Imax, China's TCL Unveil Home Theater Joint Venture
UPDATED: The 50-50 partnership between the Canadian giant exhibitor and the Chinese electronics giant will operate out of Hong Kong and mainland China.
Imax on Tuesday confirmed that it has partnered with Chinese electronics giant TCL Multimedia Technology to develop and produce an affordable home theater system for China and other global markets.
News of the joint venture followed earlier media reports that Imax and TCL had pacted to manufacture $250,000 home theater systems for a market rollout in 2015.
Imax CEO Richard Gelfond told the New York Times that he chose to partner with the Shenzhen-based electronics giant because he expects China will be the largest market for the pricey home theater systems. He added that the low manufacturing costs in China were a factor, but not the primary one.
"It's not because of the low-end cost structure but because it's the market," he said.
TCL first put a bold face on its global ambitions when it bought the naming rights to the historic Grauman's Chinese Theatre on Hollywood Boulevard last year for $5 million. The newly rechristened TCL Chinese Theatre made a prominent appearance in Iron Man 3, along with eye-catching placements of the company's flat screen TVs.
Li Dongsheng, the chairman and chief executive of TCL, said in a statement, "As content viewing in the home is constantly improving, we wanted to stake out an entirely new position in the premium home theater market."
As Imax goes deeper into the home market beyond its pricey Imax private theater offering, the giant-screen exhibitor on Monday said it invested in startup Prima Cinema. The U.S. startup's technologies will allow Imax to encrypt and transmit 3D theatrical releases to customers' homes on a day-and-date basis.
Imax is now betting that TCL's new 4K fully integrated home theater system will complement its high-end home theater offering as another option for consumers. And combining TCL's technologies with its own aims to allow Imax to deliver theatrical releases that have been digitally remastered on a day-and-date basis.
The Imax/TCL joint venture will operate initially in Hong Kong and mainland China.
Among its many superlatives, China is the world's second-largest movie market, and the No. 1 consumer of smartphones, cars and flat-screen TVs. But according to the Times report, a few unique attributes of the Chinese box office and home entertainment landscape made high-end home theater systems in China an especially promising venture for Imax.
Although China officially allows just 34 foreign movies to be imported and shown in Chinese cinemas each year, DVDs and other formats are widely distributed (both by legal and illegal means), meaning the home is often the only place to see the great many international films that fail to get the seal of approval for cinematic exhibition by Chinese regulators. Consumers with means are naturally interested in recreating the cinema experience at home for the viewing of such titles.
Perhaps owing to the import cap on cinematic exhibition there, Hollywood and Chinese studios have not blocked the immediate release in China of movies in high-quality formats for home theater systems. Whereas home theater versions of first-run movies are held in the U.S. and Europe until 30-60 days into a film's cinematic run, in China they are often available at the same time or shortly after they bow in the theater.
The systems are also expected to sell in other markets where income inequality and the number of new millionaires and billionaires continues to balloon -- places like the Middle East and Russia. But Gelfond told the Times the home theaters will be within the purchasing power of such a small number of consumers that he doesn't believe the venture will affect Imax or general release box-office earnings.
"The cost of this is not at a price point that threatens the theatrical community," he said.
The joint venture also is not expected to affect Imax's existing ultra-upscale, $2 million home theater systems, which are produced and sold from the company's base in Ontario.