IMAX CEO Richard Gelfond is one of the most bullish people in Hollywood on the subject of theatrical moviegoing. There’s a reason for that. Coming off of a year defined by a yo-yo-ing pandemic that continued to strangle the traditional movie theater business, but for a few, glowing exceptions—like Shang-Chi and Spider-Man: No Way Home—IMAX’s global box office was up 146% in 2021 over 2020 with revenue of $638 million. On Spider-Man alone, IMAX has generated over $83 million so far.
It’s not where the company was pre-pandemic—in 2019, IMAX grossed over $1 billion worldwide—but it’s a robust showing for these times. And Gelfond believes that the success of films like the new Spider-Man, which was released exclusively in theaters in December (seeing as how Sony doesn’t have its own streaming platform), is proof that Hollywood needs to stop throwing so much of its weight behind streaming. Indeed, he believes that Hollywood studios are far too besotted with a “Wall Street narrative”—i.e. that stocks go up when studios crow about their streaming plans—”that hasn’t necessarily worked.”
A few days into 2022, Gelfond spoke with Fast Company about the Hollywood headspace as the world grapples with another wave of COVID-19, and how not just studios and theater owners, but also filmmakers, need to rethink ways to turn movies into events that are worth venturing out of the house for.
Fast Company: The year 2021 was a decidedly mixed bag when it came to how movies performed on various platforms. A few big Marvel movies did well in theaters (Spider-Man: No Way Home, Venom 2, Shang-Chi), while Steven Spielberg’s much-hyped adaptation of West Side Story fizzled. Meanwhile, the majority of films that were simultaneously released in theaters and on streaming platforms—such as WarnerMedia’s slate, all of which were released day-and-date on HBO Max—saw okay-for-the-pandemic box-office grosses but helped the services grow. (HBO Max ended the year with 73 million global subscribers.) Yet. here we are in the midst of a huge omicron surge that will likely dampen the appetite to sit in a theater with a bunch of strangers. What’s the conversation in Hollywood right now when it comes to how to distribute movies?
Richard Gelfond: The conversation today is that for the right kind of movie, people really want a cultural, theatrical experience. Period. And they want to see the right kind of movie in a communal way with their friends and their family, and they want to share it the way they’ve always shared it. I know it’s easy to answer that question coming off Spider-Man, but because we’re in 85 countries, we found that to be true on a worldwide basis. In China, what’s now become the second-biggest movie in 2021, The Battle at Lake Changjin, did over $900 million. Chinese New Year comes in three weeks from now, and there are big movies people are going to come out to see in big numbers. I know that sounds like a bold statement in light of omicron, but the fact is, it’s true. We’ve seen it in Japan, too. Other models were tried in 2021, and they didn’t work. Whether it was the PVOD model [premium video on demand, where movies cost $20 to $30 to see at home] or the hybrid model [such as WarnerMedia’s dual releases on HBO Max the same day they debut in theaters], they didn’t impact audiences and create cultural events in the way that theatrical experience does.
Another defining thread of 2021 was how aggressively some studios embraced streaming, resulting in an uproar from talent [Disney, Warner Bros.]. Though in the case of Warner, it has now pledged to revert to the traditional 45-day window in 2022. Do you think there was a bit of a streaming overcorrection last year that will now balance out?
I think the studios and the streaming services believed they were going to get a free pass from Wall Street as long as they put things on streaming irrespective of what the financial results were. I think what they probably learned during the year was that, at the beginning, Wall Street was pretty enamored. But as the year went on, financial results matter. I still think there’s a little bit of the zeitgeist in the various platforms—that, we can have our cake and eat it, too—despite the objective feedback. But when you look at the universal 45-day window that virtually every studio has adopted, I think they do understand that they need an exclusive theatrical window to create the buzz, and the marketing, to allow a piece of intellectual property to achieve its potential over time.
Without a doubt Spider-Man: No Way Home was the runaway hit of 2021. It’s grossed $1.37 billion worldwide so far, a remarkable feat for a film that came out just as omicron was starting to surge. Do you think its theatrical success was in any way related to the fact that Sony does not have a streaming platform, which it would need to pack with content in order to lure subscribers, and thus was given a pure theatrical release?
There’s no question in my mind that Spider-Man wouldn’t have achieved a fraction of its theatrical results were it not for the long window around it. I mean, Sony created a global, cultural event that could not have been created on a streaming service. And part of that is the event status around it. So people heard how good it was; they heard how big the box office was; they couldn’t get it via piracy; and they wanted to be a part of this global phenomenon. Part of that was that it had time to build, so it wasn’t just one weekend and out. If you look at a lot of the alternative hybrid streaming releases, after one weekend the drops were precipitous—really sharp. Spider-Man really had room to breathe. It became a subject that families talked about at the dining-room table, over the holidays. My wife, her family is from Italy, and she talked to her cousins in Italy, so they saw it. They shared it in a global way. I don’t want to give away the secrets of [the movie], but you whispered about what the secrets were. Other people didn’t know. There’s just no question. I hesitate to put a number on it, but I don’t think it would have been even close [to $1 billion in box office] if it weren’t for theatrical exclusivity. What made it work was the global-event status.
But if the big takeaway of 2021 is that—surprise!—the movies that do well theatrically have to be big spectacles, à la Marvel movies, how can the Hollywood ecosystem survive? Those films take years to produce. There’s no world in which they are being pumped out every weekend.
One of the things that was already happening pre-pandemic was that blockbusters were becoming a much larger percentage of the box office. A lot of studios had shifted production to more blockbuster offerings. In 2022, both by design and because a lot of things got left on the shelf because of the pandemic, there are a disproportionate amount of blockbusters going forward. Over time, some big streaming movies may be released theatrically. So, for example, Apple hasn’t announced its policy yet, but [Martin] Scorsese is doing his next movie, starring Leo DiCaprio, there, and it wouldn’t shock me to see a theatrical element around that. We at IMAX are looking at another kind of cultural event that you can create. So toward the end of the year, we did a live stream of the Kanye/Drake concert in IMAX theaters. Although it was just an experiment, the fan reaction was really good. So I think that will fill some of the content pipeline.
I also think, over time, you’ll see some increased global content. So the Chinese film, The Battle at Lake Changjin—or Japan [which] has been doing really well with anime, like Demon Slayer. There will probably be more experimentation with that kind of thing. There is still a niche for really good, popular, smaller movies when you look at the results of House of Gucci, which did surprisingly well, even though you wouldn’t label it a blockbuster. Even though Dune did not have an exclusive window, because of the scope of Denis Villeneuve’s vision, it played theatrically. Directors are going to have to think less formulaically. Obviously, Chris Nolan has been doing that for years. Who would have labeled Dunkirk a blockbuster when he came up with that idea? Or would people have previously said a movie about Robert Oppenheimer [which is the subject of Nolan’s next film] would be a blockbuster? Just the way you shoot movies, how you think about them, how you market them is just going to have to evolve.
How much of an onus is on theater owners to help create a better moviegoing experience? The way things are, going to the movies means paying $15 for bad popcorn and sitting through half an hour of ads.
Theater owners have to think about what the future of cinema looks like. Some of them have done it, that’s one reason IMAX has been successful. And premium cinema is taking up a much larger share of the market. IMAX is getting greater and greater market share. Some chains invested in that. Some people are missing the boat right now by going after strategies, like you can pay in Bitcoin, or you can get theater popcorn at home. I don’t think that’s the direction they need to go. The direction is, how do you create a better experience for moviegoers? Whether it’s more IMAXes or better sound systems or a better overall experience. The ones who do that are going to be rewarded. The ones who are distracted by sideshows that might get their stock price up for a day are not going to be rewarded in the long term.
What is the biggest challenge for Hollywood heading into 2022?
The first one is studios trusting the consumer. You look at the Spider-Man results, and I think they’re still second-guessing whether to do theatrical releases. I mean, people have learned—since they have to—they’ve learned to live with COVID. They know that, for the right movie, they’re comfortable going to theaters. Studios can’t second-guess the consumer results and say, Well I don’t know if they’re going to be comfortable or not. They’ve answered the question on a global basis. I think there’s a form of paternalism in the studio community. If you’re vaxxed and put on two masks and you’re an adult, you can make the decision to go. That’s one thing that concerns me, is that the studios don’t follow the audience and the science.
Another thing I would say is that the studios have put the wrong films on streaming, that could have had a theatrical release in their rush to embrace a Wall Street narrative, which hasn’t necessarily worked. The studio community is somewhat captive to this narrative and a viewpoint that is getting a little bit dated: that you can keep getting more and more subscribers by putting movies on the service. A lot of people want to believe it, so it’s not a matter of convincing [them otherwise]. They want to believe. The Matrix Resurrections went on a streaming service last week, and the theatrical results speak for themselves. [The film was released day and date on HBO Max.] People believe what they want to believe, but the numbers just don’t support it. I’ve got to believe, with time, everybody is going to understand that.
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