Exploiting the Imax premium

With 374 screens globally, Imax Corp holds a strong position in the premium cinema market. While historically screening in the 3D format (mainly educational or nature presentations), the growth in narrative 3D features in the schedules has seen the format become an increasingly important part of Imax’s business model.

Julian Stanford, UK-based general manager for Europe, Middle East and Asia, theatre development, describes Imax’s digital 3D strategy in terms of the ‘good, better and best’ cinematic experience on offer.

“‘Good’ refers to digital 2D, which improves quality to a degree but does little to enhance the overall audience experience. The main benefit is to the exhibitor through cost savings. ‘Better’ indicates alternative digital 3D systems [RealD and Dolby 3D Digital Cinema] and ‘best’ refers to the experience at an Imax 3D presentation.”

He rejects the suggestion Imax simply skims a layer of the gross from 2D and other 3D screens. “An Imax screen accentuates cinema-going and drives the complex,” he suggests. According to Imax, 19 of the 20 best-performing North America multiplexes screening Monsters Vs Aliens had an Imax screen.

The global switch to digital is pivotal to Imax’s expansion strategy. The company claims its digital technology allows the screen to be placed closer to the audience while still improving visual quality.

The company now generally installs — or more often, retrofits — a multiplex’s largest auditorium. The cost of installation/retrofitting can vary, depending on the adjustments needed, but $50,000 is the general benchmark.

Imax offers joint-venture terms to exhibitors, which is often the basis for the company’s big deals. Joint ventures allow exhibitors to develop the Imax business with a smaller initial outlay. Revenues are then split between Imax and exhibitors.

In Europe, Imax hopes to open 30 additional screens in the next 18 months, recently working with Austria’s Cineplex Kino Betrieben to bring four digital Imax screens to the territory. In North America, an ongoing 100-theatre deal with AMC will see 25 new screens this year and a further 25 in 2010.

The ‘good, better, best’ strategy is also reflected in a premium pricing structure: Imax tickets are typically 40%-45% above general 2D prices, and 25% above non-Imax 3D screens.

This premium, combined with high occupancy rates, has helped to drive Imax box-office revenues. For North American releases, Imax screenings regularly account for around 2% of screens but generate 10% of total box-office gross.

The May 8 opening weekend of Paramount’s Star Trek illustrates this, with 138 screens generating $8.5m ($62,000 per screen), 11% of the film’s opening gross.

Star Trek is an example of Imax’s other programming stream — blockbusters remastered in the large-screen format, sometimes featuring sequences shot with Imax cameras and some rendered in 3D.

“Imax remains at the top of the food chain,” says Michael Campbell, CEO and chairman of US exhibitor Regal Entertainment Group, which has 40 Imax auditoriums in its 6,782-screen chain.

“It’s long established as a powerful brand, and attaches a higher premium.”

Imax screens by region

Source: Imax Corp