IMAX China is targeting 1,000 screens on the mainland. The cinematic technology provider from the US eyes expansion in the market's lower-tier cities for better location and less competition. Photo / IC

IMAX - a US cinematic technology provider - is eyeing greater revenue from the Chinese mainland market, fueled by a higher box-office share, larger theater network and deeper involvement in the country's movie industry.

"In the next few years, we will focus on building value. It would take more than five years to penetrate the Chinese market," said Richard Gelfond, chief executive officer of IMAX Corp and chairman of IMAX China Holding Inc.

IMAX China shares made their debut in the Hong Kong stock market last Thursday after garnering net proceeds of HK$450.7 million at HK$31 apiece. The funds will be used for network expansion, building up inventory and for various investments, including a film fund as well as facilities to convert conventional films into the IMAX format.

On the same day, IMAX Corp, its parent company, announced the extension of its revenue sharing arrangement with Omnijoi Cinema Development Co Ltd, a Jiangsu province-based State-owned cinema operator, to add 15 new IMAX theater systems on the mainland. The deal raised the total number of Omnijoi Cinemas' IMAX screens to 31, making it IMAX's third-largest exhibitor on the mainland after Wanda Cinema and CJ CGV Cinemas.

"We provide a single-screen theater system. At any given time, there might be five to six movies on, but we can only do one of them. We used to get 10 to 15 percent of box office in movies we are involved in. As we open up more theaters and do a better job in choosing movies, we'd like to see our share move up, eventually to 15 to 20 percent of the box office," said Gelfond.

According to the listing material of IMAX China, as of June 30 this year, the company has been operating 221 commercial IMAX theaters on the mainland, representing 88 percent of the 251 theaters that have already opened in 94 mainland cities, Hong Kong, Macao and Taiwan. Installation of a further 217 systems has been scheduled for the region.

IMAX, which used to focus on top-tier mainland cities, has shifted more attention to smaller cities. By end of June this year, 30.7 percent of its planned theaters were located in third- and fourth-cities, whereas a similar number has been pinned down for first- and second-tier cities. The remainder has not been determined.

"We are targeting 1,000 screens in China," said Gelfond. "It's not so simple to say first-tier cities are better than fourth-tier cities, where there is no opera hall, no theater - much less competition. Only 11 percent of our screens are in top-tier cities. It's hard to get a good location in first-tier cities because real estate has been very expensive. In smaller cities, you can go to the brand new entertainment centers in downtown. There are many variables."

Meanwhile, IMAX also plans to invest in more Chinese-language films. "When Chinese studios make films and want to play them in IMAX format, we would hope to get involved in the production too. If it's the right kind of opportunity, we would film a lot of them. We would like to co-invest along with the producers," Gelfond said.

According to Gelfond, China Media Capital - a leading Chinese media investment fund established and run by Li Ruigang, former president of Shanghai Film Group and non-executive director of IMAX China - is running a film fund for IMAX.

"The goal is to invest somewhere between $4 and $6 million per movie and eight to 10 movies with the fund's current size," Gelfond said. "If it's successful, over time we will probably bring in more investors and commit more money ourselves."

emmadai@chinadailyhk.com

(HK Edition 10/15/2015 page7)