Record China box office foreshadows global pent-up demand for movies, Imax CEO says

Record China box office foreshadows global pent-up demand for movies, Imax CEO says

Imax broke its box-office records in China over the Lunar New Year holiday weekend and the results foretell what will happen when more U.S. movie theaters resume operations this summer, CEO Rich Gelfond told CNBC on Tuesday.

The company, which produces immersive movie experiences, said it grossed $25 million between Friday and Sunday, representing a 45% increase from a pre-pandemic record.

“It tells you [that] when it’s safe to go outside and people want to go, they’re going to run to go to the movies,” said Gelfond, who appeared on “Closing Bell” after trading ended for the day on Wall Street.

“Detective Chinatown 3,” a comedy adventure that was postponed from its Lunar New Year release last year, generated a large portion of Imax’s ticket sales during the three-day period. The film brought in $23.5 million, the best results Imax said it has ever seen for a Chinese film. The action film “A Writer’s Odyssey” and “New Gods: Nezha Reborn” animation also helped Imax reach both gross attendance and gross sales highs.

Imax shares coming off the news rallied more than 6% on Tuesday, its best day since November. The stock closed at $19.85 and is up more than 5% after hours.

Imax admitted more than 1 million people to theaters in China on Friday, its best one-day attendance on record. The results come despite capacity limitations that remain in place on entertainment establishments in China. The $25 million Imax grossed at the box office was better than what it saw during the comparable opening week in 2019, which preceded the coronavirus pandemic.

Most theaters in China have 75% capacity limitations, while parts of the country seeing higher transmissions of Covid-19 are limited to 50%. U.S. theater restrictions differ by state. Restrictions range from 25% capacity in Minnesota to 50% in Indiana to 100% in Alaska, according to data kept by the National Association of Theatre Owners.

The Lunar New Year seven-day holiday ends Wednesday. Theaters were closed in China this time last year as the country shut down in response to the rapidly spreading virus that was first discovered in late 2019 in the city of Wuhan in Hubei province.

The movie rush was fueled by the traditional travel season in China being largely put on hold due to coronavirus restrictions. With travel plans scrapped, millions spent time at the movies.

Gelfond said Imax had expected strong turnout in China over the weekend.

“I think the only thing you can say is it’s pent-up demand, that people just got tired of sitting on their couches and, you know, watching streaming or whatever else they did,” he said. “I think they’re just happy to get out, and I think it foreshadows the rest of the world.”

Amid the pandemic, Imax’s business revenues plunged 74% in 2020 through September from its first three quarters the year before. The company is set to report fourth-quarter and full-year 2020 performance next month.

Gelfond said in December that 2021 U.S. movie releases, including a slate of films that were postponed from initial releases last year, would present “an embarrassment of riches” for Imax, should theaters in the country open up early in the year.

For the movie industry at large, mainland China generated sales of 6.77 billion yuan, or $1.05 billion, as of Tuesday for the holiday week, according to online ticketing platform Maoyan Entertainment. That figure tops the record 5.9 billion yuan brought during the same period in 2019.

Since theaters reopened there in June, box-office revenues have been climbing. Coronavirus cases have declined precipitously in countries such as China, Australia and South Korea, and movie ticket sales have been increasing.

Global movie ticket sales plunged 70% in 2020 from the year prior. Asia Pacific ticket sales made up about 51% of global sales, up from 41% in 2019, based on information from Comscore and Gower Street. The U.S. and Canadian box office made up just 18% of sales in 2020, down from 30% in 2019.

Reuters contributed to this report.