Imax set to expand in UAE and Saudi Arabia with plans for up to 67 new cinemas

Growth in the Middle East's cinema industry is expected to continue, CEO Richard Gelfond says

Richard Gelfond, chief executive of Imax, said costs are not an issue for the company, because of its revolving credit facility. Photo: Imax

Cinema production company Imax is considering opening up to 67 cinemas in the UAE and Saudi Arabia, as demand for high-quality film viewing experience continues to rise in the Arab world's two biggest markets, its chief executive has said.

The company, which also owns an eponymous line of production cameras, is considering opening up to 17 screens in the Emirates, up from the present four, Richard Gelfond told The National in an interview.

In the kingdom, where it currently has 11 cinemas, Imax has set a bigger goal: the immediate target is 33 but "the addressable market is at least 50", he said.

Riyadh's more open policy towards the entertainment industry, part of reforms under Saudi Crown Prince Mohammed bin Salman, has led to more "state-of-the-art [infrastructure] being built", resulting in more cinema content being led in".

"We're optimistic that the growth curve will continue. There have been a lot of new forms of entertainment that people rush to, but the thing about movies is that they're constantly changing [with] new content. So people will go back more."

Saudi Arabia and the UAE are among Imax's key markets globally, ranking 14th and 17th, respectively, according to data from the Ontario and Los Angeles-based company.

Imax first opened in the UAE in 2010; in Saudi Arabia, it launched its first screens in 2019, a year after the kingdom reopened cinemas. Imax has been present in the kingdom since 2005, in the Science Dome of the Sultan bin Abdulaziz Science and Technology Centre in Al Khobar, although it is not used to broadcast films.

The cost to purchase or license an Imax system in the Middle East is estimated at about $1 million per theatre, which, when equated to above figures, would correspond to more than $50 million in the UAE and Saudi Arabia alone, Mr Gelfond said.

Meanwhile, shooting a film with Imax cameras can cost up to $5 million. Investment for equipment such as films, cameras and other technology, are also in excess of $50 million, he added.

Costs are not an issue for Imax, Mr Gelfond said, because the company has a revolving credit facility that has resulted in it having "little to no debt with $300 million in undrawn cash".

In its fiscal second quarter ended June, Imax's net income dropped 57 per cent year-on-year to $3.6 million, while revenue declined 9 per cent to $89 million. The company attributed this to the lingering effects of the pandemic and last year's labour strikes in Hollywood, though those are now "firmly behind us".

Cinema and the entertainment industry in general were hit hard by the Covid-19 pandemic in 2020, forcing people to rely on streaming services. Still, like several other sectors, it is gradually returning to growth, as the preference for watching films on the big screen remains, in addition to the anticipation of certain titles that were pushed back due to the global health crisis.

After a significant drop in 2020, revenue in the global cinema market has steadily risen and is projected to hit nearly $110 billion by 2029, up from nearly $80 billion in 2024, at a compound annual growth rate of 5.14 per cent, data from Statista Market Insights shows.

The number of cinemagoers is expected to reach about 1.9 billion by 2029, with the average revenue per viewer at $47.34, it added.

"We're in good financial shape ... even during the pandemic, other than at the very beginning, we were cash-flow positive," Mr Gelfond said.

"We generate cash, so it's not really an issue for us in terms of the capital required for improvement."

Proof of this, he said, is Imax's current development of a new generation of film cameras worth about $10 million. He declined to give further details.

That is also part of improving Imax's technological capabilities, which, like so many other industries, are also being influenced by artificial intelligence. Generative AI, in particular, is now helping the company rationalise costs, Mr Gelfond said.

AI is contributing more to generating content, cinema inputs such as sound levels and brightness, and preventive maintenance, which all lower the costs of maintenance and managing inventories, he said.

"Though there's work to be done through the issues of rights and who gets paid, but in other technologies, those things have been worked out and we're optimistic that it will work out in Imax," Mr Gelfond said.

Piracy, on the other hand, is not a concern for Imax, as "watching a lower-quality pirated version on your small TV or your phone isn't really competitive with the Imax experience", he said.

He pointed out it is "virtually impossible" to pirate Imax content: the average size of an Imax screen is approximately 22m by 16m, significantly bigger than the 16m by 6.1m found in traditional cinemas – making it difficult to illegally film inside the theatre, "even if shot on an iPhone", he said.

Streaming also has had little effect on Imax, Mr Gelfond said, with the company having more of a collaboration rather than competition with that industry.

"Consumers say they'd likely see a film on streaming if it was released on Imax first. Imax doesn't just help the theatrical release, it helps the whole chain of content, including the streaming window [and other platforms]," he said.