Monday, January 31, 2011

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Imax Finds a Niche in Digital Future

DAVOS, SWITZERLAND — Moviegoers in Moscow who do not want to munch popcorn with the multiplex masses will soon have an alternative. At a V.I.P. cinema that is set to open in April, they will be able to watch blockbusters on a large, curved Imax screen while lounging in oversize leather chairs. The cost of a ticket for one of the 80 seats: close to $100.
At a time when many media companies eye the digital future with dread, worrying about how to persuade consumers to buy their products when free information and entertainment abound on the Web, Imax, a Canadian company, not only gets consumers to spend but also gets them to pay a premium.
Imax had a very good recession. Global box office receipts at Imax theaters more than doubled last year, to $546 million from $270 million in 2009. Under agreements with movie studios and cinema operators, the company keeps about one-third of that revenue.
Only a few years ago, Imax was weighed down by debt and scouting around unsuccessfully for a financial rescuer. The turnaround has prompted speculation about possible offers for the company.
Imax has said it is unaware of any reasons for a recent increase in the price of its stock, which is traded in Toronto and on Nasdaq. But Richard Gelfond, the company’s chief executive, was eager to discuss the company’s turnaround, during the World Economic Forum in Davos last week.
At a time when other media companies are reeling from the effects of piracy, Imax benefits from the fact that it offers an experience that is difficult to replicate outside a specially equipped theater. The screens are big — typically 22 meters wide by 16 meters high, or about 72 feet by 52 feet, though some are much larger. Resolution is higher than that of conventional movies.
But the company needed a technological leap to take advantage of those attributes in ways that were practical and financially viable. Starting in 2007, it switched to a digital projection system, replacing analog film prints, which cost $30,000 apiece, with digital versions that cost $175 per theater.
That made it feasible to expand the number of Imax screens, which is expected to reach nearly 600 worldwide by the end of this year, up from fewer than 300 in 2005. Digitization also encouraged Hollywood studios to make blockbusters like “Avatar” available in the Imax format, which used to be known more for nature films and other educational fare.
Some critics say digital Imax movies are not as good as the film versions, offering lower resolution and, sometimes, smaller screens.
But viewers do not seem to mind. The average Imax ticket price in the United States last year was about $13, Mr. Gelfond said, about $5 more than the overall average cinema price.
Imax’s growth has been particularly speedy in countries like China and Russia, where going to the movies makes for a popular night out. In Russia, the number of Imax screens rose to 15 from four last year, while in China, the total doubled to about 100, Mr. Gelfond said.
“There’s not a lot of live sports or music in China, so movies are the place to be,” he said.
Average Imax ticket prices in China are almost as high as in the United States, and Chinese consumers resold seats to “Avatar” for up to $100 on eBay, Mr. Gelfond said.
In Russia, Imax screens produced an average of $3 million in revenue last year, he said. That was the highest average of any market for the company; in the United States, the comparable figure was $1.2 million.
The company developed plans for the new theater in Moscow, which will be run by a local exhibitor, Formula Kino, after hearing that wealthy Russians sometimes liked to buy up every seat in a theater to treat themselves and a few friends to a private screening.
If the theater is successful, Imax plans to open other V.I.P. rooms, in cities like St. Petersburg, Mr. Gelfond said.
“All over the world, people are willing to pay for premium content,” he said. “They want something they can’t get in the home.”

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