On Feb. 21, Imax, the Canadian company known best for its super-giant movie screens, revealed the final details of what had been, all in all, a pretty solid year. Adjusted earnings per share climbed 95% in 2012, to 80¢. Revenues were up 20%. And the company’s digital remastering business, which converts Hollywood blockbusters to the Imax format, posted solid returns.
Perhaps most important for Imax watchers, the company installed 125 new theatre systems in 2012. It also signed contracts to build 142 more, helping quiet the whispers that surely everybody who wants a movie screen the size of two barns has bought one already.
But alas for Imax, a new year brings new challenges, and 2013 promises a few doozies. Chief among them: the fortunes of a heartthrob copper named Jai Dixit and his bumbling sidekick, Ali. As the heroes in the Dhoom movie series, Dixit and Ali have become possibly the most popular protagonists in Indian film. Dhoom was a massive hit when it was released in 2004. Dhoom 2 fared even better in 2006. Dhoom 3 is scheduled—after a series of delays—to hit theatres next December. And Imax is hoping to ride its coattails to success in the massive and notoriously difficult-to-crack Indian film market.
Until recently, Imax had barely a footprint in India. The company boasts more than 100 screens in China—with at least 150 more on the way soon—and more than 250 in the U.S., its largest market. In India, it had only three at the end of 2012. More Imax cinemas are on the way for the country, including several more before the end of this year. But getting Indian consumers to pony up for pricey Imax tickets could still be a tough sell.
That’s where Dhoom 3 comes in. The movie is scheduled to be the first Bollywood production ever remastered for Imax’s eye-stretching format. It will also boast the star power of Aamir Khan, an Indian film legend who signed on to play the villain, and could just be the jolt Imax needs to find its way into the Indian mainstream.
It’s easy to understand why the company wants to get there. By most measures, India is the world’s largest film market. The country produces more movies than any other in the world—more than 900 (in more than 20 different languages) in 2011, according to Ernst & Young. And it sells somewhere in the neighbourhood of three movie tickets for each of the more than 1 billion people living in India every year. The industry has such a dominant place in Indian society, in fact, that some 14 million Indians go to the movies on any given day, according to Deloitte. That figure becomes only slightly less staggering when you consider that it represents less than 1.5% of the country’s total population.
But for all its size, the Indian film market has never been terribly profitable. The pure volume of films coming out of Bollywood and other regional hubs is so large that no one company has an easy time making money from them. And ticket prices remain on average far below those in other parts of the world, a serious problem for a company like Imax, which depends on premium pricing to justify higher production costs. What’s more, if Indians have had a hard time earning a rupee from Indian film, Americans have done, on the whole, much worse. An Indian film executive told a U.S. diplomat in 2010 that American films represent just 3% to 6% of the Indian market, according to a cable released by Wikileaks. That’s another significant hurdle for Imax, which relies on Hollywood blockbusters—ginned up for the big, big screen—to drive much of its business.
There are signs, however, that Indians’ tastes are beginning to change. More and more luxury multiplexes, fertile ground for Imax screens, are opening in India every year. And western blockbusters like The Avengers and Skyfall, the most recent James Bond instalment, are doing big business, says Rajesh Mansukhani, a Bollywood watcher who until recently hosted a radio show on Indian film in Vancouver. Life of Pi, an effects-heavy Hollywood film with a mostly Indian cast, has been doing even better, dominating the Indian box office since its release late last year.
The path, then, for Imax is clear, if not exactly guaranteed: introduce the wider Indian market to its brand with Dhoom 3, then keep audiences hooked afterward with a steady diet of American action. The second movie in The Hobbit trilogy will be available in Imax just weeks before Dhoom 3. The Amazing Spider-Man 2, a potentially huge hit with Indian audiences, comes out in Imax the following May. Mansukhani, for one, thinks it’s a solid plan. “People will spend a few hundred more rupees to go and see an Imax movie,” he says, “provided there are more Imax cinemas.”