Key Takeaways
The battle for Hollywood's biggest screens now has a new contender, as The Walt Disney Co. takes direct aim at IMAX's lucrative premium-format dominance.
Disney's launch of its "Infinity Vision" certification program for premium large-format (PLF) screens creates a direct rival to IMAX, targeting over 1,000 domestic screens ahead of its December 18 'Avengers' release and signaling a new front in the cinema technology wars. The program was announced at the industry's CinemaCon conference in April.
"If there are 120 wide release movies a year, which is about where we are now, then $10 billion is achievable," Macquarie analyst Chad Beynon said in an interview, highlighting the high stakes of a recovering box office where premium screens are key.
The move comes after Warner Bros.' "Dune: Part Three" secured IMAX's 426 North American screens for the same holiday window. Disney's program, which aims to certify screens from over 75 domestic PLF brands, is a direct response to being shut out of the top-tier platform for a key release.
The competition underscores the increasing importance of premium screenings, which are driving the post-pandemic box office recovery. For IMAX, which has seen its stock fall 4.5% this year, it represents a challenge to a model that captured an estimated 20% of 'Oppenheimer's' nearly $1 billion gross in 2023.
The theatrical market is mounting a strong comeback, and premium experiences are at the heart of the recovery. The domestic box office has already reached $2.9 billion so far this year, the highest comparable figure since 2019, according to Comscore data. Wall Street analysts now project the full year could finish between $9.5 billion and $10 billion. While this is still below the $11.4 billion pre-pandemic average, it comes as the total U.S. screen count has declined by over 10% from 2019, making each screen more valuable.
Exhibitors like AMC Entertainment are seeing the benefits. The company posted its strongest first quarter since the pandemic, with revenue climbing 21% to over $1 billion on attendance that rose nearly 14%. The growth is fueled by moviegoers' willingness to pay for better experiences like IMAX and Dolby Cinema, leading to record per-patron revenue.
Disney's 'Infinity Vision' is a calculated risk. By creating its own certified network, the company avoids having its marquee 'Avengers' title relegated to standard screens, a fate that hurt the box office for 2023's 'Mission: Impossible' installment when it had only a one-week IMAX run. However, it also means competing against the formidable IMAX brand, which has become a destination event for directors like Christopher Nolan.
For IMAX, Disney's move is both a threat and a compliment. While the company's stock has lagged peers like Cinemark (up 16% YTD), analysts still expect its revenue to grow 8% this year to a company record of $443 million, lifted by a strong slate including Nolan's next film, "Odyssey." The bigger risk for IMAX is the long-term precedent: if a studio as powerful as Disney can successfully create a rival PLF network, it could erode IMAX's negotiating power and market dominance. Yet, it also validates the very premium strategy that IMAX has championed for years, potentially growing the overall market for high-end cinema.
This article is for informational purposes only and does not constitute investment advice.
