IMAX, Wanda to add more cinemas

IMAX Corp, the world's leading giant-screen movie theater operator, and China's Wanda Cinema Line Corp on Thursday announced they will add 40 to 45 new IMAX theaters in China.

Under a revenue-sharing agreement reached in 2011, they agreed to build 75 IMAX cinemas.

Wanda's lease terms for all new IMAX theaters will be extended from 10 years to 12, according to the latest agreement. It brings the total number of IMAX cinemas owned by Wanda to up to 210, making the Chinese theater chain IMAX's largest exhibition partner internationally and biggest IMAX operator.

In addition, AMC Theaters, a United States cinema chain that was acquired by Wanda Cinema's parent, Dalian Wanda Group Corp Ltd, last year, has signed an agreement with IMAX Corp to extend its lease terms for all new and existing theaters to 13 years from 10.

It will install a minimum of five and up to 10 new IMAX theaters in the US, lifting AMC's total IMAX commitment to up to 152 cinemas. After the deal, AMC will be IMAX's largest exhibition partner in North America.

"The Wanda and AMC IMAX network continues to flourish and today's agreement underscores their ongoing confidence in IMAX to strengthen their businesses by delivering to audiences the industry's best cinematic experience," said Richard Gelfond, chief executive officer of IMAX Corp.

"Week after week, AMC guests are choosing to see their Hollywood blockbusters in an IMAX auditorium," said Gerry Lopez, chief executive officer and president of AMC Entertainment Holdings Inc.

"Wanda and AMC are two of the best IMAX theater operators in the world," said Gelfond.

"Their commitment to quality, innovation and building the IMAX brand means that we're not just adding more theaters, we're delivering IMAX audiences top-notch theaters with strong operations."

As the largest theater operator in Asia, Wanda Cinema Line operates 119 theaters with 1,038 screens, of which 73 were IMAX screens as of June 30.

It generated first-half revenue of 1.96 billion yuan ($319 million), up 35.1 percent year-on-year, according to the company.

"Our IMAX theaters have been showing a strong performance, while Wanda Cinema Line is constantly developing. We're delighted to build on our successful partnership that continues to differentiate our cineplexes by offering a premium entertainment experience," said Jerry Ye, vice-president of Wanda Cultural Group, a subsidiary of Dalian Wanda Group.

In 2012, IMAX reported global revenue of $284 million, up 20 percent year-on-year.

China's share of IMAX's global revenue jumped from 4 percent in 2008 to 16 percent in 2012, making it the fastest-growing market for IMAX across the globe.

EntGroup Consulting, a Beijing-based entertainment industry consultancy, expects the growth momentum in the China market will last another two to four years.

The consultancy said China is expected to account for one-quarter of IMAX's total revenue as of 2016, getting close to the US share.

"Over time we would expect China to represent somewhere between a quarter and one-third of our worldwide revenue," said Gelfond.

Currently, 108 IMAX theaters are being operated by Wanda and other companies in China, but a lot more are waiting to be opened in the next few years.

"We have a backlog that includes the deal we signed today plus the deal we announced last week. The best way to say it is that we expect 300 to 400 theaters to be open in China in the next five years," Gelfond said.

Since the initial agreement in 2011 between IMAX and Wanda, the giant-screen operator has shifted its model in China from one where it sells equipment for high upfront fees to one where it contributes equipment and gets a percentage of box office revenue.

This is IMAX's first full revenue-sharing deal in China. "That's increasingly how we are doing business in China and in the world," said Gelfond, adding that he expected the trend to continue.