Imax China deal will get more movies into grow­ing mar­ket

Higher rate ‘good for our busi­ness’

The Washington Times Daily - - Business - BY TIM DE­VANEY

What bet­ter mar­ket is there for the world’s big­gest movie screens than the coun­try with the world’s big­gest pop­u­la­tion?

Movie gi­ant Imax is op­ti­mistic that it will be one of Hol­ly­wood’s big win­ners in a new trade agree­ment be­tween the U.S. and China that will open up the film mar­kets in both coun­tries. The deal ex­pands the num­ber of for­eign films that will be per­mit­ted in China and in­creases the box of­fice share that goes to stu­dios.

“The Imax brand is re­ally pow­er­ful in China,” Imax Corp. CEO Richard Gel­fond said in an in­ter­view. “This brings China much closer to what the U.S. busi­ness model is for us. If you can ship more movies at a higher rate, that’s a good thing for our busi­ness.”

Imax, which has 80 the­aters in China and plans to in­crease that num­ber to 217 in the next few years, spe­cial­izes in show­ing supersized films with screens that are larger than in reg­u­lar movie the­aters. They play both tra­di­tional and 3D movies.

The White House an­nounced the new film agree­ment, part of the Obama ad­min­is­tra­tion’s ef­forts to ex­pand U.S. ex­ports, last month in Los An­ge­les, af­ter Vice Pres­i­dent Joseph R. Bi­den Jr. and Chi­nese Vice Pres­i­dent Xi Jin­ping reached a deal that is ex­pected to boost the film in­dus­try in both coun­tries.

“This agree­ment with China will make it eas­ier than ever be­fore for U.S. stu­dios and in­de­pen­dent film­mak­ers to reach the fast-grow­ing Chi­nese au­di­ence, sup­port­ing thou­sands of Amer­i­can jobs in and around the film in­dus­try,” Mr. Bi­den said in a state­ment. “At the same time, Chi­nese au­di­ences will have ac­cess to more of the finest films made any­where in the world.”

Un­der the deal, U.S. stu­dios can take a 25 per­cent cut from box of­fice rev­enues, up from the cur­rent 13 per­cent to 17 per­cent. The Chi­nese gov­ern­ment will con­tinue to cover the costs for mar­ket­ing and film prints.

“This land­mark agree­ment will re­turn a much bet­ter share of the box of­fice rev­enues to U.S. stu­dios, re­vis­ing a two-decade-old for­mula that kept those rev­enues woe­fully un­der nor­mal com­mer­cial terms,” Mo­tion Picture As­so­ci­a­tion of Amer­ica Chair­man Christopher J. Dodd, a for­mer U.S. se­na­tor, said in a state­ment.

That means Imax will take in about 12.5 per­cent of box of­fice rev­enues, up from as low as 6.5 per­cent. Spe­cialty com­pa­nies such as Imax typ­i­cally only get half the rate of tra­di­tional stu­dios.

“For any U.S. film com­pa­nies do­ing busi­ness in China, it’s an im­por­tant de­vel­op­ment,” Mr. Gel­fond said.

China cur­rently im­ports only 20 for­eign films per year, the bulk of them Amer­i­can. But un­der this new deal, they will ac­cept an ad­di­tional 14 films that are “en­hanced,” which in­cludes Imax’s big-screen and 3D movies. Al­most all such films made world­wide are Amer­i­can.

“This is the first time they’ve set up a sep­a­rate bucket to let Imax films into the coun­try,” Mr. Gel­fond said. “It will help us get more movies in China. I’m con­fi­dent it will be more.”

Hol­ly­wood is prais­ing the Obama ad­min­is­tra­tion for the new film deal.

“This agree­ment rep­re­sents a sig­nif­i­cant op­por­tu­nity to pro­vide Chi­nese au­di­ences in­creased ac­cess to our films,” Walt Dis­ney Pres­i­dent and CEO Robert Iger said.

The In­de­pen­dent Film & Tele­vi­sion Al­liance said the agree­ment would open new doors in China for small movies that have had dif­fi­culty break­ing into the mar­ket.

“For In­de­pen­dents, this agree­ment is mo­men­tous,” IFTA Pres­i­dent and CEO Jean Pre­witt said. “Our sec­tor has been un­able to ben­e­fit fully from the ex­ist­ing rev­enue-shar­ing im­por­ta­tion quo­tas and has had limited av­enues through which to dis­trib­ute. For the first time, through this agree­ment, there is a prom­ise of cre­at­ing a com­mer­cial foun­da­tion that will al­low in­de­pen­dent pro­duc­ers to par­tic­i­pate more fully in the Chi­nese mar­ket­place.”

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