IMAX CEO Richard Gelfond joins Yahoo Finance Live to discuss company earnings, top-grossing IMAX films, the demand for movies, and the outlook for Hollywood blockbusters.

Video Transcript

[DINGING]

- IMAX shares saw healthy growth in the first quarter. In fact, the stock up today, actually. The entertainment, technology leader posted its highest grossing Q1 ever, as well as its greatest first-quarter market share.

CEO Richard Gelfond noted on the conference call that the business is more global than ever-- he's with us today-- as many of its signings for new IMAX systems came from high-value international markets. And a third of its global box office was driven by non-Hollywood films.

He joins us now in studio to discuss. Let's get right into it. What is the takeaway that we should have from your latest report?

RICHARD GELFOND: I think you summarized it really well. It's becoming internationally more and more global. IMAX is in 90 countries today. Our signings he mentioned. We had 63 signings through the end of April, which all of last year we had 47.

So, I mean, that just shows you our global momentum. They were in places like the Philippines, Indonesia, Japan. We had a lot because those markets are really booming.

And one third of our box office in the first quarter was from international foreign language films, so Japan, India, China. But it wasn't only Japan in Japan or India in India. There's a film in Japan called "Slam Dunk," which did $5 and 1/2 million in China the next weekend.

They packaged some TV shows in Japan called "Demon Slayer." And it did $1 million in Korea. So this is kind of a new global trend, which is making IMAX more than just Hollywood blockbusters, but global blockbusters.

- And I know our Allie Canal has some questions for you, too.

ALLIE CANAL: Yes, Richard. So, given that your business is so global, how do you approach an event like the Hollywood writer's strike, for example? Are you more insulated from that impact, considering this international focus?

RICHARD GELFOND: Yeah, we're definitely more insulated, as I said, because about a third of the revenues in the first quarter were from foreign language films. I think nobody is completely insulated. However, the movie slate for this year is pretty well locked.

So, again, IMAX does Hollywood blockbusters. And those aren't ones, hopefully, if you're a studio, that aren't being cobbled together at the last second. So things like "Fast X," "Mission Impossible," "Oppenheimer," they're largely in the can. "Dune" is done shooting and it's being edited. So for films coming out this year, the strike really doesn't have an impact. It's a question of how long it goes on for and what happens next year.

The good news on that, I think people have been anticipating it. So I think a lot's been written for next year. So we'll have to watch it, just like you do.

- How early on in the process of even conception of a new title or any content do you get involved in conversations where possible? Because that's a different type of production that production studios have to consider, that videographers, anything that's going into any type of entertainment piece that would be displayed in an IMAX platform.

RICHARD GELFOND: It depends on who the filmmaker is, Brad. So if it's Chris Nolan or it's Denis Villeneuve and part of their vision is the IMAX of it all, so we may find out two years earlier or three years earlier. And in the case of "Oppenheimer," we have an IMAX team embedded in Chris's production crew just so he can maximize the IMAX opportunity.

If it's another kind of film-- I'm trying to think more like "Indiana Jones," which is coming out, which I've heard great things about, that's one that it's not shot specifically for IMAX. So that typically will get involved six months before.

ALLIE CANAL: And, Richard, I know you're very bullish on the comeback of theaters. And there's reason to be, right? The "Super Mario Brothers" movie just surpassed $1 billion globally after debuting in Japan. We have that strong slate coming out this summer.

But you were just at CinemaCon, which gathered the top industry executives, the top exhibitors. What is still a concern in your industry right now?

RICHARD GELFOND: So, Allie, you may remember, because we've talked a lot, that I was bullish before this whole turnaround because I think a pandemic doesn't change 100 years of behavior. At CinemaCon, I think it varied by region. So I think China, which just came out of lockdown in December, is doing well. But it's not back full bore.

I think the rest of the world, Southeast Asia and Europe, they're just killing it. Places like France, Japan, other places in Southeast Asia, Taiwan, India, they're all back. And I think the US is somewhere like, in my opinion, 85% back. I think the pandemic doesn't keep people at home. But a lot of the exhibitors in the US who license our technology had a tough go of it. So I think they're coming back a little slower.

With that said, we had our biggest signing in the US in a decade that we announced as part of our quarter. So I think we're starting to see positive signs.

The other thing about CinemaCon, I think people are really upbeat about the slate. I mean, April, the only movie, big movie was "Mario." But, for example, our box offices more than doubled last year for not what you would think.

But here we are. "Guardians of the Galaxy" is coming up this week and then "Fast and Furious" right after that, then "Little Mermaid," then "Flash," which got terrific reviews coming out of CinemaCon. And then you go into "Indiana Jones," and you go into "Mission Impossible," and there's so many. I'm missing some of them.

- That's all right. I know you're trying to get your brain to come up with all of them. So many coming up. But one thing, so, obviously, we knew "Avatar-- Way of the Water" was a huge hit, blockbuster film. "Creed" was an unusual choice for choosing IMAX. What are your expectations for more films taking that path?

RICHARD GELFOND: Well, I mean, I think you chose a really good example because "Creed" was a sports film. We'd never really done one before. But I think that Michael B. Jordan really wanted to do something that would make the film stand out from the pack.

And that's kind of what IMAX does. We're a global curator of film. So when people see, wow, it's in IMAX, they think it's something really special. And, actually, I had the privilege of getting to know Michael through the process, back to your question, Brad, because he was filming with IMAX cameras. That's one where we were involved for a while.

- You gave him the workout process for "Creed," right? He can credit you for that.

RICHARD GELFOND: I told him I'll kick his butt if he doesn't make it, if he doesn't do a good job.

- I love his regimen.

RICHARD GELFOND: He wasn't very worried, though. I don't know why. I can't understand it.

ALLIE CANAL: Well, I'm still waiting for that intro, right? You're going to intro to Michael, right? We're going to--

- We're going to have to fight over this one, Allie.

ALLIE CANAL: Yeah, exactly.

- I'm sorry.

ALLIE CANAL: Well, Richard, real quick, you said the US is about 85% back. What will it take to get to that 100%? And when can we expect to reach prepandemic levels?

RICHARD GELFOND: I think probably later this year or next year. One of the really good developments is people at companies like Apple and Amazon are releasing films theatrically first. The narrative that to go right to streaming has been thrown away. That experiment just didn't work and failed.

So one of the big things about CinemaCon, which you asked about a minute ago, was the Scorsese film is coming out first on Paramount. Then it's going to streaming. "Napoleon" is going through Sony, then it's coming out and streaming. "Creed," which you mentioned, was an Amazon-MGM release.

So theatrical has lost some movies because the midlevel movies are going to streaming. But they're gaining movies now from streaming. And some of those movies, like "Napoleon" and the Scorsese movie, look fantastic. So I think that'll fill in that gap. There'll just be a little lag.

- When you look at the consumer environment right now, consumers are looking to where they can cut costs. And, unfortunately, it's also a question of, OK, can we pay for an IMAX experience versus just seeing the normal run-of-the-mill movie experience? So how do you discuss with their partners how to make it more economical for consumers who want to go see these titles?

RICHARD GELFOND: Well, the exhibitors set the price. We license our technology for a percentage of the box office. But they set the price. And I think, frankly, because of inflation, right now it's been fairly easy for them.

- Do you think it's excuseflation on their part to keep the price higher?

RICHARD GELFOND: Well, I mean, you look at their financials, I wouldn't say so. They've have a tough go of it. I think it's makeup for pandemic inflation rather than excuse inflation.

But movies are still a very affordable kind of entertainment. Even IMAX movies are. You compare it, I don't know about you, but when I go to a restaurant, I'm shocked. Or I buy an airline ticket, I say, there must be a problem. There's an extra zero on that ticket.

So that kind of thing you kind of give up. But I think going to the movies, it's a way to get away. And, look, we just talked about "Super Mario Brothers." That's an animated film. And for IMAX, our market share on opening weekend for that was 8%, whereas for "Frozen," it was 6% years ago.

So I think people are really in postpandemic doing something special, getting out of the house, paying for the best, same kind of trends you're seeing in concert and sports. So I think there's less price sensitivity than you would think.

- That, Richard, is what we call a Mario party. Richard Gelfond, who is IMAX CEO, and Yahoo Finance's own Allie Canal, Allie, thanks so much for joining us this morning.

ALLIE CANAL: Thank you.

- Richard, thanks for joining us in studio.

- Thank you.

- Good to have you.

RICHARD GELFOND: Thank you so much.