How is IMAX responding to the rise of Netflix and in-home entertainment?

- Leadership - Jun 03, 2016

There are 150,000 digital cinema screens around the world. In 2006 there were fewer than 3,000.

Premium cinema experiences are also growing fast. The number of IMAX screens globally now stands at 1,060, with hundreds more in the pipeline for the next 12-18 months.

Andrew Cripps is President of International at IMAX, and points to the emerging markets as driving the future of cinema. “When I joined the industry in 1985 around 25-30% of the box office on a movie would come from the international side,” he said. “That’s more like 70% now.

“I think this is a really healthy thing for the industry and Hollywood has responded by producing more globally orientated movies. I only see this trend continuing. If you think of how much growth we are experiencing in China and then the potential of untapped markets like India, we are just scratching the surface at the moment.”

Such growth in high quality cinema could be seen as unprecedented in the entertainment industry, before the advent of streaming en masse.

On demand in demand

Netflix is massive. Turning over $6.8 billion in 2015, the leading on demand provider has more than 81 million members in over 190 countries who enjoy more than 125 million hours of TV shows and movies per day. In the fourth quarter of 2015 alone the number of Netflix subscribers grew by 5.6 million.

Other internet giants such as Amazon and Now TV have joined the streaming revolution, which provides a cost effective way for consumers to enjoy their favourite shows and films in the comfort of their own home.

“Ironically for IMAX it has actually been a good thing for a number of reasons,” Cripps revealed. “First of all the good news is that consumers today are seeing more movies in more places on more devices than ever in history. There’s been a general upsurge in movie viewing and interest in movies, which can only be a positive. People love talking about movies.”

Raised awareness of films and entertainment, Cripps believes, has also led to a heightened demand for premier experiences. He continued: “IMAX provides people with an immersive experience. It feels like you’re part of the movie in a way that you don’t get at home or on various devices. When you go out to the movies you expect to see, hear and feel the best, most premium movie experience.

“Technology aside, comedies are funnier and thrillers are more enthralling when there are 400 other people laughing and holding their breath with you. I believe humans have a desire to be collectively entertained.”

The IMAX factor 

The rise of on demand has reinforced the importance of cinema continuing to up its game. If the likes of IMAX stall in their pursuit of development and allow home streaming to narrow the quality gap, consumers may opt to stay in more often.

Moreover, “consumers are paying a premium price for IMAX so it’s incredibly important that we deliver a premium experience,” Cripps added. “If you’re going to compete with in-home you must live up to your promises.”

For 50 years IMAX has been pioneering the big screen experience. In the last 12 months it has introduced laser projection and immersive sound to screens in London’s Leicester Square and Cineworld in Sheffield, UK.

It has also embarked on a joint venture with camera specialist ARRI. Together they provide IMAX cameras for filmmakers to shoot scenes, giving a taller image and larger aspect ratio on screen. The new Captain America movie was partially filmed with one of these cameras.

Global footprint

The second way in which IMAX plans to compete with the growth of on demand streaming is to expand its own network of screens. Although China represents the most significant growth market (290 theatres already installed with a further 240 ready and waiting), Cripps is also targeting underexploited European countries.

There are 195 IMAX screens in Europe, of which 155 are open and 40 signed in backlog and due to open in 12-18 months. Another five screens will go up in France and Switzerland as part of a new deal. Cripps explained: “We are targeting France and Germany in particular and looking to build on our success in the UK, where we have 42 IMAX screens open now.

“Russia is another excellent market for us with 50 theatres, although issues with the Ruble have thrown up a few challenges. Scandinavia is another promising region where IMAX has two terrific theatres – one in Copenhagen and one in Stockholm – so we will look to build on that.”

Filmmaker force

The film industry itself is also an enthusiastic backer of IMAX and the big screen.

Endorsements from directors and studios provide crucial publicity for cinema over on demand, encouraging film fans to enjoy the entire visual, audio and atmospheric experience their productions can provide on the big screen.

“IMAX has extremely good relationships with filmmakers who, ultimately, produce their movies to be watched by people at the theatre,” Cripps said. “JJ Abrams with Star Wars is a great example – he promoted IMAX and encouraged people to see it on our screens, going round the world and telling people IMAX is a great place to see Star Wars.”

Old classics have also been revived by IMAX during disrupted scheduling periods, often caused by major sporting events like this summer’s European football championships in France. Last year it showed Forest Gump and a special 70th anniversary showing of The Wizard of Oz. IMAX has also successfully digitally remastered two episodes of Game of Thrones, vastly improving the experience of watching the type of content available through the likes of Netflix.

IMAX at home?

Is it possible to combine the best of IMAX technology with the comfort of home entertainment? China and the Middle East are currently trialling the new IMAX home entertainment theatre system, aimed at very high net worth individuals.

“Again this is a very different experience,” Cripps explained. “It is not your plasma TV on the wall. I went to our demo room in Shanghai and it’s a fabulous product.”

However, IMAX’s major focus is on strengthening its core product, the theatre experience. Cripps concluded: “I think cinema will generally continue to move towards premium experiences in the future, be that IMAX, VIP luxury seats, in-theatre dining alternatives or high quality bars. Cinema really needs to carry on innovating.

“Clearly the Netflix model and other services have been bought into enthusiastically by consumers, but that is not a bad thing. Cinema and home entertainment can continue to co-exist positively, but only if cinema offers something you can’t get at home.”

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Read the June 2016 issue of Business Review Europe magazine.

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