According to Comscore, Dune: Part Two recorded the best opening weekend for 2024, with $81.5 million in domestic ticket sales. However, strikes could continue to be a threat as IATSE, Teamsters Local 399, and Hollywood Basic Crafts begin negotiations with the Alliance of Motion Picture and Television Producers.
Richard Gelfond, IMAX (IMAX) CEO, joins the Live show alongside Yahoo Finance Reporter Alexandra Canal to discuss the domestic box office landscape and how IMAX fits into the picture.
Gelfond adds that it may be "too soon" to discuss a possible strike: "I personally think the industry has seen enough trauma both on the studio side and the exhibition side, and it would be self-destructive for all involved to let it develop into a strike. Obviously we want the union to get fair wages. The studios and Hollywood needs to make a living. But it's bad enough following the pandemic that you had these twin strikes. I got to believe no one wants to have this kind of self-inflicted wound imposed on the industry."
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AKIKO FUJITA: Well, "Dune Part 2" racking up nearly $82 million in ticket sales for its domestic debut. This marks the best opening weekend of the year and the biggest since Taylor Swift's "The Eras Tour" film last October. For more on how the 2024 box office is shaping up, let's bring in IMAX CEO Richard Gelfond along with Yahoo Finance's Allie Canal.
Richard, it's good to talk to you. We should point out, IMAX sales is providing a big bump to this film. I've read reports of, what, 3:00 AM showings that were nearly sold out, a film that was shot entirely on an IMAX camera. I mean, what do you think this draw or this performance-- at least in the first opening weekend here, what does that tell you about where the enthusiasm is within theaters right now?
RICHARD GELFOND: There is no question that "Dune 2" is going to have a lot of legs to it. The pattern is playing out very similar to "Oppenheimer," which was filmed with IMAX cameras. It opened globally to a very similar number. It opened to extremely high IMAX indexing.
For this film, IMAX was 18% of the world's box office on 0.8 of 1% of the screens and about 22 and 1/2% of the domestic box office. So it's a little bit like appointment viewing, meaning that people are going to wait to see it in IMAX, which Denis Villeneuve film the whole thing with IMAX cameras. And if you look at our pre-sales two, three, even four weeks out, there's no question this film is going to have legs and is really going to jump start the box office this year.
ALEXANDRA CANAL: And Richard, this also seems like a full circle moment for theaters considering this film was delayed from its original November date to March due to the Hollywood strikes. But we do have a group of Hollywood Teamsters, a separate union, IATSE entering negotiations with studios today. They've threatened another strike if they're not able to reach a deal. So to put it bluntly, can the industry handle a third strike in a year if that were to come to fruition?
RICHARD GELFOND: So Ali, think it's way too early to ask that question. As you said, they just started negotiations today. And if they didn't say, if it doesn't work out, we're going to go on strike, they give up all their bargaining position.
I personally think the industry has seen enough trauma both on the studio side and the exhibition side and it would be self-destructive for all involved to let it develop into a strike. Obviously, we want the union to get fair wages. The studios and Hollywood needs to make a living, but it's bad enough following the pandemic that you had these twin strikes. And I've got to believe no one wants to have this, kind of, self-inflicted wound imposed on the industry.
ALEXANDRA CANAL: So Richard, what stage are we at when it comes to the recovery process from those strikes?
RICHARD GELFOND: So I'm going to be a little out there, Ali. We know each other well, so you know that's not surprising. But I think the forecast this year for box office have been too conservative. I mean, I think it was easy when there were very few films the first two months of this year for people to be pessimistic.
But if you look at the numbers, given the first weekend of "Dune," the box office is only down 13% year over year. And we've got three more weeks of "Dune 2" to go. And then you have "Godzilla versus Kong." After that, when you go through the year, you have "Deadpool," which is tracking extremely well.
You have "Wicked." You have "Joker." You have the prequel to "The Lion King", "Twister." I mean, there's a ton of good films.
So I think people overreacted to the shortage in the first two months. And I think the year is going to play out pretty similar to last year. For IMAX, we had our second best year ever last year because we're not an exhibitor. We're a technology license company and people clearly want to see social events, particularly those filmed with IMAX cameras in IMAX. And you know, I think this is the beginning-- the real beginning of the year and I think it'll gain more traction than people are expecting.
AKIKO FUJITA: Richard, we know CEOs don't often like to talk about their stock, but you on a recent earnings call talked about how you think IMAX's stock is really undervalued given the growth outlook. What do you think investors are missing right now about the IMAX story?
RICHARD GELFOND: I think because there aren't a lot of comps in what we do. There aren't any. IMAX is a bit of a unicorn. We license film technology and we help facilitate film making.
We're trading at something like seven times EBITDA, which is ridiculous for a company that had the kind of growth we had year over year. And we just issued guidance for this year for continued growth. Our network is expanding fairly rapidly. We added 128 new installs last year. For this year, we guided from 120 to 150.
There's also a very important thing going on just beneath the surface and that is "Oppenheimer," obviously, is a huge success and IMAX did over $180 million in that. Now you have "Dune" also filmed with IMAX cameras and we do 22 and 1/2% of opening weekend and headed in the "Oppenheimer" direction. There are a lot of films-- I think the majority of films coming out for 2025 that are being filmed with IMAX cameras, both film cameras and digital cameras.
So I think the market share gains that we're having and the increased indexing is a precursor a lot of good things to come, including network growth. And I think the public is just confusing that with a different model, which is exhibition, which has high fixed costs. We're an asset-light model, I just think they're not focusing on it.
ALEXANDRA CANAL: And Richard, another big part of the IMAX story is local language films. And you talked about on the earnings call, the recovery and the markets in China. You said your overall positive, but there's still a few variables that have to sort themselves out. In your view, what are those variables and how can China get back to the place where it was?
RICHARD GELFOND: Well, you put your finger on what the biggest variable was, Ali, which is China, which we came back a lot. We did over $300 million in box office there last year, but it was the first year out of COVID. This summer is very promising. We have four films in China this year that are filming with IMAX cameras and I also think they'll over-index.
But also last year, over 20% of our box office was local language films. So that was things like Japanese anime not only in Japan, but in the US and in the Netherlands. It was Indian films. It was Korean films.
And this year was slated to have more than 100 films. So I think people look at the domestic box office and they say, well, the first month was bad because of the strike. But IMAX provides awe-inspiring experiences on a global basis and it's a completely different business model than exhibition. And we just have to continue to show that with our financial results as we did last year.
AKIKO FUJITA: IMAX CEO Richard Gelfond, always good to have you on the show. And our thanks to Ali Canal as well as joining in on the conversation. Thanks so much.
