IMAX is looking to target high net-worth individuals in China and real estate developers in the country with its new $400,000 home theater system, according to a company executive.
Robert Lister, chief business development officer for IMAX Corp, told China Daily that the company is looking to target three segments of the market: wealthy individuals, high-end real estate developers, and home designers that individuals consult when they furnish their homes.
"Before we even launched the product, a lot of the market research we did were on things like Bentleys and Ferraris - things that are the very, very high-end of luxury goods and there seems to be a great appetite for that in China as more capital flows to the middle class and the upper class," he said. The product has only been available since June, and Lister said the company is optimistic about sales. "We do have a lot of confidence," he said.
IMAX China, a subsidiary of IMAX that focuses on China, listed on the Hong Kong Stock exchange last week. It teamed up with TCL Multimedia Technology Holdings Ltd to manufacture the 20-feet-by-10-feet screens that will play IMAX movies at the same time they are available for release in theaters. Homeowners will pay a fee for movies, a figure that IMAX is negotiating with various studios, according to Lister.
The company unveiled the luxury home-entertainment system at Le Royal Méridien Shanghai for customers in the summer. The system features sound isolation, acoustics, wall treatments and audio-visual content from IMAX.
"Our strategic partnership with TCL, one of the world's leading entertainment technology manufacturers, strengthens both companies' positioning in China, with its rising demand for premium entertainment, and creates an ideal launch-pad for global expansion in the home entertainment sector," said Lister at the time of the product launch.
Eric Wold, an analyst with B. Riley & Co who follows IMAX, said that the home-theater system's price point means that IMAX doesn't need a huge number of sales to make the venture economically viable.
"It's not as much of a gamble as it would be. They've spent 20-30 years developing the technology, so to partner with TCL and launch a smaller system, it's expensive but you don't need a lot of sales to make it work," he said. "The people that can afford this are not the people who go down to your local multiplex on a Saturday night and sit next to the riff raff and pay $12. They're happy to sit in their homes. There's a market for it."
The Chinese box office is the second-largest in the world, earning $4.8 billion in 2014, a 34 percent increase over the previous year. China is ranked right behind the US, which took home $10.4 billion last year, a 5 percent decrease from the year prior. Many analysts predict that China's box office will overtake the US' by the end of the decade.
IMAX has 251 screens in China, and is planning to build 217 more. IMAX announced on Oct 8 that it reached a deal with Chinese company Omnijoi Cinemas to open an additional 15 IMAX theater systems in China. Its box office revenue was $183 million last year
IMAX China made its Hong Kong Stock Exchange debut on Wednesday, becoming the first Hollywood company to list shares in Hong Kong and raising $248 million to do so. It priced its shares at 31 Hong Kong dollars ($4), and closed at 34.25 Hong Kong dollars on opening day, about a 10 percent increase. Shares were 36.5 Hong Kong dollars at market close on Oct 9.
"Going public has been part of our long-term China strategy, and we believe the introduction of local Chinese investors into the business will further solidify our position in the Chinese market," CEO Gelfond said on opening day.
Wold said that the company is clearly aiming for the Chinese market, where a third of its business now exists, adding that there will be a continuation of growth trends within the movie industry and increasing demands from customers who will pay to watch films.
"IMAX China's stock's up 18 percent in the two days since it became public, so clearly the valuation has gone higher already," he said. "They haven't seen a degradation in demand, they haven't seen a degradation in box office numbers per screen. It's held up. That bolsters optimism."