Yahoo Finance IMAX CEO on movie industry rebound: 'It’ll be like the roaring 20s'
There appears to be light at the end of the tunnel for the movie industry, which was ravaged by the coronavirus pandemic. After a record year in 2019, box office sales globally plummeted 71% last year as movie theaters struggled with pandemic-induced shutdowns and capacity restrictions, according to Comscore.
IMAX CEO Richard Gelfond told Yahoo Finance Live that with the COVID-19 vaccine rollout, he’s hopeful the movie industry will bounce back by the summer.
“There's a lot of terrific movies, almost an embarrassment of riches, because a lot of [films] have moved forward from '20 to '21,” said Gelfond. “I think by the end of the year, we're going to see an industry that resembles the one we saw in '19.”
Gelfond said post-pandemic, movie chains will be focused on blockbusters. Some of the highly anticipated films that Gelfond is banking on this year include “Top Gun: Maverick,” “Black Widow,” and “Fast & Furious 9,” all of which had their planned 2020 releases pushed back to 2021.
“I think during the pandemic people have gotten used to streaming, and I think the economics of non-blockbuster movies make it feasible to do either a simultaneous release in theaters and online, as well as maybe just an online release. So I think for smaller movies and more niche movies, you'll probably see more things online and less choices in the theater,” said Gelfond.
“But I think for blockbuster movies, if anything, I think it'll be like the roaring '20s,” he said. “People will be itching to get out of their homes, and they're going to want to socialize with other people, and they're going to want to enjoy event experiences like concerts and big movies with other people.”
IMAX (IMAX), which operates its big screen movie chains in 82 countries, gets about two-thirds of its annual box office revenue from outside of North America. Business has nearly returned to pre-pandemic levels in parts of Asia, where many COVID-19 restrictions have been eased, according to Gelfond.
“I think what we learned from the global box office is where places are open and people feel safe, they want to go to the theaters,” said Gelfond. “In China, a number of films this year became among the top 10 releases in Chinese history and there was still 75% capacity restriction.”
One of those films was Hong Kong’s “Shock Wave 2,” which out-earned “Wonder Woman 1984” in China in just two days, topping the local box office with $51.4 million in its debut, according to data from Maoyan Entertainment.
“In Japan, the largest movie in the history of Japan with capacity restrictions at 75% called ‘Demon Slayer’ came out,” said Gelfond. “So it seems like there's an awful lot of pent-up demand, and people really want to get out and socialize where it's safe to do so.”
Just before the pandemic-induced lockdowns in March, Gelfond says IMAX was sitting on roughly $350 million in cash. Nearly a year later, the chain is “cash-flow neutral” with over $300 million.
“Unlike other people in the industry, we're positioned well because we're global, and I think we did a lot of the right things really early,” said Gelfond.
IMAX is in an enviable position. AMC Entertainment (AMC), America’s biggest movie chain, is aiming to raise $750 million by the end of January in an effort to stave off bankruptcy, while Regal Cinemas’ owner, Cineworld Group (CNWGY), secured a $450 million financial lifeline in November.
“Because we have a big presence in China, when COVID came to the United States, we had a blueprint for how to act,” said Gelfond. “We conserved our cash. We focused on new businesses. We were very conscious of what our costs were.”
Alexis Christoforous is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AlexisTVNews.
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