Imax Managing Director Talks China Strategy, Luxury Home Cinemas Business

"The Monkey King" is the latest giant format hit in the booming China market.

The company's business head in APAC discusses the company's ambitions for growth in China's less developed provincial cities and why it's moving into ultra-upscale home entertainment.

HONG KONG – Imax will extend its reach in China by expanding its business into the country's so-called "fourth and fifth tier cities," Imax Asia Pacific managing director Don Savant told The Hollywood Reporter.

In China, excluding Hong Kong, Imax already has over 300 theaters contracted. Among those, 137 are now open.

China's urban centers are commonly classified by "tiers," with first tier cities represented by the country's great metropolises Beijing and Shanghai, second tier by major urban centers such as Chengdu, third by large but less cosmopolitan cities like Zhongshan, and fourth by the less-developed but rapidly modernizing places like Changshu and Xinmin. As first, second and third tier cities are by now well-developed, the smaller, more rural areas are perceived as the next frontier for commercial development. 

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Imax has a contract with China's largest theatrical chain, Wanda Cinema Line Corp., to build 210 giant-format theaters in the country by 2021. It also signed a deal last July with South Korea's CJ CGV to build 30 more Imax movie screens in China and five in South Korea.

It has a twelve cinemas partnership with UA Cinemas in Hong Kong, and a fourteen cinemas commitment with Jinyi cinemas out of Guangzhou, China.

"We're working with our local partners in China to look into the best site as we go into the fourth and fifth tier cities -- to find the best downtown site," said Savant. "The most important [aspect] of a site is the critical mass -- if it's a lifestyle center, if a place that people can visit to enjoy several different things, not just the theater or shopping, but if it's somewhere that people gather. So we're really looking for the class-A sites in these fourth and fifth tier cities."

In the rest of Asia, Imax is working with SM cinema group in the Philippines for ten theaters, TGV Cinemas in Malaysia for eight cinemas, Major Cinemas in Bangkok where they already have six, and Cinema 21 in Indonesia, where Imax has a ten-theater commitment.

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Imax box office sales for 2013 in China alone exceeded $100 million. In Asia, excluding China, box office receipts for Imax movies was $221 million.

The Imax film The Monkey King, starring Donnie Yen (Ip Man) and released during the Chinese New Year period, proved a blockbuster, breaking the 500 million yuan ($82.5 million) mark in China in five days, a record-holder.

"We have at least a minimum of four to six Imax movies coming out this year," Savant said. "Our strategy in China is we're going to continue to invest in the Imax versions of Chinese blockbusters. We don't have a set number of films; we look at the [titles[ and if we think it's a blockbuster -- if it will look good in IMAX, if it's an action or major drama film -- then we'll want to be part of it. That's how we're going to build the Imax brand."

"We're really excited, because it's a new-built market, where we're able to go in and build state-of-the-art Imax theaters...  We're building these really big, beautiful screens, because they're all new and custom-built," he added. 

Imax also has partnered with China's TCL Multimedia to develop luxury home cinemas. "We believe there is a substantial market for in-home entertainment for a very high-end product," said Savant. "So we're working to develop that product exclusively with TCL. We hope to have a product to market by the end of 2015 and it's something we've just established and we're very optimistic about."

At the initial stages, Imax is looking for its home theaters to go into Russia and the Middle East, after China. Each luxury theater will cost at least $250,000.

"We don't feel it competes with our commercial cinemas because they're not selling tickets, only for in-home personal use," Savant said. "Also to acquire the movie is very expensive."

"We're only using the Imax brand to go into consumer electronics business, but our main focus in still commercial cinemas," he added.