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IMAX ENTERS NEW DIMENSION

THE PURVEYOR OF BIG-SCREEN THRILLS IS TEAMING UP WITH TRADITIONAL MOVIE CHAIN AMC

By Jesse Serwer

Imax is coming out in every dimension and then some. Mississauga, Ontario–based Imax Corp. is signing deals with entertainment companies to install its equipment in regular movie theaters, and sources say this will hasten the proliferation of digital and 3-D movies in the U.S., China and Europe.

Through a deal with AMC Entertainment, Imax has gone increasingly mainstream in recent years. Beyond the nature/space “experiences” that visitors see inside the domes of such museums and science centers as the San Diego Hall of Science or the Smithsonian, Imax screens are now inside neighborhood movie theaters like Regal Entertainment Group's Lincolnshire (Ill.) 20. Offerings include 3-D prints of such Hollywood blockbusters as Beowulf and I Am Legend.

But the very things that make the Imax experience so appealing — those giant screens and the high-capacity (and prohibitively costly) film stock — have also hindered Imax Corp. from offering its product in more locations. Thus, the company has spent the past few years developing digital technology that would reduce the size and cost of the Imax package, without sacrificing quality.

Having finally produced that technology, Imax has entered into a joint venture with Kansas City, Mo.–based AMC Entertainment, the nation's second-largest movie theater chain, to bring these state-of-the-art projection systems to 100 screens across 33 U.S. markets over the next three years. The agreement, announced in December, will more than double Imax's commercial theater footprint in North America, according to the company. Imax also aims to open 40 screens in China by 2010 and about 200 in Europe, though the company has announced no time frame for the latter.

“The digital offering lowers the costs of prints in our theaters,” said Richard Gelfond, Imax's co-CEO and co-chairman. “It brings more flexibility, so during the daytime, you can show something for school groups, and at night you can show I Am Legend. From the consumer's point of view, the product won't be much different, which is a good thing. [The films] will still look and feel like the same Imax experience.”

Imax will foot the bill for the new projection systems, which cost about $500,000 each, and AMC will retrofit its existing auditoriums with 25 percent larger screens and new, Imax-friendly seating arrangements. The companies will split the revenues, though they did not disclose specifics. “These are joint ventures, not leases, which had been our traditional model,” Gelfond said. “So we'll get more of the revenues on an ongoing basis. We did four JVs with AMC kind of as a test two years ago, and they've performed extremely well. A combination of that strong performance as well as the advent of the digital product is what led to this deal.” Last year Imax posted a same-store sales increase of 65 percent against the year before.

AMC, which owns in whole or in part some 360 theaters and 5,128 screens, had been looking to boost the number of its digital projection units, says Peter C. Brown, AMC's chairman and CEO. “Deployment of the Imax digital projection systems is consistent with AMC's commitment to install digital cinema technology throughout its circuit of theatres in 2008,” Brown wrote in an e-mail. AMC currently has 171 auditoriums equipped with digital projection units. The first Imax projection systems will arrive in AMC theaters this summer, ahead of schedule. The rollout will take 27 months, according to Brown.

Perhaps the most important feature of the new systems is their 3-D capabilities. With superior picture quality and larger screens, Imax and AMC are perfectly positioned to take advantage of what has been a renaissance in the popularity of 3-D films, says Paul Dergarabedian, president of Media By Numbers. “There's a groundswell that really has been building for years,” Dergarabedian said. “Imax is definitely taking the lead here. Everyone in the film industry is going to be watching that deal very closely. If it's successful, and I think they will be very successful, other chains will be interested in working out similar deals with Imax or whatever other technology that's out there.”

DreamWorks CEO Jeffrey Katzenberg recently announced that all his studio's animated features going forward would be produced in 3-D, telling Britain's The Independent that advances in 3-D technology represent “the single greatest innovation in film-making in 70 years.” Meanwhile, though 3-D prints of Beowulf were available in only a handful of larger markets, they were a key element of the film's success.

“Less than one-third of the screens were in 3-D, but those screens accounted for two-thirds of the gross on that opening weekend,” Dergarabedian said.

If the trend feels like déjà vu, that's because it is. Exhibitors first touted 3-D as a way of luring consumers back from TV land in the early 1950s. They trotted the horse out once again in the 1980s as a way of combating the arrival of home video, outdoing the B movies of the 1950s with 3-D prints of blockbusters like ET. Today there is competition on a number of fronts, including bigger, better and more-affordable home projection systems, high-definition television and DVDs, not to mention the world of options available at the click of a button on the Internet.

Though Imax's audio-visual depth provides what is widely considered a unique experience, it is actually facing competition of sorts from Los Angeles–based Real D, which, unlike Imax, does not require a dedicated auditorium. As of the November release of Beowulf, there were some 1,100 screens worldwide equipped to show films in Real D, which made its debut in 2005 with the animated feature Chicken Little. And, according to a report published on several film industry Web sites, Mark Cuban's Landmark Cinemas chain is exploring the possibility of glassless 3-D screens (not requiring 3-D eyeglasses) with the principals of Digital3-D.com.

For now, though, all 3-D formats still require the use of special eyeglasses to make the viewing experience possible.

Though only a handful of 3-D films are currently on the release calendar for this year, studios are quickly ramping up production, says Dergarabedian. “I think in 2009 and 2010, we're going to see a lot of 3-D films entering the marketplace,” he said. The films being offered are also changing in nature. Though 3-D has typically been used to enhance animated films and special-effects-heavy blockbusters, January saw the release of the concert film U2 in 3-D in both Imax and Real D formats. “With these new 3-D movies, they are trying to bring the level of the visual plane up to the level of the sonic experience, and that's what's going to make the difference,” Dergarabedian said.

The Imax-AMC is not exclusive, Gelfond says, leaving the door open for similar partnerships with other exhibitors. “I can see doing deals in the 20- or 30-location range with other chains, but I don't think there is another 100-theater deal to be done,” Gelfond said. “I don't think we could have done a deal of this scope with anyone but AMC. One hundred is a lot of theaters, and I don't think any other chain has that many ideal locations.” The key word there is “ideal,” so the distinction applies even to Regal, Imax says, though Regal is in fact the largest chain.

Will movie audiences one day demand 3-D to the exclusion of all else? It is not entirely out of the question. “I think in the future, it will be somewhat expected when it comes to the bigger action blockbuster movies,” Dergarabedian said. “Certainly, it's not for every movie. But who knows? Maybe someday the subtleties of 3-D will enhance the typical character-driven movie, and not just the big blockbusters.” SCT