How Box Office Trends, Before And After The Pandemic, Benefit IMAX

Not only could theater closures lead to an increased market share for IMAX, so too would a further consolidation of moviegoing dollars toward the biggest IMAX-friendly tentpoles.

The Wrap is reporting that IMAX
IMAX
lost $47 million in the third quarter of 2020, which make sense since American theaters have been (at best) struggling as Hollywood has pulled almost all of its presumed biggies from the 2020 calendar. IMAX is, more so than even conventional theaters, a format that demands “big movies.” All due respect, but movies like The Broken Hearts Gallery and The War With Grandpa are not exactly ideal for “The IMAX Experience.” CEO Rich Gelfond argued concurrently the downturn could actually help IMAX by giving them a larger market share. Yes, if major US theaters or theater chains (like Studio Movie Grill, which filed for Chapter 11 bankruptcy protection yesterday in the hopes of remaining open) don’t survive, then by default IMAX will have a larger portion of available screens.

There are around 450 IMAX screens among 4,200 total screens in America, and yes many of those exist within the most profitable theaters. “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 said. “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.” But perhaps more importantly, the kind of movies (franchise-friendly tentpoles) and consumers (those willing to splurge for the theatrical experience) that exist for theaters in the aftermath could be ever-more tilted to IMAX and related PLF formats.

Yes, this is another post related to the “movie theaters as video game arcades” theory. If you recall, video game arcades shriveled up almost overnight in the mid-1990’s as the at-home consoles (Super Nintendo, Sega Genesis, Turbo Graphix 16, etc.) were able to approximate at-home adaptations of pretty much every popular arcade game. Once the next generation (Playstation, X-Box, DreamCast, N64, etc.) surpassed what could be offered in arcades, the arcades that still existed were filled with immersive experiences (driving games, shooting games, VR set-ups, etc.) that couldn’t be approximated at home. The growing affordability and quality of at-home audio/video set-ups has lessened the gap between how audiences can watch films at home versus a conventional movie theater. Ditto the kinds of films that have debuted on streaming and VOD platforms in the last several years.

So-called “peak TV” has supplanted the mid-budget theatrical movie as the place for star-driven, original (or new-to-you), adult-skewing genre fare. Something like Nicole Kidman and Hugh Grant’s The Undoing, about a wealthy therapist who realizes that her husband may be a murderer, once might have once been a Paramount
PGRE
theatrical release. The Undoing or Big Little Lies once might have been a mid-1990’s “movie for grown-ups” directed by the likes of D.J. Caruso or Gregory Hoblit. It might have earned strong reviews and maybe $120 million worldwide on a $50 million budget, which would be fine for the R-rated programmer since marketing was a lot cheaper and the post-theatrical revenue streams (VHS, pay cable, basic cable and finally network TV) were sturdier. But in 2020, it’s a potentially bloated six-episode HBO miniseries.

That goes for romantic dramas and rom-coms (like Netflix’s
NFLX
just-released Emma Roberts vehicle Holidate), legal thrillers and star-driven comedies. Streaming, TV and VOD has approximated, in terms of star power, screenwriting and production value, maybe 90% of what might be released in a first-run theatrical multiplex. All that’s arguably left are the mega-budget tentpoles, or the kind of films that benefit from IMAX. When theatrical moviegoing is again a safe activity even in America, the marketplace will be even more skewed toward a smaller number of “big” theatrical releases (Shang-Chi, F9, The Matrix 4, Ghostbusters Afterlife, Top Gun: Maverick, etc.). The theatrical moviegoer that still exists in 2021 and beyond may well be the sort who only goes to see the biggest movies in the biggest (and most polished) possible format. That’s IMAX in a nutshell.

Universal’s deal with AMC, which allows Universal to put theatrical releases onto PVOD after as little as 17 days after opening day, could start a trend of smaller and more varied studio pictures getting a three-week theatrical run as glorified marketing for the PVOD (or streaming) debut. Think WB’s Nancy Drew and the Hidden Staircase or various “prestige” Netflix titles. Nonetheless, the consumer still desiring the theatrical experience in 2021 (as opposed to staying home) will also be that much more likely to splurge for IMAX, Dolby Cinema or AMC Prime. It won’t just be that IMAX will have, by default, a larger portion of existing theater screens as a result of closures. The theatrical business as it exists in the aftermath will be even more heavily tilted toward movies and consumers that trend toward IMAX.