IMAX rolling ahead with 'hitching its wagon' to China

Just like a 60-foot-tall movie screen, IMAX Corporation's confidence in the Chinese market is hard to miss.

Earlier this year, the giant-screen exhibitor signed a deal with China's largest cinema operator, Wanda Cinema Line, to add 150 theatres to its circuit over the next six years. Last October, the company's China subsidiary went public on the Hong Kong Stock Exchange.

In a recent interview with China Daily, Imax CEO Richard Gelfond explained how the company has "hitched its wagon" to China, the second-largest movie market in the world and one that's expected to pass the US as number one by 2017.

Q: How's Imax doing in China?

Imax has about 350 theatres in China today and another 40 theaters that are scheduled to open over the next several years. We license our technology to our partners, about 45 Chinese exhibition chains. Wanda is the largest of them.

In China, we deliver both Hollywood movies and local movies. We work with almost every major studio in China, including China Film Group, Bona Film Group, Wanda, Huayi Brothers and many others. We also work with some of the leading directors, including Zhang Yimou, Feng Xiaogang and Jackie Chan.

Q: Why China?

We had a combination of good judgment and luck. We entered the market in the late '90s, a time when the multiplex expansion was booming and the quality of Chinese films was really increasing. So we invested capital and resources. Now we have about 100 employees in China, almost all Chinese.

Cinemas in China have grown from around 2,000 to 35,000 (since our entrance), and Imax has grown from five screens to 750 - all fueled by Chinese consumers' increased disposable income, spare time and willingness to the see the best movie experience possible - and that's Imax.

Q: How does the Chinese market differ from the US?

It's pretty much growth versus maturity. China is a relatively new market in entertainment, and Chinese consumers really seek out the newest and best experience. People are willing to try different things and see what they like, and if they like it, they go back for more. Fortunately, they like Imax.

In other markets, people may be more used to existing patterns and are less likely to try different things. Also, Chinese consumers tend to be very loyal, so brand and reputation are very important.

The US market is very mature. It is growing very slowly, adding very few screens. The studio system in the US is entrenched, while China is much more dynamic and growing like crazy. There are always new studios, new technology companies and a lot of money pouring in.

Q: Do you foresee any obstacles slowing the company's expansion in China?

I don't. A lot of outsiders say that we can't keep up this growth rate, or real estate is changing, but we are in 121 cities with 48 different partners. I think the appetite for entertainment is big enough in China that over the next five years, I'd be really surprised if there's anything that slows us down.

You always have to be attuned, as a businessman, to the risks you don't see. I'm not sure what government policies will be; we'll have to pay attention to that, and the long-term health of the economy and disposable income - the kinds of things that would be obstacles in any market in the world.

Q: What's next? What's new?

We are always innovating and providing new technology. We just invented our next generation "Laser" projection system and installed it in China, and we plan on broadening our business to other areas.

Virtual Reality (VR) is definitely one of them. We just established a joint venture with Google in the US to develop a camera that we'll use worldwide to create special VR content. We have a special headset, which is like the Imax of VR, with a much larger, more immersive experience. We are launching the first test sites around the world in a few months and I believe one or two of the first six will be in China.

Q: Are Chinese films catching up to Hollywood?

Chinese films are definitely making a lot of progress. There are more skilled cameramen, more skilled directors of photography and more skilled directors. Budgets are going up, hence you'll see better special effects, higher paid actors and higher production value. Over time, the gap between Hollywood films and Chinese films will narrow.

Of course, the Chinese will have to deal with some issues on the content that they produce. Is it distributable on a worldwide scale? I think that's the aim, but it hasn't been achieved yet.