IMAX expands China operations

IMAX has a Chinese dream for the fastest growing film market in the world.

On April 16 in Beijing, the company known for its giant-screen technology announced the official start of the cooperation with CMC Capital Partners, China's leading investment fund chaired by Li Ruigang, and FountainVest Partners, a leading China-focused private equity firm.

The two Chinese companies purchased a 20 percent stake in IMAX's Greater China subsidiary for $80 million on April 8.

"At this juncture, it makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China," says IMAX Corp's chief executive officer Richard L. Gelfond.

"We believe Li and CMC, as well as FountainVest, are ideal partners, whose status, leadership and expertise will be invaluable in helping us accomplish these goals."

According to the company's 2013 annual report, China has become the fastest growing market for IMAX, contributing $56.48 million, a 25.7 percent growth over 2012's $44.92 million, to the company's $288 million revenue in 2013.

China now has 173 IMAX screens, and Gelfond expects an additional 239 theaters (including two upgrades) to be installed by 2021.

The company, which has a 15-year plan to tap into the Chinese market, has worked with multiple Chinese filmmakers to make IMAX-format movies, such as Feng Xiaogang's The Aftershock and Cheang Pou-soi's Monkey King 3-D, so far the highest-grossing Chinese film for IMAX, with ticket sales reaching $160 million. The next big project would be Zhang Yimou's Coming Home in May.

At the ongoing Beijing International Film Festival, a screening is specially designed to showcase IMAX films, including the Transformers series and The Avengers.

The introduction of CMC and FountainVest is believed to be a prelude to IMAX China's initial public offering, and Gelfond confirms that IMAX expects the deal to lead to an ultimate IPO.

But Li of CMC, backed by the National Development and Reform Commission, notes that an IPO is not his target now. Rather, he envisions a long-term momentum for the Chinese film industry by cooperating with companies from Hollywood.

"I am more concerned about what Chinese filmmakers can learn from working together with American companies to build a more sophisticated and professional industry here in China," he says. "Almost every link in our industry now is weak, from financing, law, education to production."

Responding to the Chinese government's eagerness to promote Chinese soft power all over the world, IMAX promises to export more Chinese films to overseas markets. In September 2012, Hong Kong director Tsui Hark's Flying Swords of Dragon Gate was released exclusively in IMAX theaters in the United States.

"With 837 theaters in 57 territories we'll continue to leverage our global theater network as a culture-exchange platform to showcase the artistry and talent of Chinese cinema in multiple countries."

Li is realistically positive about the expectations.

"The most important issue to address for Chinese filmmakers if they want a global presence for their films, is storytelling, not facilities," he says. "It needs time and patience, and the experiences and expertise gained in working with Hollywood."

IMAX's Chinese strategy also extends to small screens. The company and China's TCL Multimedia Technology Holdings Ltd announced on April 16 a joint-venture partnership with Wasu Digital TV Media Group as part of their IMAX TCL home theater initiative.

As one of China's largest digital content providers and one of five operators approved by the State to deliver multimedia content to the home, WASU will license and distribute IMAX-enhanced Hollywood and Chinese current theatrical and other content to the IMAX-TCL premium home theater system.

The deal builds on the 2013 joint venture agreement between IMAX and TCL to design, develop and manufacture a premium, fully integrated home theater system that is expected to launch in China and select other global markets in 2015.