all of those subsequent windows. Also, internationally, where Trolls I was a huge success, it didn't play. And it's playing now as kind of a second-run movie, and then it'll go to Universal's streaming service. So I think maybe it'll be OK at the end of the day and maybe it'll make money, but one thing's clear-- it wasn't a phenomenal financial success. And actually, what triggered a lot of the brouhaha you referred to is they billed it as a big financial success and said it was going to change the model. And a lot of the exhibitors called them out on that, and that's what became the controversy. But we're in the blockbuster business. And blockbusters aren't going to streaming, because the financial model doesn't work for the reason I went through for you. SUSIE: Rich, I'd like to get your outlook for business in the US economy. You know, here we are at the halfway point of the year. And at Fortune, we just did a survey with the CEOs who ran Fortune 500 companies. And the majority of them said that they don't believe economic activity will return to pre-pandemic levels until the year 2022. So how are you preparing for that possibility of maybe a recession or just a severe downturn? RICH: Well, IMAX had a very strong balance sheet coming into this. So as of the end of last year, we had $100 million in cash and no debt and we drew down our revolver at the beginning of this year. Our burn rate is $10 million a month, and we have $350 million in cash right now. So we're trying very much, Susie, to take the long-term view. So if it opens two weeks later or a month later, that's not how we're running our business. And that's not how we're building it. We're building it for the longer term. We're using this downtime to try and innovate. And whether it's looking at things like how we can improve our internal things like work streams, using the cloud, or how we could use artificial intelligence to better up-res some of our movies. We've faced tough times before. And as a culture, we really try to use these times to figure out how to make ourselves stronger in the long run. And that worked the last time, and I expect it to work again. 

Rich Gelfond says most people are eager to get back to seeing movies the traditional way.

IMAX CEO weighs in on streaming versus theater experience

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Gelfond says people want to see movies the traditional way.