Film Fans Keep Splurging on Blockbusters in Imax, So Why Hasn’t Wall Street Gotten on Board?

THE TRIP TO Baden-Baden didn’t go as planned.

Last summer, Imax CEO Rich Gelfond touched down in the German city for a conference of theater owners, looking to hype the blockbusters that were about to unspool on the company’s football-field-sized screens. But instead of excitement, Gelfond was greeted with outrage. “I was almost attacked,” he remembers, lifting his palm as if to ward off assailants.

All the sound and fury directed at Gelfond that day stemmed from a battle that had recently erupted in Hollywood between two top talents. At stake had been access to Imax’s screens: Tom Cruise and Christopher Nolan had both wanted them in July, among the busiest times for moviegoing.

But even Cruise, who had personally lobbied Gelfond to give his next “Mission: Impossible” tentpole a longer run, couldn’t outmaneuver Nolan. Nolan’s epic “Oppenheimer” was shot with Imax film cameras, which contractually meant his movie could be the only offering in Imax for three full weeks.

For theater owners, the deal with Nolan meant losing out on playing Cruise’s “Mission: Impossible — Dead Reckoning Part One,” expected to be one of the year’s biggest hits, at its most profitable venues. Exhibitors in Germany were blunt, Gelfond says, assuming the personas of his critics. “What? Are you an idiot? Why wouldn’t you play ‘Mission: Impossible’? I thought you guys knew what you were doing!”

You don’t need to be a movie fanatic to know how this saga ended. “Oppenheimer” was an unstoppable box office force. It grossed $188 million in Imax, just behind behemoths like the two “Avatar” movies, “Star Wars: The Force Awakens” and “Avengers: Endgame.” And “Mission: Impossible” sputtered, ranking as one of the year’s biggest commercial disappointments.

As Gelfond sits in his New York office, near a poster of J. Robert Oppenheimer huddling with Albert Einstein, he isn’t boastful about his bold wager. “It was easy,” he says. “I try to make life simple: Whichever movie is the first to commit wins. We committed to Chris, and Chris has been committed to Imax over the years.”

But that’s a risky mindset. Gelfond read “American Prometheus,” the book that became “Oppenheimer,” at Nolan’s insistence and struggled to picture its commercial appeal. (At nearly 800 pages, it’s also a struggle to finish.) “When someone commits to Imax, we don’t know if it’s a great or bad movie,” Gelfond admits.

Months removed from the Sturm und Drang, Gelfond’s detractors have come around. “Many people have called and said, ‘You know, there’s not much loyalty in Hollywood. In retrospect, we respect you for doing that.’”

And the gratitude extended out from there. At the Oscars in March, where “Oppenheimer” triumphed, producer Emma Thomas gave a shoutout to Gelfond in her best picture acceptance speech. It was a nod to the critical role the company’s technology played in the movie’s success: Filming “Oppenheimer” with Imax cameras gave a cerebral drama about nuclear armament an epic feel that helped it become a summer blockbuster.

Gelfond is still stunned by Thomas’ public acknowledgment. “They thanked me privately, and I thought that was more than enough,” he says. It was Gelfond’s wife, Peggy, who exploded with excitement as she sat in the audience at the awards show and heard her husband name-checked. “My wife goes, ‘That’s my husband!’ to the people sitting next to us, who could probably care less,” he recalls.

The success of “Oppenheimer” and last month’s “Dune: Part Two,” which earned roughly 20% of their ticket sales from Imax, demonstrates the force of the Imax brand. When audiences go to the movies, they overwhelmingly choose to see films in Imax. In the process, Imax, with its sprawling screens and carefully calibrated sound systems, has become the gold standard for ticket buyers. (People crossed state and country lines to see “Oppenheimer” in 70 mm Imax, selling out auditoriums for weeks. More recently, theaters added 3 a.m. and 6 a.m. Imax showings of “Dune 2,” which was shot with Imax lenses, to meet demand.)

“I strongly believe that the future of cinema is linked with Imax,” says Denis Villeneuve, the director of “Dune 2.” “It just conveys a level of quality.”

Yet even as Imax has become invaluable to filmmakers like Villeneuve and Nolan, the company struggles to get respect from Wall Street. That frustrates Gelfond, an unflappable lawyer turned entertainment executive who helped transform Imax from a purveyor of nature documentaries into a Hollywood powerhouse. It was Gelfond who orchestrated a 1994 leveraged buyout of the company, took it public and, over several decades, enlisted studios to showcase their biggest films on Imax’s patented screens (allowing them to charge more for tickets in the process). His pitch worked — studios now vie for the company’s cameras and limited number of venues. (Imax has 1,772 auditoriums — a fraction of the 250,000 screens worldwide.) Yet Imax’s share price has languished at roughly $16, down from the more than $19 it was trading at a year ago.

“Investors like to invest based on comparables,” Gelfond says, ”and there is no other Imax.”

Gelfond thinks Imax is being valued like AMC Theatres, Cineworld and other major cinema chains, which are mired in debt as they grapple with the overhead required to maintain hundreds of locations at a time when attendance is still lower than it was pre-pandemic. “I like to say we have as much in common with North American exhibitors as we do with steel companies,” Gelfond says, adding, “It’s a totally stupid line.”

Gelfond has a point. To make money, Imax licenses its technology — its screens, sound systems and projectors — to various theater companies. It also allows filmmakers to choose between its two kinds of photography equipment: a film camera (there are only eight in existence), like the ones Nolan used on “Oppenheimer,” and an array of Imax-certified lenses that modify digital cameras, such as those deployed on “Dune: Part Two.” The company overindexes on ticket sales for the films that are shot with its technology.

“It’s an asset-light model,” Gelfond says. “We don’t own theaters. We don’t sell concessions.”

But Imax relies on special effects-driven blockbusters to draw crowds, and that’s a problem: Thanks to COVID delays and the two labor strikes, studios aren’t expected to release as many major movies in 2024. Gelfond acknowledges that the year got off to a rocky start. “The first two months, there wasn’t much out there.”

Though the box office was down 20% through February, it sprung back to life with “Dune 2,” giving Gelfond confidence that overall revenues will be roughly in line with the previous year’s. He sees “Deadpool & Wolverine” and “Joker: Folie à Deux,” both of which used Imax digital lenses, as potential bright spots. “The year is better than it looks to the outside world,” Gelfond says.

Moreover, 2025 will offer up sequels to “Jurassic World” and “Captain America” along with a Fantastic Four movie, making it, in Gelfond’s words, “stupid good.” Many of those movies will be filmed with the company’s cameras and lenses, as well.

There’s a reason that Imax prizes its relationships with auteurs like Nolan, Todd Phillips, Jordan Peele and Paul Thomas Anderson, to name a few filmmakers who have worked, or will work, with Imax. These top directors can harness the power of TikTok influencers as they promote their movies, usually stressing that Imax is not just an optimal viewing experience, but the way their films were meant to be seen.

“Directors need to know that Imax is one of the greatest partners you can have,” says Phillips, who used Imax cameras on both “Joker” movies. “If you show them a little love by embracing the format, they give it back to you 10 times.”

Imax rewards loyalty. Its employees are made available early in the filmmaking process to troubleshoot issues with movies that use the company’s film cameras. That’s important because Imax film cameras are massive and hard to maneuver. Though Villeneuve would have liked to use them for “Dune 2,” logistics won out, and he eventually opted to shoot on digital. “The film cameras look better, but we were shooting in the heat of the desert and needed more flexibility,” he says.

For movies from a director like Nolan, who only shoots on film, Imax finds experts who can still operate the few dedicated projectors that use old-school film stock, a rarity in a mostly digital business. In some cases, projectionists have been moved across the country so they can work in certain Imax venues. Because Imax goes to such lengths, Gelfond says, many employees approach their jobs with unusual intensity.

“A long time ago,” Gelfond says, “someone said to me, ‘People at Imax think they’re curing cancer.’ And I said to them, ‘Don’t tell them they’re not.’”

SEQUELS TO HITS like “Dune” and “Joker” used to be as close to a sure thing as you could get in the movie business. But it’s harder to know what audiences want these days. Last year, comic book movies like “The Flash” and “Ant-Man and the Wasp: Quantumania” flopped, raising questions about a type of moviemaking that could do no wrong at the box office. At the same time, more offbeat offerings like “Oppenheimer” or “Barbie,” which aren’t part of long-running franchises, topped the box office. It seems like one of those moments when popular tastes are shifting.

Gelfond isn’t having it, declaring it “premature to hold the funeral for superhero movies.” He predicts that upcoming comic book movies like “Deadpool 3” and “Joker: Folie à Deux” will recapture the excitement for costumed heroes and villains. But he also stresses that Imax is about more than one genre. “We try to be the creative outlet for great filmmakers. And if they’re going in different directions, we’re going in a different direction.”

Since it can’t rely on just Hollywood blockbusters, Gelfond says, Imax has “widened its aperture” when it comes to what it screens, pointing to music documentaries and concert films featuring the likes of André 3000 and Queen. The company also plans to broadcast the Paris Olympics opening ceremony in 160 of its domestic locations. And it’s partnering with A24 to create a monthly screening series for older favorites.

At the same time, the company, which has a significant presence in Asia, has moved heavily into local-language content in places like China and Japan, making Imax less reliant on Hollywood fare. More than 20% of its global box office in 2023 was from foreign films.

Imax’s revenues have climbed despite an industry downturn, a sign the strategy is paying off. The company took in $1.06 billion at the global box office in 2023, the second-best year in its history. That’s impressive considering major theater chains that house its screens saw their sales fall 24% from pre-pandemic times.

“Investors don’t give Imax credit for how much flexibility they’ve demonstrated,” says Eric Wold, an analyst with B. Riley Securities. “Imax has figured out a way to have more control over its destiny.”

Still, Imax must contend with an armada of rivals. There’s no shortage of other high-end presentations, known as premium large formats, on the market, like 4DX, Cinemark XD and Event Cinimas-branded V-Max. But in the fight for audiences, Gelfond says all screens aren’t created equal.

“I think exhibitors do their best to confuse the consumer. They put an ‘X’ in all their titles,” he says of rival companies whose names look a lot like “Imax.” “Either that or it’s a funny coincidence.”

The difference, he says, is some of the other brands aren’t doing much to improve the quality of the image before slapping a surcharge on admission. Instead, they’re using an ordinary projection on a larger screen. Imax, however, works with directors to alter the film, increasing the resolution and sharpness of the larger-than-life footage.

“I remember when I was a kid and I copied my hand on a Xerox machine. The more you blew it up, the worse it looked,” Gelfond says. “That’s the dirty little secret of other PLFs — the image is bigger and people pay more for it, but it’s actually not a better image.”

Gelfond doesn’t blame the copycats — “America is built on capitalism,” he says — but he dares the consumer to accept any substitutes. “Where it crosses the line is when they try and say, ‘As good as Imax’ or ‘Better than Imax.’ I understand their business reasons, but it’s just an entirely different thing.”