Imax Steps Up 3D Investment

Imax is to step up its roll-out of cinemas capable of showing 3D films in an effort to take advantage as other cinema owners slow their investment plans in response to the recession. The US group, which is upgrading its trademark large screens from film to digital projectors capable of showing 2D and 3D films, plans to open 100 screens worldwide in 2009 and to increase its estate from 350 to 600 screens within three to four years, Rich Gelfond, its chief executive, told the Financial Times.

The mass adoption of 3D screens has been delayed by haggling between studios and cinema owners over how to share the cost of new digital projectors. An agreement was reached whereby studios pay cinemas a “virtual print fee” for each film they distribute, which cinemas put towards the cost of new digital equipment. However, by the time this had been agreed, concerns about consumer spending had affected cinemas’ ability to raise funds.

Analysts believe there will be just 1,500 3D screens in the US by March, when DreamWorks Animation releases Monsters vs. Aliens in 2D and 3D, rather than the 5,000 they once expected.

“In the US, the digital conversion has virtually come to a halt,” said Mr Gelfond, adding that it would show the film on 200 Imax screens.

Imax opened 46 new cinemas globally in the second half of 2008, an acceleration from the 30 a year it used to open, after raising $20m last May and securing another $30m funding line.

Studios are pouring marketing budgets into a strong slate of 3D releases for this year, starting with 3D advertisements for Monsters vs. Aliens during this weekend’s Super Bowl game in the US. At least seven more 3D films, or films featuring 3D segments, are due before the end of the year.

“With so much digital product available, we become one of the only solutions for the studios,” Mr Gelfond said. “The percentage of the 3D box office which we capture will certainly be higher than we thought it would be a year or so ago.”

Imax was reassured about consumers’ willingness to pay a 30 per cent premium to standard ticket prices, he added, noting that it took 14 per cent of the US box office for The Day The Earth Stood Still with just 1 per cent of the screens, and about 10 per cent of the takings for The Dark Knight, the Warner Bros film.

Mr Gelfond said an “extremely glum” economic outlook had prompted many people to “throw in the towel on 2009 and start thinking about 2010”, but added that he was not worried that studios were cutting the number of films they planned to release.

“The blockbusters are still being made, and we only focus on the blockbusters,” he said. Imax’s takings would have “a lot more to do with the film than the economy”.

By Andrew Edgecliffe-Johnson, The Financial Times