Imax CEO Explains How China's 70,000 Theater Screens Could Start to Reopen

With new coronavirus cases in China approaching zero, Richard Gelfond is optimistic that moviegoing will resume and grow in the coming weeks and months.

As China makes progress battling its coronavirus outbreak, Imax CEO Richard Gelfond sees increasing signs that the country's exhibition sector — shuttered since Jan. 23 — could begin to turn its lights back on.

"I'm hoping — and a lot of this is subject to biology — that by June things will be somewhat more normal over there," Gelfond tells The Hollywood Reporter.

With China home to more than 700 Imax theaters — roughly half of the giant-screen exhibitor's global network — Gelfond has monitored the coronavirus outbreak's devastating impact on the global exhibition industry for longer than most.

"While that doesn't make it less painful, it does make it less shocking. I saw this movie in China, and we have more understanding about what's going on here," the exec says of more recent events like U.S. cinema giants AMC Theatres, Regal Entertainment and Cinemark, as well as Canada's Cineplex all closing down their circuits as the global spread of COVID-19 reaches North America.

The situation in North America is now mirroring what unfolded in China approximately two months ago. As the worsening coronavirus in China's Hubei province became a national crisis just before the weeklong Lunar New Year holiday, health officials ordered the public to avoid crowded places like the local multiplex, local studios pulled all of their holiday tentpoles from release and the nation's 70,000 movie theaters closed their doors.

Along with China's New Year blockbusters, a slew of U.S. awards-season films were then pulled from release (Jojo Rabbit, Little Women, Marriage Story and 1917 among them), followed by several studio tentpoles, including Universal's Dolittle and Paramount's Sonic the Hedgehog. As the studios are now delaying releases — Mulan, Black Widow and No Time to Die are among the tentpole titles that have been pushed back — the pile of unreleased product in China grows.

Meanwhile, confirmed cases of the coronavirus have plummeted in China while rising in Europe and in the U.S. On Wednesday, China’s National Health Commission spokesman Mi Feng said there were no new suspected domestic cases within the mainland. He added that the country's emphasis now is warding off imported infections.

Still, Gelfond says he doesn't foresee major Hollywood movies and local Chinese blockbusters returning to the big screen in China in a big way before the summer. But much will depend on how the government rolls out its policies for the reopening of theaters, and how effectively the country's exhibition infrastructure can get up and running.

Imax China's Shanghai headquarters reopened its doors two weeks ago and, while the company says it has no visibility on when its screens in China may resume operations, it is expected some may be screening movies by mid-April and heading into the country's May Day holiday period from May 1-5.

Wall Street has also begun factoring in a return to business for Imax in China. "With the potential for theaters in China to open earlier than other markets, we could see Imax screens in that region (which is about 40 percent of the company's global network) benefit from the near-term return of local-language content, even before other regions of the world ramp and Hollywood content gets off the ground," B. Riley FBR analyst Eric Wold wrote Wednesday in a report.

And MKM Partners analyst Eric Handler had written in a March 9 report about Imax: "The one saving grace is reports out of China that theaters could be looking to reopen at the end of April or early May. At this point, a return to normalcy would be a very welcome event for Imax."

Other major local studios, such as Wanda Pictures and Huayi Brothers Media, have begun returning to work. Sources at the companies say business remains far from usual, though, as employees continue to practice social distancing and take turns working in the office or from home. More significant for Hollywood's release prospects, the regulatory apparatus of the Chinese state also is beginning to get back into gear, albeit slowly. China's Film Bureau and the state-backed China Film Group both have reopened their offices.

But operations there are similarly piecemeal. For example, the Film Bureau has yet to restart screening imported movies for censorship approval, a source close to CFG tells THR. Once cinemas are ready for them, foreign titles will still need to jump through the usual time-consuming regulatory hoops. Mulan, for example, still hasn't gotten the official censorship approval, since such operations shut down in late January, long before the film's original March 27 target release date.

After months of no revenue and mounting costs, local Chinese cinemas are eager to return to business. The Shanghai Film Authority, which overseas regulation of the industry in the region around China's great commercial city, has begun requesting applications for local theaters to reopen. Gelfond says that Imax has learned that some theaters in Sichuan and Xinjiang have received the green light to resume business — albeit under strict health guidelines. He is optimistic that other regions will be able to begin following suit from the end of March through mid-April.

Thus far, the central government in Beijing has left it to provincial authorities to determine their own policies for the resumption of theater businesses. This distanced approach has created opportunities for experimentation, as well as a pattern of bureaucratic wariness that is common on the lower rungs of PRC politics. The lack of a central policy also presents challenges to big circuits that operate on a nationwide basis.

The CEO of one national exhibition chain said his company was struggling to keep track of the hodgepodge of health guidelines and approvals required by regional governments around the country. "In the Suzhou area, for example, they are saying we need to provide masks and a pair a surgical gloves for every audience member," the executive says. "We just have no budget for that kind of thing." (The exec asked not to be named because of the sensitivity of discussing local health policy.) "In some provinces, we need to get stamps of approval from 10 offices to reopen," he adds.

The lack of product to screen is the other big bottleneck to overcome during the early reboot phase. "People are looking for what kind of movies to open with," Gelfond says.

The exec expects China's Film Bureau to provide rereleased classic films to the first wave of cinemas that reopen — low-risk titles that will help get the Chinese moviegoer back in the habit of congregating in the cinema. Given that moviegoing didn't become a mass habit in China until just 15 years ago, demand for classics on the big screen can be significant. Shortly before cinemas went into lockdown in January, a rerelease of Roberto Benigni's Life Is Beautiful earned $8.2 million over three weekends.

Gelfond then foresees the second phases of approved releases to be comprised of newer art house and prestige titles, with the potential for some Hollywood Oscar films that were postponed in February screening further down the road. The exhibition sector's most pressing goal, he says, is rebuilding as much capacity as possible before the long Labor Day holiday, typically one of China's biggest box office windows of the year. In an ideal scenario, some sizable commercial films could even find their way into the market by then.

After months of being cooped up in their homes under quarantine, the Chinese populace is desperate for social contact and a return to everyday consumer life. Gelfond is bullish about the China market's potential in the second half of 2020, expecting pent-up demand to fuel box office through the end of the year.

"People are going to be excited for social interaction and getting out and getting on with their lives. But the balance of that is to make sure it's safe to do so," says the CEO. So, as with North American cinemas before their more recent closures, the reopening Chinese theaters are expected to practice strict social distancing.

"The early stages will see guests in every other seat in every other row," Gelfond says. "They'll be coming back in a measured way."

Georg Szalai contributed to this report.