Is IMAX a Screaming Buy? With Rich Gelfond

Key takeaways

IMAX plays a crucial role in the success of blockbuster movies, often capturing a significant share of opening weekend revenues.
Technological innovation, including working with directors like Nolan, is central to IMAX’s strategy to enhance the cinematic experience and maintain industry leadership.
The company’s pipeline of upcoming films and strategic partnerships position it well for continued growth, with strong international markets and diversified content initiatives.
Despite industry uncertainties and valuation concerns, IMAX’s brand strength and technological advantages provide a potential for higher market recognition and valuation.

Summary

IMAX's Strategic Importance and Market Position

Rich Gelfond emphasizes IMAX's pivotal role in the Hollywood and global content ecosystem. He discusses how IMAX is integral to blockbuster releases, citing its partnerships with top filmmakers and studios. The company's strategic focus is on being central to an upcoming film's release plan, leveraging its brand value and technological innovations. Gelfond highlights IMAX's dominance in premium experiences, its international footprint, especially in China, and its influence on box office success, noting that IMAX often accounts for a disproportionate share of opening weekend revenue.

Technological Innovations and Film Format Strategies

The conversation covers IMAX's advancements in filming and projection technology, notably working with Christopher Nolan on specialized cameras and equipment like the 'blimp' to improve filmmaking and viewing conditions. Gelfond explains the challenges and opportunities related to film versus digital projection, including costs, availability of prints, and strategic retrofitting of theaters. He discusses the company's initiatives to enhance the cinematic experience and retain a technological edge, including upcoming projects with movies shot in IMAX.

Business Growth, Content Strategy, and Market Dynamics

Gelfond talks about the company's pipeline of upcoming films, including collaborations with high-profile directors and film studios, and its ability to plan well in advance of releases. He discusses creative efforts like merchandise and special events to expand revenue sources beyond ticket sales. The impact of streaming services and global content trends are also examined, emphasizing IMAX's adaptability and strategic positioning amid industry shifts. The company’s potential to grow through deeper integration into Hollywood's workflows and increased film formats (e.g., 70mm) are highlighted.

Valuation, Market Perception, and Industry Outlook

The discussion turns to IMAX’s valuation and market capitalization, with Gelfond addressing why the company appears undervalued compared to its brand strength and industry influence. He acknowledges ongoing interest from potential acquirers but states that IMAX is focused on maximizing shareholder value rather than seeking a sale. The conversation also explores the future of Hollywood’s evolution, the importance of star and director-driven films, and the prospects for IMAX adapting to industry changes, including potential new revenue streams and the reinvigoration of film genres like comedies.

Show notes

IMAX is about 4% of the world's screens and routinely delivers 20% or more of opening weekend on the films that matter most. Rich Gelfond has been running the company since 1994. On this episode of Live From The Compound, Josh Brown and Michael Batnick are joined by Rich to discuss: how IMAX became the format studios build their biggest movies around, the Christopher Nolan relationship and the Odyssey rollout, why there aren't more IMAX screens if demand is this strong, and where the next dollar of profit comes from.

This episode is sponsored by Betterment Advisor Solutions. Learn more at https://betterment.com/advisors

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