More Selective Moviegoers to Blame for China's Box-Office Chill, Says Imax CEO

Allison Michael Orenstein
Imax CEO Richard Gelfond

"It's become a much more mature market, like the rest of the world," Richard Gelfond told an investors conference on Monday.

Affluent Chinese moviegoers are more selective about the Hollywood movies they'll come out to see at the local multiplex, says Richard Gelfond, CEO of giant-screen exhibitor Imax Corp.

"China used to be a market where the screen count was growing so much, people would kind of go see anything, or see a lot of things," the exec told the Deutsche Bank Media & Telecom Conference on Monday during a session that was webcast.

"But it's become a much more mature market, like the rest of the world. It's more sensitive to content," Gelfond added of the Chinese market these days. That's after Imax China, his company's Beijing-based subsidiary, saw its latest financial results hit by a slump at the Chinese box office.

Gelfond pointed to a stronger start this year for Hollywood movies on Imax screens in China, with hits like the local title Journey to the West: The Demons Strike Back, Vin Diesel's xXx: Return of Xander Cage and 20th Century Fox's Logan, which was released over the weekend.

Gelfond said an abundance of Hollywood blockbuster sequels in 2017 like Fast and Furious 8 and Spider-Man: Homecoming should help Imax this year, given how big event movies play well in its single-screen locations. That's a contrast with 2016 where, despite Disney having a big year, box-office revenue in both the U.S. and China depended on a Hollywood slate lighter on blockbusters and filled more with singles and doubles to fill 24-screen multiplexes.

"When you have real blockbusters, like this year, it may not be as good for regular multiplexes. For Imax, it plays to our sweet spot," Gelfond told investors. With roughly around one-third of its screen count in China, the performance of Hollywood movies in that fast-growing Asian market weighs heavily on Imax.

The exec added that Imax also has a big runway ahead in China after recent theater signings adding to its screen installation backlog. Imax just raised its profile in the country yet again after signing a 30-theater deal with Chinese film studio and distributor Bona Film Group.

Gelfond also told investors the recent profit fall in China also reflected increased investments in revenue-sharing theaters and the depreciation of the Yuan.

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