The state of film theaters in North America stays dire amid the coronavirus pandemic, and Imax in its earnings on Thursday reported a lack of $47 million in Q3, however CEO Rich Gelfond put a silver lining on the downturn within the business and painted an image of how theater closures may really assist Imax.
Gelfond defined that there’s a situation by which, ought to extra screens throughout the nation shut, there’s an opportunity it may improve Imax’s market share. There are roughly solely 450 of the large-format film screens out of over 42,000 screens throughout North America, and lots of of these solely seem in multiplexes which can be, in Gelfond’s phrases, “the most productive and profitable.”
“In 2019, about 85% of our box office was generated in the top 20% of North American complexes. In North America in 2019, only 5% of our box office was generated from the bottom 65% of multiplexes as ranked by revenue,” Gelfond stated. “In other words, approximately 3,500 North American mid-to-low-performing multiplexes out of 5,400 could disappear overnight, and we believe that it would have no material direct impact on our business.”
Of course, a few of these most-profitable theaters are probably in markets that stay utterly closed, notably in New York and Los Angeles. And Imax, like another theater screens, must account for decreased capability inside its theaters. But Gelfond says that even when the business contracts, notably in North America (Imax additionally has screens in Europe) it may not make a distinction.
“The approximately $375 million in domestic box office we produce in a typical year is what we should produce even if the industry shrinks around us. In short, should the industry contract, our theaters are not the marginal theaters and our consumers are not the marginal consumer,” Gelfond stated. “In fact, based on our preferred locations and premium product it’s feasible we could gain market share in such a scenario.”
Imax had extra income than was anticipated, however its web loss for Q3 was nonetheless at $47.2 million. Though a few of its income was boosted by native Asian motion pictures in these markets, its Q3 income was down 56.9% from the comparable quarter in 2019. Last yr, Imax earned $9 million, or 21 cents per share.
This can also be a extra constructive tone from Gelfond after he argued again in September at a Goldman Sachs convention that premium VOD was a “failed experiment” for the blockbuster motion pictures that went direct to streaming as a substitute of to theaters.
“The numbers haven’t worked in a pandemic, so how would they work in a non-pandemic,” he beforehand stated. “Of the movies that were postponed, very few went into PVOD or streaming, and I should be clear I’m talking about the blockbuster movies — the movies that Imax does. So I believe that the studios are very committed to theatrical releases, and they’ve said it.”
Read extra about Imax’s earnings right here.
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