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IMAX CEO: First VR Centre Still Topping Expectations, NY Location Up Next (MESA)

The first IMAX VR Experience Centre in Los Angeles is still outperforming the company’s expectations and IMAX will soon open its second virtual reality location, at the AMC Kips Bay multiplex theater in New York City, according to IMAX CEO Richard Gelfond. Since opening about three months ago, the Los Angeles “flagship” VR Centre has attracted a total of more than 20,000 unique visitors, he told analysts April 20, on an earnings call for IMAX’s first quarter (ended March 31). The location has been taking in about $15,000 a week in revenue over the past month or so, including the best week to date this month, and “continues to exceed expectations,” he said.

IMAX plans to open additional pilot VR Centres in New York, Shanghai, Tokyo and Manchester, U.K., and will “continue to use these sites as pilots to ultimately determine the longer-term opportunity at hand, but we’re definitely encouraged by the initial results” from the Los Angeles location, he said.

With those new pilot locations, he explained: “We’re basically looking for confirmation of our business model. So, not only are we looking at the revenue model, but how much staff you have to have, how often you have to change out the content, what the throughput is per hour, what the price point is in different environments.”

After the Kips Bay theater with AMC in New York, IMAX will open the next VR Centre in Manchester, in an entertainment center “contiguous to a multiplex,” he said, adding: “We want to get data points from a variety of places and, if they support the excellent results we’ve seen so far, then we’ll decide to go forward.”

IMAX continues to believe that the ultimate success of its VR venture “will be driven largely by the quality of content that we’re able to deliver to consumers,” he said, echoing comments he said at an investor conference March 6. (https://www.mesaonline.org/2017/03/06/imax-ceo-strong-content-will-decide-vr-winners/)

Since those comments at the Deutsche Bank Media & Telecom Conference in Palm Beach, Fla., IMAX signed a VR content deal with Warner Bros. Home Entertainment to develop and release three VR short pieces of content based on upcoming Warner movies, including “Aquaman,” “Justice League” and a third unspecified film. All of the VR content will have an exclusive window at IMAX VR Centres before being made available to other VR platforms, including in-home and mobile, the companies said.

“We anticipate a number of deals similar to this one advancing through the pipeline in coming months,” Gelfond told analysts April 20. IMAX is looking to fund the Warner content via the $50 million raised by its VR fund that’s expected to produce about 25 pieces of content in all, he said.

IMAX was also “very pleased at the progress we’re making” with original content, he said. The show will launch exclusively on IMAX screens and then start airing on ABC TV in September.

“We intend to pursue investments in other pieces of original content and have already seen encouraging interest from various content creators looking for a way to eventicize the launch of television content,” he said. IMAX can envision making 2-3 such investments per year, but will do it in a “disciplined” manner, he told analysts.

IMAX shares were up 1.01% at $32.53 in early afternoon trading April 20, after the first-quarter results were reported. Despite reporting a loss and revenue that was weaker than the same quarter a year ago, the results were pretty much in-line with expectations. Revenue tumbled to $68.7 million from $92.1 million and it swung to an $887,000 loss from a $14 million profit.

The company faced a tough comparison to last year’s first quarter, when IMAX benefited from the strong “one-two punch” of “Star Wars: The Force Awakens” and “Deadpool,” Gelfond said on the call.

But IMAX was still “pleased” with the “momentum” it saw in the first quarter with the performances of “Beauty and the Beast,’ “Logan” and “Kong: Skull Island” on its screens, he said. So far in the second quarter, “The Fate of the Furious” took in $30 million on 1,079 IMAX screens in its opening weekend, which represented the fourth-largest opening ever for IMAX, he said, adding he expected box-office results to grow each quarter versus last year for the rest of this year.