The pact is the latest in a 15-year collaboration that has put 100 sites into the marketplace or in construction. CGV now has more than 170 Imax theaters in operation or contracted to open in China, Vietnam and South Korea.
The new Chinese locations will feature the Imax with Laser projection system. The agreement will see CGV and Imax open the new systems primarily in Tier 1 and Tier 2 Chinese markets under a joint venture/revenue share model. Additional Tier 3 to 5 markets will deploy a hybrid model requiring no net capital commitment from Imax. Additional terms were not disclosed.
Eric Wold, an analyst with B. Riley, reaffirmed his “buy” rating on Imax shares based on the news. “After multiple years of growth headwinds within China (as seasoning results from newer theater installs far outweighed the results from more established theaters),” he wrote in a note to clients, “we believe the recent performance of Imax theaters in China (even on a consolidated basis) helps to support our argument that Imax trends in the region are beginning to represent a tailwind to overall results (and potentially to investor perception) as the format gains market share with movie-goers.”
Through July 14, Imax theaters had generated more than $237 million at the box office in China in 2019 to date, up 26% percent versus the same time period in 2018. There are currently more than 600 Imax theaters in operation across China, with an additional 300 planned under existing agreements.
“In recent years Chinese audiences have increasingly shown their desire to watch films in the most immersive way possible, driving a stronger demand for the Imax experience,” CGV China President Kyungsoon Jang said. “In step with this, Imax has developed new technology with Imax with Laser and embraced a more diversified film slate, enriched not just by Hollywood blockbusters but also local language titles. We are looking forward to further partnering with Imax in future projects globally.”
Imax CEO Rich Gelfond saluted the “strong partnership” between Imax and CGV, which he said is helping tap into regional demand. “Building on the momentum we saw during Chinese New Year and strong demand for Hollywood and local language blockbusters alike, Imax China continues to generate solid growth at the box office and across our theater network in 2019.”