Great. I think we'll get started. Welcome to the IMAX Fireside Chat at the Goldman Sachs Communacopia and Technology Conference. I have the privilege of moderating this discussion with IMAX's CEO, Rich Gelfond. Rich has served as IMAX's CEO since 1996 and is responsible for transforming the IMAX business from a product that was primarily in science centers and museums to the ubiquitous and very successful commercial product that we all know today. Today we're gonna discuss IMAX's growth strategy, the future of movie-going, IMAX's new business initiatives, and expectations for the box office this year and beyond. My name is Mike Ng. I cover IMAX and movie theaters here at Goldman Sachs. We have 40 minutes for today's discussion, and we'll leave about five or 10 minutes at the end for investor Q&A.
So first, Rich, thank you very much for being here today, and for making yourselves available for this discussion. So IMAX is coming off of an incredibly strong summer, with blockbuster films like Top Gun, Jurassic Park, Thor, Minions, and the buzz for things like Black Panther and Avatar are really building. Could you talk a little bit about the film momentum that you've seen to date, and how the company is preparing for the release of blockbusters like Avatar this holiday?
Sure. And thanks for having us here, Michael. It's been a long history between IMAX and Goldman Sachs, and we very much appreciate it. So, 2022 has been, sort of, a transitional year for IMAX and the movie business. For the movie business in general, the pandemic obviously was dealt a strong negative blow. Theaters were closed, production was closed. Studios and streaming services tried new models, including day-and-date releases at home. And, in fact, there were premature obituaries written for the movie business. 2022 really has come back roaring, at least in the IMAX business. And I should just take diverge for a moment and say, if you come away with one thing, it's that IMAX is not a North American exhibitor. Two-thirds of our revenue are outside of North America. We don't have leases with movie theaters. We have no net debt.
We have $500 million in cash. Our trailing 12 months EBITDA is $100 million. We've been profitable from an EBITDA point of view for two years. So we have a very different model than what people think, not what they think, what an exhibitor is. So for us, the comeback has been really strong. So for the first six months of the year, our box office outside of China was about 90% of 2019, which was the best year in movie-going history and the best year for IMAX. By contrast, exhibitors were about 65%. So as you mentioned, Michael, we especially benefit from blockbusters, and this has been the year of the blockbuster.
So whether it was Doctor Strange or whether it was Jurassic World or you mentioned Minions or Top Gun, which in IMAX alone, we done $110 million. It's been a great year. One of the other points, though, is when you talk about the great year so far, you have to think about local language films. IMAX does films not only in North America, but our biggest successes are from elsewhere in the world. There was a number one movie in the U.S., called Dragon Ball Super: Super Hero. I can't always remember the something after it. But that's a movie that did over $20 million in the U.S., and we did about 20% of the box office. We've done movies in Korea this year. We did movies in Japan.
As a matter of fact, in the third quarter, where the headline has been, there are very few movies available. IMAX has done or will do 17 movies of local language, in various territories in the world. And we're in 89 countries. And as I said, the U.S. accounts for one-third of our box office. In terms of the rest of the year, which is your question, I think, you know, the films we're the most excited about are Black Adam, the sequel to Black Panther, and Avatar: The Way of Water. And of those, you know, I think Avatar is really a unique opportunity in the history of IMAX, which is over 50 years. The number one movie ever released in IMAX was the first Avatar, which did $250 million in IMAX alone. At the time, we had roughly 250 theaters.
And by way of example, we had 15 theaters in China that averaged about $1.5 million apiece. Right now, we have 1,600 theaters. So 1,600 versus 250. And in China, we have 800 theaters versus 13 at the time. So I think Avatar provides an extremely strong opportunity for us. I think Disney is gonna do a phenomenal marketing job. We've been directly in touch with the producer, Jon Landau and Jim Cameron. We've spoken with them. And not only am I excited about the movie 'cause what I learned about it, but I also think they understand the IMAX of it all. And again, I don't wanna take up too much time, but you know, there were six-hour waits for IMAX tickets. In China, the Politburo closed and took over an IMAX theater to go see it. It was kind of a frenzied atmosphere.
And I think a lot of the marketing for this one will play off of that frenzied atmosphere. So and internally, we have this task force we're working on technology, marketing, just figuring out ways to get ready for it. So very excited. And I don't know whether you're gonna ask later whether we should wait for later, but I think next year is equally promising on the blockbuster slate. Should I talk about that now or later, Michael?
You know, why don't we go ahead and talk about that now, the 2023 slate. You know, what are your expectations there? Are there any films on the 2023 slate that, you're particularly excited about or you might believe is underappreciated?
You know, it's a little too early to be underappreciated. We'll see as we get closer. In no particular order, there's a Mission: Impossible starring Tom Cruise. We did $110 million on Top Gun. That, we do very well on the Mission project. Chris Nolan, whose name is almost synonymous with IMAX because he films a lot of his content using IMAX cameras, has a movie coming out in July, called Oppenheimer. There's Fast and Furious 10, the next one in the franchise. There's three Marvel movies coming out next year. There's three DC Comics movies coming out next year, including Aquaman, which is over the Christmas period. I must be missing some, but there are a lot of really good content coming out next year.
That's great.
I should say I've left out the international content, but to give one example, in China, there's The Wandering Earth II, and The Wandering Earth, became the biggest film in the history of China. I don't remember exactly, but I think it did around $800 million, something like that. But there's a lot of global blockbusters as well.
That's great. I did wanna follow up on something that you said earlier, which I think is worth emphasizing. You know, the IMAX box office this year is at, you know, roughly 90% of 2019 levels, which is very impressive, outperforming the traditional exhibitor industry, as you pointed out, is closer to two-thirds. And you know, that blockbusterization strategy has certainly been helpful in achieving that. And I think insulates IMAX from a lot of the headwinds that an exhibitor might be facing as it relates to small and mid-budget films. You know, Top Gun had very strong indexing, as you talked about.
Could you talk a little bit more about this trend of blockbusterization, how that affects the relationships between IMAX and studios, and whether that makes IMAX a more important distribution partner as, you know, blockbusters continue to thrive while, you know, the future of smaller and mid-budget films may be a little bit less certain?
So the proof is in the pudding. And in addition to proof is in the results. And, our market share has increased dramatically, not only in North America but throughout the world. And, you know, in some places in Asia, our market share is up 40%. And the blockbuster trend is actually one that's been going on, for a number of years, but it was really gained momentum, during the pandemic. And, I think one of the main reasons for that is the advent of streaming. So I think when you look at the cost to a studio of releasing a movie, they need to have fairly significant box office returns. So a blockbuster which costs $200 million, you know, might cost more than $100 million to market. And a mid-level movie which costs less than that will still cost a lot to market.
So as a result, a lot of the mid-level and smaller films have migrated to streaming platforms. So whereas, you know, years ago, a typical release slate was around 150 films a year, you know, this year, it'll probably be closer to 100 or less than 100. Now, that has an impact on the exhibition industry, but it has virtually no impact on IMAX because IMAX only plays blockbusters. That is, that is our business model. And in the world of blockbusters, IMAX is kind of a curator. So IMAX, an IMAX release is a tag to consumers that this is a special movie. And if it's getting the IMAX treatment, you need to see it in, in IMAX. So there's almost no blockbusters that are released that don't have an IMAX, release window.
In fact, we turn down way more movies than are available, because we're only gonna play the top blockbusters. So, again, the loss of kinda the non-blockbuster movies has virtually no effect on us. Now, in fact, one could argue it has a positive effect, because the studios really need an IMAX release on a global basis. So that gives us leverage with the studios in terms of if they want us to do their release, you know, what are they gonna do for us? And there are all kinds of what I call soft instances where that's helped us. So, The Batman, which wasn't filmed with IMAX cameras, was released a day early by Warner Bros. only in IMAX, because they wanted to create a marketing link between the movie and IMAX. And that followed. Dune came out before that.
We did 22% of the global box office on Dune on less than 1% of the screens. The studios understand that the closer the link they put between IMAX and their content, the more likely the film is gonna better perform. Then there are other things we do, such as we film movies with IMAX cameras rather than up-res them using alternative technology. We've seen an uptick in the number of studios that wanna film their movies using IMAX cameras. I think it also adds leverage to us with the exhibitors, because I mentioned the market share numbers, but if you're an exhibitor and especially if you have your over screen, which many of them are, they really need more premium entertainment to bring people into a multiplex. As a result, you know, over time, I think demand should increase.
So the blockbusterization trend, I think, helps us on all sides of our business. And I should mention the most important one, which is with consumers. So if you saw Top Gun in a non-IMAX theater, and by the way, I should mention it was filmed with special IMAX cameras that were made for Top Gun. So we put cameras in the cockpit and designed them with Tom Cruise and the production team that put the movie together. A lot of the ground shots were with IMAX cameras. So if you watch Top Gun not in IMAX, the wings would be cut off in a number of the scenes, or the pilots, their heads would be cut off. But rather than stressing the negative, I mean, it's just spectacular.
It's like you're in the fighter jet or you're, you know, in whatever imaginary country it was watching the flyover. And it just creates such a different consumer experience. And I think that powers everything.
That's really great. Why don't we shift gears a little bit and talk about the IMAX Network and installations and the backlog? The backlog is still very strong. With that said, you know, I think there's a lot of uncertainty among exhibitor partners on what seems to be an uncertain macro environment or box office environment. Could you talk a little bit about the health of your exhibitor partners and the implications for future screen demand? How are you pacing towards that 80-100 screen installs and upgrades that IMAX has guided for this year? What are some of the swing factors that you see just as you think about installations?
So the biggest swing factor this year is China. So as well as the rest of the world is doing, as I said, China's traditionally about one-third of our revenues. China's still in COVID lockdowns, as you know. And as a result, for the first half of this year, China was extremely slow. In the third quarter, China rebounded, somewhat. And I think, you know, we're looking forward to a number of good things in the fourth quarter. Hopefully, Avatar will get into China, and I believe it will, that should turn that around. So that accounts for the, you know, the range and the swing. I think we have to see, you know, what's going on there. We actually got some very good news in the last couple of days.
We're going to do a formal announcement probably next week, but we signed a six-theater deal in China last night. And in fact, those are all signed and installed for this year. So that's an extremely positive development. But in terms of where we're at in the range, we'll wait till we get closer to the end of the quarter, and then we'll sort through it. And, you know, by the for our third-quarter earnings release, we'll give an update about that. In terms of the backlog, we have about 300 theaters in backlog. During the pandemic, we went to our exhibitor partners and we said, you know, you have no revenues right now. You are shut down. We don't really expect you to install IMAX theaters.
However, with that said, believe it or not, during the two years of the pandemic, we installed around 50 a year, which was kind of remarkable given to where audiences really going. But we delayed the backlog. But now that the pandemic has subsided, we've gone back to every one of those exhibitors, and we've updated the rollout schedule for the entire backlog. So of the roughly 300 theaters, every one was confirmed with a delivery date. So I'm really happy to say that it cost us some time, but it didn't cost us the reality that those things are gonna get installed. Of course, you're right, Michael, that the health of traditional exhibition is somewhat challenged because, I guess, any business, if you shut it down for two years, is gonna be challenged. But the beginning of this year really helped. The summer blockbusters have helped.
But IMAX, it's really the 80/20 rule. So IMAX does about 80% of its business or more, maybe it's closer to 90%, from the top 20% of screens. So no matter what happens in the industry and no matter who owns what, and that includes, you know, the recent bankruptcy announcements, people aren't closing their top 20% of their screens. And in fact, the Regal, Cineworld bankruptcy announcement last week, from where I sit now, has virtually no effect on us in terms of the theaters they're gonna close. And, I mean, you know, these things aren't always linear. But at the moment, I can go back to 2000 and 2001, when the exhibition business had a similar kind of downturn, even worse. There were massive bankruptcies. We lost nothing out of backlog during that period of time.
In fact, our business has grown. I'm trying to remember, but probably from 100 theaters or 200 to 1,600 since that period of time. So I think it's a short-term issue that we'll get through. You know, the simple answer is IMAX does a lot of business. You know, on most of these blockbuster movies, on 1% of the screens, we do 10% of the business. So if you're gonna restructure or you're challenged, you're not gonna play around with your best-performing theaters. You'll play around with your worst-performing theaters. So although, you know, I'm not happy about this, obviously, there are partners, and we feel for them. It, I don't believe it'll have an impact on it.
And one can argue that as the base of screens shrinks in North America, that ultimately that will continue to increase our market share and will increase demand for the IMAX experience. And, you know, one final thought is I think if the pandemic was the ultimate stress test, right? It, it had been going on for years where streamers had said, you know, we don't need movie theaters. We'll just sell it to people in their homes, and we'll cut that out of the value chain. In fact, that was a disaster. And, it was a failed experiment under the most amazing stress test. And there were so many reasons. One was massive piracy. So, you know, I don't know what people were thinking, streaming services, but you put out clean copies, you know, for $20.
The fact that people knocked them off and steal them, I mean, I'll use a very sophisticated word, duh. I mean, you know, I just it never held together for me. So I think having come out of that period, the studios and kind of the existential overhang over the movie business has been eliminated in the most difficult of circumstances. So I think despite the fact that there's still a little muck to, you know, navigate through, that we're all gonna come out of this stronger, and particularly IMAX.
Right. Yeah. I would certainly agree the rate of change seems to be getting better, right? There's a recommitment to the theatrical-to-home video window. It seems like streaming services are more likely to distribute into theater at some point in the future. So I certainly agree with all those trends.
Yeah. On that point, Michael, virtually every streaming service is having discussions now, with us, and others about what kind of theatrical window is appropriate. I do think it probably won't happen tomorrow, but I do think over the next year, you're gonna see more of that. And, not to belabor the point, but Top Gun was the number one digital release of all time, meaning on PVOD and paid services. And that movie collected $1.5 billion in box office before it got to digital. So again, I don't know what people were thinking by thinking it was a better model to send clean copies over the internet, but I don't think anyone thinks that anymore.
Right. And Apple's CODA won Best Picture, right? So we're, we're seeing more of that. Why don't we shift gears and, and talk a little bit more about local language? You mentioned Wandering Earth. There have been other huge successes like The Battle at Lake Changjin in China. Could you just dive in a little bit deeper around the local language strategy? I think historically, it's been there to help balance out the film slate, either when Hollywood production has shut down or in shoulder periods. How does local language fit into IMAX's strategy today? And has that changed from where it has played a role historically?
It has. And I think that was one of the silver linings of the pandemic. We made a conscious decision to diversify away from Hollywood content. And I'm trying to, I don't remember the exact number, but I know that in 2022, we have twice as many local content releases as we had two years ago. And I think there's still a long way to go. So I'll answer by starting with a market example, which is Japan. As I mentioned to you earlier, I just got back from Japan yesterday. I did a little bit of a tour of Asia. And Japan has the highest per-screen averages of any country in the world for IMAX, and it's $1.5 million a screen, which is extremely high.
And they did it in a year this year, which is still not. Hollywood films aren't really open. And the Japanese have really committed to using local language film as part of their IMAX offerings. And in fact, the two biggest releases in the history of Japan are something called Demon Slayer and Shin Evangelion. And those films received prominent release in IMAX. And it's hard to believe 'cause of the time difference. But in my meetings yesterday with some of the studios in Japan, they made it very clear that they see IMAX as a valuable marketing tool for their local language films. And there was one film called Dragon Ball Super: Super Hero that we did extremely well in China, and then we moved it to the U.S. where it did extremely well here.
So I think they see IMAX not only as a local tool, but one that will help them with export. And I think something like half of their box office this year is attributable to local language film. But that's what you mentioned China. We have a lot of films in China, local language film. It's been a big part of our programming, and our network is fairly large there. So in kind of the more rural areas, they'd be much more likely to like a local language film than to wanna see a Marvel or a DC comic film. So it's not only a replacement in some senses. It's better. We did a French film this year about the fire at Notre Dame. We've done Korean films this year.
Just this past weekend, I wish I could remember how to pronounce it, but I don't wanna embarrass myself. In India, we did our most successful Indian language film in a number of places, and you know, people don't talk about that much. They talk about it in the area of television where this Korean series or this French series or from anywhere else. But we're really the only company taking advantage of the globalization of content and providing multiple platforms to distribute that content.
Right. And then on China, can we talk a little bit about the macro and operating environment in Greater China? It's obviously been an area that's been challenged by COVID lockdowns over the last year. And, you know, I think there are some continued capacity restrictions in some Chinese theaters. What's the current status of IMAX's presence in China? Has the strategy changed at all for that country?
The strategy hasn't changed, but the reality on the ground has changed, so a surprisingly high number of theaters are open. So a few weeks ago, and again, I've been out of the country. I haven't caught up. We were like 90% or 95% open. But the two big factors have been the COVID shutdowns and the lack of Western films available there. In terms of both, and again, I could spend too much time on this, Michael, but the election is the Party Congress is in mid-October. I think it's the 16th. And I think it's highly likely that President Xi will be reinstated as president for another term. But the way the politics work in China, until that's finalized, the bureaucracy is very conservative. So people are really afraid to go out on a limb and make a mistake.
And I think that has a lot to do with the lack of Western product being there. 'Cause I think just no one wants to tip the apple cart while that's going on. And I do think that a lot of the legitimacy of the Communist Party and a lot of the popularity there is based on the economic miracle that's been China. And we've been in China for over 20 years. I personally have made 57 trips to China. And our CEO there is very experienced and knows it well. So I think it's very easy to have a recency bias and say exactly what's happening today is gonna happen tomorrow. But I don't think that's the case.
I think following the election and hopefully Avatar getting in, I do think there's gonna be a return to normalcy on both the COVID policy as well as the importation of Western films. I mean, you look at the economic data coming out of China, and I just don't believe that's where they wanna be long-term. So I think there's every incentive for that to happen. The next question would be, you know, what's my confidence in that? I'd say probably 80% 'cause it's a complicated world and how the Ukraine plays in and the Biden administration. There's a lot of factors beyond our control, but I feel quite good about it.
Great. Before I see if there are any audience questions, why don't I squeeze one more in? You know, I think a lot of people have been impressed, certainly I have, about IMAX's track record of evolving with the media and exhibition industry. You know, starting out focusing on documentary filmmaking in museums and science centers to, you know, the commercial and blockbuster strategy today. IMAX is undergoing, you know, the next stage of that evolution with what you described as IMAX 3.0, which really focuses on unique live events and experiences globally. Could you talk a little bit about the vision and opportunity here, and why it makes sense now?
I was part of a group that bought IMAX almost 30 years ago in an LBO. And as you say, it was there were 55 theaters in the world, and they were in museums and science centers. And the movies we played were Whales, Bears, and Seals, and we had a vision to bring it to multiplexes on a global basis. And we've largely accomplished that. And that's what I call 2.0. I think the platform and the brand are so powerful on a global basis, and I give our team high marks for that. But I think in terms of value creation, there's a long way to go. And I think you mentioned some of the three top initiatives, but we're in the process of wiring our theaters now. And we're not just wiring them with the cable that the TV guy puts in.
We've developed proprietary technology and very high bandwidth, and we're doing live events that are filmed with IMAX cameras, and if you saw them in the theaters, they're truly remarkable, so we did a Kanye West- Drake concert, and people were jumping on seats. I think you may have seen some of the footage and incredibly excited about it. We've done a bunch of Q&As, so the one I found most interesting is Peter Jackson did the Beatles series on Disney+, and three months after that, he cut it down to just the concert on the roof, and we did a live Q&A with Peter where he was in a cabin in New Zealand, and thousands of people showed up in our wired theaters.
Literally, Peter said, "You, the guy in the yellow shirt in London, you know, what's your question?" And it was really popular. We filmed it. We re-released it in not only the live form. We did $3 million. This is for something that was on Disney+, three months ago. So we have a lot coming forward on live. As a matter of fact, Monday, we're doing a live Q&A with Olivia Wilde and Harry Styles. And a lot of theaters sold out immediately. It was in the trades. We have a bunch of music concerts coming up. We released the tickets for Brandi Carlile last week. And it's about a month from now, well, maybe three weeks from now. And we sold out about 25% of the network in the first couple of days.
So we think that's a really good revenue opportunity and a really good marketing opportunity for us. And it's not really a chicken and egg because we control wiring the network. And we've got about 150 theaters wired now. We think we'll be over 200 by the end of the year. And we would hope to at least double that next year. And obviously, the economics get better as you grow the fixed base. We have something called IMAX Enhanced, which makes images better on television sets in the home. And we have a deal with Disney+ where we do that for all the Marvel movies. And they've added to that deal as the year has gone on. I'm glad you referenced it by the 3.0 'cause there's actually some technology kind of innovations that we're in the process of experimenting with right now.
You shouldn't be surprised to see, relatively soon, some ideas, some businesses that use AI and other elements to provide additional revenue streams, going forward. I think it's really an exciting time. Our brand is obviously global and obviously really special. As I said, for all we've accomplished, I think we've undermonetized it.
Great. So, in closing, you know, I just wanted to ask about some of the differences between IMAX and your exhibitor customers. You know, IMAX is often paired together with the domestic movie theater industry. But, you know, as you mentioned throughout this conversation, there are a lot of differences. It's capital light, focused on blockbusters, has a much broader geographic footprint. Could you talk a little bit more about some of these differences and how that translates into a different financial profile for IMAX relative to an exhibitor?
Sure. I mean, our model is a technology license model. So, we don't own theaters. We don't have employees at theaters. We don't have leases with theaters. We license the IMAX technology to theater operators. And our financials are somewhat complicated. However, there's a shortcut to cut through it, which is you basically look at our gross box office, and then you take about 18% of that. And, you know, that roughly that's a very simple way to cut. So if we did $110 million in box office on Top Gun, it translates roughly into an incremental $20 million for IMAX. And, the hard part was building out the network 'cause that was capital intensive, when we built it out. But now we have this great network, and it's highly leveraged to whatever the box office is.
And then, you know, again, we don't. During the pandemic, we burned almost no money 'cause we don't pay landlords leases. We have no net debt. You know, in a way, Michael, I was tempted to be snarky and say, "You should actually differentiate it from a steel company 'cause it's that different. We're in 89 countries." Again, when the industry turned around, we turned around like that. So it, it's just a completely different business model. Yes, we both make money off of showing movies. And I guess one other thing I should say is not business model related, but really important. We're in the middle of the ecosystem in Hollywood, and not just in Hollywood, all over the world.
You know, we deal with Megan Colligan, our head of entertainment, with the most prominent directors, actors, studios. That's our business in terms of creating this global product. Exhibitors basically get movies that are done, and they press the play button, and they make money on popcorn. I mean, this may turn you off, but we make no money on popcorn. Our business has nothing to do with popcorn. But you know, other than that, we're exact replicas.
Great. That's a great way to cap off the session, Rich. It's always a privilege to share the stage with you. Could you please join me in thanking Rich for his talks and thoughts?
Thank you.