IMAX's Big Picture

Film Fans Keep Splurging on Blockbusters in Imax, So Why Hasn’t Wall Street Gotten on Board?
How Imax has quickly become the goldstandard in theatrical experiences.

It's easy to overthink it. With all the concerns about the future of cinemas – as in the actual buildings where you go to watch movies – when you take a step back and consider why many are struggling, it's often because the experience just isn't very good.1 You pay a bunch of money to go watch a movie in a room that is often less comfortable (and sometimes dirtier) than your own living room with a screen that is not that much larger than the one on your wall. The pandemic further focused this reality and made it so that people only wanted to go if there was either a must-see movie in the zeitgeist or a unique experience.

The latter is where IMAX comes in. And actually, with Oppenheimer and Dune Part 2, the former was in play as well in the past year.

The success of “Oppenheimer” and last month’s “Dune: Part Two,” which earned roughly 20% of their ticket sales from Imax, demonstrates the force of the Imax brand. When audiences go to the movies, they overwhelmingly choose to see films in Imax. In the process, Imax, with its sprawling screens and carefully calibrated sound systems, has become the gold standard for ticket buyers. (People crossed state and country lines to see “Oppenheimer” in 70 mm Imax, selling out auditoriums for weeks. More recently, theaters added 3 a.m. and 6 a.m. Imax showings of “Dune 2,” which was shot with Imax lenses, to meet demand.)

“I strongly believe that the future of cinema is linked with Imax,” says Denis Villeneuve, the director of “Dune 2.” “It just conveys a level of quality.”

Hard to get a more ringing endorsement than that. And Christopher Nolan is an even stronger advocate for the format and experience.

To make money, Imax licenses its technology — its screens, sound systems and projectors — to various theater companies. It also allows filmmakers to choose between its two kinds of photography equipment: a film camera (there are only eight in existence), like the ones Nolan used on “Oppenheimer,” and an array of Imax-certified lenses that modify digital cameras, such as those deployed on “Dune: Part Two.” The company overindexes on ticket sales for the films that are shot with its technology.

Yet this love and increasing success hasn't (yet) translated to Wall Street as IMAX CEO Rich Gelfond conveys in his colorful way:

Yet even as Imax has become invaluable to filmmakers like Villeneuve and Nolan, the company struggles to get respect from Wall Street. That frustrates Gelfond, an unflappable lawyer turned entertainment executive who helped transform Imax from a purveyor of nature documentaries into a Hollywood powerhouse. It was Gelfond who orchestrated a 1994 leveraged buyout of the company, took it public and, over several decades, enlisted studios to showcase their biggest films on Imax’s patented screens (allowing them to charge more for tickets in the process). His pitch worked — studios now vie for the company’s cameras and limited number of venues. (Imax has 1,772 auditoriums — a fraction of the 250,000 screens worldwide.) Yet Imax’s share price has languished at roughly $16, down from the more than $19 it was trading at a year ago.

“Investors like to invest based on comparables,” Gelfond says, ”and there is no other Imax.”

Gelfond thinks Imax is being valued like AMC Theatres, Cineworld and other major cinema chains, which are mired in debt as they grapple with the overhead required to maintain hundreds of locations at a time when attendance is still lower than it was pre-pandemic. “I like to say we have as much in common with North American exhibitors as we do with steel companies,” Gelfond says, adding, “It’s a totally stupid line.”

It's an interesting model – as Gelfond notes, they don't actually own any theaters, and don't sell concessions – which is pretty bespoke:

There’s a reason that Imax prizes its relationships with auteurs like Nolan, Todd Phillips, Jordan Peele and Paul Thomas Anderson, to name a few filmmakers who have worked, or will work, with Imax. These top directors can harness the power of TikTok influencers as they promote their movies, usually stressing that Imax is not just an optimal viewing experience, but the way their films were meant to be seen.

“Directors need to know that Imax is one of the greatest partners you can have,” says Phillips, who used Imax cameras on both “Joker” movies. “If you show them a little love by embracing the format, they give it back to you 10 times.”

Imax rewards loyalty. Its employees are made available early in the filmmaking process to troubleshoot issues with movies that use the company’s film cameras. That’s important because Imax film cameras are massive and hard to maneuver. Though Villeneuve would have liked to use them for “Dune 2,” logistics won out, and he eventually opted to shoot on digital. “The film cameras look better, but we were shooting in the heat of the desert and needed more flexibility,” he says.

So IMAX both vets who they work with and forces those filmmakers to use their technology for filmmaking and presenting. And the resulting quality seemingly pays off, quite literally. In that regard, it's almost like HBO – well, the old HBO – meets technology, just a specific, cinema-focused bit of technology. Amazingly Gelfond has gotten this all to work even when betting on an auteur like Nolan over the biggest (and last true) movie star in the world, Tom Cruise – as the article notes, he bet on Oppenheimer over the seventh Mission: Impossible movie, even though the latter seemed like a slam-dunk blockbuster while the former was based on an 800-page historical biography about science.

For movies from a director like Nolan, who only shoots on film, Imax finds experts who can still operate the few dedicated projectors that use old-school film stock, a rarity in a mostly digital business. In some cases, projectionists have been moved across the country so they can work in certain Imax venues. Because Imax goes to such lengths, Gelfond says, many employees approach their jobs with unusual intensity.

“A long time ago,” Gelfond says, “someone said to me, ‘People at Imax think they’re curing cancer.’ And I said to them, ‘Don’t tell them they’re not.’”

The big theater chains obvious reaction to the rise of IMAX has been to try everything just short of Smell-O-Vision:

Still, Imax must contend with an armada of rivals. There’s no shortage of other high-end presentations, known as premium large formats, on the market, like 4DX, Cinemark XD and Event Cinimas-branded V-Max. But in the fight for audiences, Gelfond says all screens aren’t created equal.

“I think exhibitors do their best to confuse the consumer. They put an ‘X’ in all their titles,” he says of rival companies whose names look a lot like “Imax.” “Either that or it’s a funny coincidence.”

The difference, he says, is some of the other brands aren’t doing much to improve the quality of the image before slapping a surcharge on admission. Instead, they’re using an ordinary projection on a larger screen. Imax, however, works with directors to alter the film, increasing the resolution and sharpness of the larger-than-life footage.

“I remember when I was a kid and I copied my hand on a Xerox machine. The more you blew it up, the worse it looked,” Gelfond says. “That’s the dirty little secret of other PLFs — the image is bigger and people pay more for it, but it’s actually not a better image.”

I know it sounds crazy now, but I don't think it's totally crazy to imagine a future where a certain type of big movie opens on IMAX and then heads to something like Apple's Vision Pro. I'm just not sure what the point of a big chain movie theater is anymore. They're lucky the distribution window, which was shattered during COVID, was brought back.2 But it's just delaying the inevitable.

“America is built on capitalism. Where it crosses the line is when they try and say, ‘As good as Imax’ or ‘Better than Imax.’ I understand their business reasons, but it’s just an entirely different thing.”

1 To be clear, there are many great, independent movie theaters in the US and around the world. It's largely the mega chains that have ruined it for everyone. (A few smaller chains, like Alamo Drafthouse, are an exception -- but always seemingly in trouble or about to sell... It feels like the studios are going to have to step in more fully once again, the ultimate plot twist.)

2 Though not nearly as strict -- even Dune 2 is hitting the home next week, just six weeks after its insanely popular theatrical run. In the past, this would have been a six month wait.