Advertisement

'When we’re really out of the pandemic, you’re not going to see... hybrid releases,': IMAX CEO

IMAX CEO Richard Gelfond joined Yahoo Finance Live to discuss his thoughts on WarnerMedia's deal with Discovery and the recent report on Amazon and MGM.

Video transcript

SEANA SMITH: Time for our "Fame and Fortune" special. Big news this week in the media industry. AT&T's WarnerMedia is merging with Discovery. We want to get to Alexandra Canal, who is joined by a very special guest. Allie.

ALEXANDRA CANAL: Yes, thank you, Seana. I want to bring in IMAX CEO Richard Gelfond. Richard, thank you so much for joining us today. And I want to start off on those entertainment deals that we got over the past 24 hours. We have WarnerMedia merging with Discovery. And then we got that report late last night that Seana mentioned, Amazon in talks to acquire MGM. So what are your thoughts on those media deals and the potential impact that they could have on your business?

RICHARD GELFOND: So the Amazon-MGM one, you know, I think that's just a rumor. I have no idea whether that's going to happen or not. I've heard MGM has been on and off for sale over the last several years. I'm sure if they want to sell, they could do a deal. But I can't add any special insights to that other than, you know, probably if it happens, it would have more to do with MGM'S TV content than their movie content.

In terms of Warner and Discovery, I think that's a great deal for the industry. David Zaslav, who is the CEO of Discovery and will run the joint company, is a very close friend of mine. I think he's incredibly talented, innovative. He has wonderful relationships. And I think he'll be able to attract back to Warner, you know, some of the creative people, who haven't liked the direction they were going.

I think he understands-- well, [INAUDIBLE] Warner because Discovery is such a global enterprise. And I think he understands the value of IP. So I think that's a really good thing for that company. And especially since IMAX, we're in 84 countries. We're global. We do blockbuster films. We work with great filmmakers. So I think that's a positive for us and a positive for the industry.

ALEXANDRA CANAL: Do you think we're going to see more consolidation in the industry at large?

RICHARD GELFOND: I think we probably will. I think the streaming industry, which I'm not that actively involved, but I read a lot about, it's clear that you need scale to succeed. Because the way the model works is, you have to have, really, a lot of subscriptions to pay for the costs of production of all that content you're providing. So I think if you don't have the scale, you can't make money. And I think that was part of what was behind the Warner Discovery merger.

And you have, obviously, the big players-- Netflix and Disney Plus. So I would think that other people are going to look for scale right now. I mean, there have been rumors which I'm sure you've heard about Comcast looking for more scale. And obviously, the Warner situation is now not open season. So I think it'll be interesting to see what happens.

SEANA SMITH: Richard, let's talk about something that could potentially impact your business over the next several months. And that's the theatrical debuts. Lots of talk about whether this hybrid-- that hybrid model that we've seen over the last couple of months, whether or not that is going to continue post-pandemic. And then also, whether or not the theatrical windows within movie theaters, whether that will remain a little bit more tight. And I guess, how many-- when you look at these trends that we are starting to see within your industry, are those trends that you think are here to stay?

RICHARD GELFOND: It depends which trends you mean. I need to get more specific. So the pandemic happens, right? And every company, whether you're an exhibit or a studio, is threatened with its survival. So if you're Disney, you close your theme parks, your movies. You close Broadway. You know, you really don't have much going on. If you're AMC or you're a theater operator, you're burning $100 million a month. So you take the furniture, and you throw it in the furnace to keep going. I mean, you are really in bad shape. And you really got to do everything you can to survive. And I think that's what we saw through most of the pandemic.

Now we're reaching the end of the pandemic. And I think what you're starting to see is people say, oh, what's the long-term plan? I didn't pause and think about that. And what you're seeing is almost every studio is talking about a 45-day streaming window, right? There are still some PVOD releases at the same time as theatrical. But we're still coming out of the pandemic. And I think a few months from now, when we're really out of the pandemic, you're not going to see those kind of hybrid releases. I mean, we do have a very clear vision into the future. We could see what's happening in other parts of the world. And IMAX, as I've said, is in 84 countries. And we've seen China open. We've seen Japan, Korea, and it's the same thing everywhere. When it open up--

ADAM SHAPIRO: Richard--

RICHARD GELFOND: --people feel safe. They're going back to the movies in record numbers. And the same thing is going to happen here when the dynamic is the same.

ADAM SHAPIRO: But when all that money starts chasing content creation, there's going to be billions and billions spent to make new content, whether it's for this device or the IMAX theater. And I got to tell you, I love being in IMAX. I saw "Rise of Skywalker" in IMAX. Will we see the content creators maybe take two avenues where you get one version on this, but I get something perhaps more incredible if I go to an IMAX theater? And that's how they keep us in the theaters?

RICHARD GELFOND: I think what's more likely than that is you'll see a shorter window around the 45-day window, which is happening now. Because you have to remember that the theatrical release, the movies create a lot of magic around the property and a lot of the reason people go opening weekend to see it.

So, like you mentioned, "Star Wars" movie, you can think about streaming releases over the last couple of months during the pandemic. I'd be surprised if you could tell me five movies you saw on streaming. But you can tell me-- and when you look at what the theaters are holding for this year, it's Bond, it's Top Gun, it's Black Widow. It's those franchise kinds of movies. So I think they will open theatrically. I think they'll build the buzz around them. And then they'll go to streaming.

For more niche movies, where the marketing expenses are really high, I think they will make movies especially for screening to save those expenses. And I also think maybe the shorter windows will enable some of the streaming services to release their movies theatrically, rather than day and date on the service.

ALEXANDRA CANAL: And Richard, I'm going to echo Adam's point, because I still remember my first IMAX experience was at the Tropicana in Atlantic City, New Jersey. I think it was to see "Pirates of the Caribbean." But I loved it. But when we take a look at summer blockbuster expectations, the box office expectations, what are you anticipating? Because we got numbers from the new "Saw" film. It came below industry expectations, only bringing in 8.7 million in its opening weekend versus the expected 14 million. Does that worry you at all as we enter this critical time for theaters?

RICHARD GELFOND: It doesn't worry me in the slightest. "Godzilla Versus Kong" opened, and I forget the number, but it was hundreds of millions of dollars worldwide. In IMAX, we did extremely well. This weekend in China, "F9" opens. It opens a month earlier there than it opens in the United States. And you're going to see that movie-- I know I'll get myself in trouble-- but internationally, do north of $100 million. People are going back to the movies.

You know, the "Saw" movie was a little bit of a niche movie. It's the summertime. People want blockbusters. You have, you know, coming in the next couple of weeks, you have "Quiet Place 2," you have "Black Widow." As the summer goes on, you have "Suicide Squad." You know, you just wait. I mean, I've seen the numbers and the rest. Well, maybe the most compelling is Japan, which, during the pandemic, with capacity limitations, had the two biggest movies in the history of Japan. And they were both anime, so they appealed to kind of a millennial, Gen X audience. People are going to go to the movies and the US is no different than everywhere else.

SEANA SMITH: Richard Gelfond, CEO of IMAX, always great to have you on Yahoo Finance. Thanks so much for taking the time. And of course, our thanks to Alexandra Canal as well.