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Bank of America Merrill Lynch 2012 Media, Communications & Entertainment Conference Transcript

September 12, 2012 4:35 PM ET

Executives

Greg Foster - Chairman and President, Film Entertainment

Analysts

Jessica Reif Cohen - Bank of America Merrill Lynch

Bryan Goldberg - Bank of America Merrill Lynch

Jessica Reif Cohen - Bank of America Merrill Lynch

Okay. We are ready. We also have Greg Foster back at our conference, Chairman and President, Film Marketing for IMAX. Greg will, he’ll talk with the few slides and then we’ll go -- get into Q&A. And I’m joined us here by Bryan Goldberg, I think everybody knows, my colleague. And now, so Greg, thank you so much for coming.

Greg Foster

(Inaudible) you called the President and Chairman of Film Marketing but that would be stealing my colleague Christine Tasto’s job. I’m actually the Chairman and President of Film Entertainment, but Marketing is something that is big on the IMAX agenda.

But thank you for having me. I [love you] Jessica, okay…

Jessica Reif Cohen - Bank of America Merrill Lynch

All right. I’ve been wrong on everything.

Greg Foster

I just don’t want to steal Christine’s thunder. It’s nice to see all of you. Its great to be here again and I want to start with just a kind of little overview before Jessica and Bryan start peppering me with questions.

For those of you that don’t know our story kind of the 50,000 foot version is that we are 45-year old company, operated for many, many in museums, science centers, and aquarium, and play nature movies, space movies, underwater movies, et cetera.

Somewhere in the 90s, we started moving into more of a multiplex model, but we needed the product to appeal to people who went to a multiplex on a Friday night at 10 o’clock. So we have migrated a big chunk of our product to Hollywood films by creating a technology called DMR, which allows us to in a very proprietary way convert and enhance the presentation of the biggest blockbusters in Hollywood.

If you go the first slide, you can see what actually makes, and I guess, I should that, what actually makes an IMAX movie an IMAX movie? The first thing that we do in our criteria in our selection process is we really commit to the big pillar titles. So those are the foundations that we use for our annual slates. So it’s Batman movie, Harry Potter movie, James Bond, we are doing our first Bond movie Skyfall this fall, which we are very excited about or Hunger Games which will, will now we are on the second one, which comes out a year from November. We pick those big core pillar titles first.

Then we constantly are working to improve and enhance the relationship that we have with Hollywood biggest filmmakers and if there is anything that I’m extra proud of I think it’s that.

We do all of Jim Cameron’s movies. We do all of Chris Nolan’s movies. We started with Harry Potter 3 then we did 4, 5, 6, 7A and 7B. We do all of Michael Bay’s movies, Brad Bird's movies. The relationship that we have with the biggest filmmakers in Hollywood is very important.

And someone like J.J. Abrams for instance who is just doing Star Trek which was shot with our cameras is a great example of it. Because J.J is someone who started with Star Trek, the first one and now the second Star Trek movie he is shooting with IMAX cameras. So we try and amp-up the experience each time. So a filmmaker with an IMAX vision is very critical.

We also strategically try to optimize and fill in what we call the shoulder period times. So for instance some of you may have see at this weekend we did Indiana Jones and The Raiders of the Lost Ark, which was a 31-year old movie that we did actually nicely with it. It’s not a giant bread winner for the company. But nevertheless, it was a nice, I call it Lily Pad if you will that enabled us to kind of get from one side of the bank of the river to the other side, one side being Batman, the other side being Bond.

And in the shoulder periods we have try and fill in as many titles as we possibly can. We have a film opening up this week and that we’re looking forward to which is called Resident Evil: Retribution which is a sequel of the Resident Evil franchise that’s done quite well.

So we strategically try and filling our schedule and from a conceptual point of view we obviously try and pick movies that had huge scope and this does the take movie go as the places they talk about going to but probably will never get to, obviously we need the studio partner who understand IMAX and he is willing to promote, publishize, advertise us in an appropriate way and we have to generate financial returns for our company and our partners.

Differentiation is a huge part of what we do. We are the only company that actually works with filmmakers to make their movies better that also in the exhibition business. So we do that often by differentiation.

We often have filmmakers film with our camera, again J.J. Abrams, Chris Nolan, Michael Bay, Brad Bird, et cetera. We often increase the aspect ratio to a bigger aspect ratio, specifically and exclusively for IMAX. We did that with Tron. We are doing that with the next movie that Tom Cruise and Joe Kosinski is doing which is called Oblivion.

Bond will have IMAX differentiation to it. We have often or we are working on often early release window so far. We did Mission: Impossible - Ghost Protocol five days early in IMAX and we have announced that Oblivion will come out one week early exclusively in IMAX, which we are quite excited about that the Tom Cruise, Joe Kosinski movie which will also have the differentiated aspect ratio.

And we often have specific IMAX and exclusive marketing campaigns whether it’s a trailer that’s specific for IMAX something that Sam Mendes, the Director of Skyfall did for us for the latest Bond movie, a trailer that was just for us and had an expanded aspect ratio was released on the Dark Knight Rises in our theaters.

So our DNA is one of the things that really distinguishes us and it’s something that we worked on extensively with the Hollywood studios and the filmmakers, Catching Fire, the Hunger Games movie is another movie that will shoot with our cameras comes out a year from November and we are very happy about that.

The next slide shows the growth in our film business. In 2005 we released five movies. So far in 2012 we are up to 30 and we expect to have a similar number of films in 2013. We basically use to have a chicken and the egg problem. We couldn’t get enough films, because we didn’t have enough theaters, and we couldn’t enough theaters because we didn’t have enough films.

But between the traction that we have from the studios and filmmakers, as well as the changing of the business model to the joint venture model that happened when we went digital. We’ve been able to increase our film output quite significantly and with that is also come an increase in our box office.

As I think many of you know the best year we’ve had so far was 2010, which featured Avatar and its public information we did $546 million in box office. We’ve announced already that at the end of Q2 of this year we had already done $200 and something million dollars, I can’t remember the number.

But then we also announced mid-quarter of Q3 that we had done $130 something million so far that quarter, half way through the quarter. So as of that point our global box office was $418,515. So we are on our way to having a strong year and we have some great titles that we want to talk about for the rest of the year.

So if you look at the first, the last, you will see that we are up to 30 films so far this year, and so far to go, that are, the sort of the 10 fold pillars if you will, we have Bond, and we have Hobbit. So we also have a lot of other titles including four that we announced today that Rich Gelfond announced in China, Tai Chi 0, Tai Chi 2, back to 1942, which is a film from Feng Xiaogang who is a very famous film director, who did After Shock and also CZ12, which is the Jackie Chan movie.

So we have a terrific slate for the rest of the year and then in 2013 we technically only announced eight but we are in daily conversation with all of our studio partners and as I mentioned, expect to have the approximately the same number of films which is about 30 in 2013.

So far some of the movies that we’ve announced again are big pillar titles, Hunger Games, Star Trek, the Spider-Man, the Superman movie Man Of Steel and the Hobbit, so those are four of the pillars that already in place for next year.

We also fill in the gap with partnering DMR business, which is taking local language films, where there is the staggered release schedule for the Hollywood titles and using local product to fill in those gaps.

Again, today we announced the top four movies in China for the next three or four months, Tai Chi 0 and Tai Chi 2, remembering 1942 and CZ12 and below the line you will see our – sorry, below the line you will see the our, the candidates for some of the Chinese titles in 2013, which we have not signed yet and have not agreed to do yet. But there are candidates that make a lot of sense for us to look at, and that’s precisely what we will do.

And then lastly, we are using our foreign language DMR to also fill in gaps with programing in some of our more important territories such as Russia, where we’ve already announced the big epic titled Stalingrad, which is coming out on October of 2013 and we are also doing the same in Korea, Japan, India, et cetera. And so these are the kind of pillars in those countries, outside of the Hollywood films that we are focused on and those are the ones that we expect to get.

So, with that, that’s just a little kind of preview of what we are talking about and I will now turn it over and take my seat next to Bryan and Jessica.

Question-and-Answer Session

Jessica Reif Cohen - Bank of America Merrill Lynch

So before we get into IMAX specific, I just wanted to talk globally. Domestic box office started off sizzling this year, we like what’s sizzled today. But the time the Avenger had finished its run, box office received throughout mid teens year-over-year and now obviously it tends to soften during the summer, August was down 10% versus prior year.

So basically the summer results did the great starts has been wiped away and I think, but as of now we are up low single digits versus the year-to-date. Could you talk in your view, what drove the soft summer transit? Was it a weak slate or was it the tragedy in Colorado?

Greg Foster

There's nothing that we can quantify on Colorado. I think that it was obviously tragic for our country, tragic for people in our business, most importantly tragic for the families. And while I can’t quantify from a mathematical point of view that it had an impact, I can't imagine that in someway it hasn’t and I think that's probably particularly true with more intense realistic based film.

It is not a coincidence to me also given the economy, also given that it’s an election year that some of the more, not take yourself so seriously titles have been the ones that have done better than expectations. Ted, Avengers, two movies that had a little bit of a wink in their eyes, have done really well.

I think people go to the movies to escape. And I think right now they need that more than anything else. So, I don't think you are going to see a massive shift in the kinds of movies that are made. But I don't think that it was the film slate because I think there were a lot of terrific movies, but I also think that the environment, the circumstances haven't necessarily help things.

Bryan Goldberg - Bank of America Merrill Lynch

So as you look to the slate, the films for the second half of the year, do you think attendance will recover? The domestic box office, will it finish stronger, is there a chance this summer months just drives all the way through year end?

Greg Foster

What I can tell you is that, if I were betting on the three movies that can turn the momentum back in a positive way, it would be Bond, Twilight and the Hobbit. Those are three movies that are earmarked for success. They are franchises, they are iconic. They have terrific filmmakers associated with them. They have everything climbed to be incredibly successful.

Again, we live in a world where things can change rapidly. Social media has helped turn the tide positive or negative on a dime and I think that's something that we all have to pay attention to. I think piracy continues to affect business in lots of places and I also think that momentum in a positive way can happen really quickly. But momentum in a negative way tends to be more difficult to recover from. And what you need is a series or one or two really cool movies that are unique and different, more of the same doesn't work that I know for sure.

When you do something that's a little bit different and is also made in an amazing way that has playability, it can shift the tide to a positive way. So when you're just basically pressing play on the tape recorder and doing the same thing over and over and over again, I think people will get a little sick of it.

Jessica Reif Cohen - Bank of America Merrill Lynch

So, turning on this specifically, couple of years ago it was very much a North American story and I know you developed. As you mentioned, you clearly market China. You have good presence in China and Russia. You have been extending in India. You just reworked your relationship in Latin America. So as you go to over next, two to three years, how do think about each of the key geographies offsetting to your business?

Greg Foster

I think it’s been incredibly material to us. So China is a massively important market for us. Rich is there today. He got there on Sunday and as I mentioned earlier, made the announcement of four Huayi Brothers Pictures that I’ve mentioned, that I won’t mention again.

Our relationship with Wanda is a very strong relationship that’s very important to us. Wanda, as many of you know just bought AMC Theaters. So that’s a nice report to have. At the same time, the Chinese market is producing Chinese made pictures which are also very important to our business there, and they can also become important to our business outside of China as we export them through IMAX, which sort of gives that the good housekeeping feel of approval because it has an IMAX window.

And we did that a few weeks ago with the movie called ‘Flying Swords of Dragon Gate’ that we played in China last winter, did exceptionally well. And we just released it in some selected markets in the U.S. and it did nicely in other countries. So China is an acute part of our business and will continue to be. And we are very pleased with how things are going there.

Russia is also a budgeting market for us. They love movies. They also happened to pay a film rental that’s similar to what they pay in the United States. Ticket prices are quite high in Russia. Stalingrad, as I mentioned is a Russian film that we are doing that we are very excited about with, very important filmmakers. Our network is growing in all over, not only Russia but also the CIS countries.

And then India is a market that we need to penetrate in a more established way in a, bigger, broader way. I'm actually going there tomorrow and it’s the place that Rich is going in November. It’s the place that we are going to start spending a lot more time. And we think that the key to what is going to be selecting Bollywood films, 85% to 90% of the box office that comes from India is not from Hollywood films but in fact is from Bollywood films.

And so we are going to begin to cherry pick some of the biggest Bollywood titles from some of the most important filmmakers in India and release them not only in India, but in markets that are conducive to Bollywood films like the U.K., like parts of Southeast Asia and the Middle East, even in parts of the U.S. and Canada. So that’s the market that we have our eyes on. And by the way, it won’t be a coincidence to you that all of these are BRIC countries.

And then Brazil and South America is another place that Rich has spoken quite a bit about. Rich has been there several times in the last few months, sorry in the last six or seven months and it is a market that we just opened a theater in São Paulo with Cinépolis that is doing really well. We opened it - the first movie that we opened it with was Spider-Man and Brazil, Argentina and South America in general are territories that we are focused on as well.

So international growth, the vast majority of our growth going forward will come from international. We are about 20% penetrated from what we think currently is our zone analysis in non-North American markets. And in the U.S. and Canada, we are somewhere in the 55% to 60% penetrated area. So we have more growth for sure in North America. But we have even stronger and bigger growth outside of North America.

Bryan Goldberg - Bank of America Merrill Lynch

Could you just talk on that a little bit that the screen count opportunity, but I guess the DMR opportunities sounds pretty substantial and it’s easy to stick movie like Dark Knight into these markets and see it play out. But in terms of the local opportunity for DMR to play on the network. I mean can we -- how should we think about the opportunity for you guys. I mean Bollywood, I think they put them to these movies multiples of what Hollywood films are, are you going out to the A film market but big budget…

Greg Foster

Only, only.

Bryan Goldberg - Bank of America Merrill Lynch

And then when you look at Bollywood, you look at that local Chinese markets, Russia how much DMR kind of the company actually absorb how much…

Greg Foster

Well, that’s -- it’s a good question, Bryan. So, a couple things, first of all we are only going after the A high-quality films that our calling card. We have a Chief Quality Officer, David Keighley and it drives everything we do in our business, from the technology point of view, from the film point of view, from a operational point of view, quality actually really is important to us.

So we are not going to pick a movie that’s a substandard quality. Just to fill the gap we rather keep another movie playing for an extra week. On the volume basis, that how we can actually DMR these titles. We have recently opened up a second DMR team. It’s actually based in our way. Our original team is based in Toronto and that helping take some of the volume.

Because again, if you remember the slide earlier we did previously five, six years ago, we were doing less than 10 movies a year and now we are doing 30. The good news is we’ve gotten much better and more efficient at it and certainly digital technology has helped that.

Secondly, by having a second team, we are able to focused on one group does a certain kind of movies, the other group does another kind of movies and that is helping our efficiency as well.

So, it’s a really good question. But I think we’ve got in the pretty good place. And by the way, not having -- not being able to do every movie isn’t the worst thing in the world. We turned down or unable to do way more movies then we are able to do. Its actually about -- we turned down about five movies for every movie we say yes, too.

And sometimes saying no, I will give you an example it has nothing to do saying not to a movie but have to do with someone not being able to buy a ticket. The best thing that happened to IMAX was not being able to buy a ticket to Avatar or The Dark Knight, because that supply-demand ratio feeds momentum and gets people excited.

People usually want what they can get and it’s why we are very, very protective of our exclusive zones. We are not going to have an IMAX theater across the street from an another IMAX theater. We don’t want that we won’t do it. We are not going to pick movies just to pick movies. We are going to pick movies that are right brusk and we rather have fewer movies but make they are all right for us then more movies with a half dozen of them that we aren’t really pound to release.

Jessica Reif Cohen - Bank of America Merrill Lynch

Another question on that, so you are very much a profit maximization model the more you have and see generally the more money you make. But you have relationships with a lot of the studios and so can you just talk about how you balance the relationships with the flexibility you have to move product around due to the some point better or worst than excepted, so basically how can you improve or how can you optimize the usage of your network?

Greg Foster

We do have great relationships with the studios. And because we’ve now generated over $2 billion in box office in the last 10 years from our DMR titles and our network is growing substantially they recognized that it’s around world and sort of what goes around comes around. So, if they have a title that we are all very excited about but for whatever reason we give it a shot and it doesn’t work, they have been great about saying we understand if your need to start sharing the screen perhaps with another movie.

It’s not something that we look to do, but we have to protect our customers, our exhibition customers and make sure that their theaters are as closed to being full as possible. So, the studios all of them have been great about recognizing that. If they have a title that doesn’t work to be extensive, they think its going to work this time maybe next time they'll have a title that didn't have an opportunity to play in IMAX, but they want to another companies movie might not be working the way they wanted to and it will be their turn that time to be the beneficiary of it.

We honor our relationships. We would never pull a movie, when a filmmaker or studio says sorry, we need to have it here that was the deal we made. We honored our commitments and in fact have a long history of holding firm on that. But at the same time, we are able to do a little bit more juggling than we have been able to do in the past.

Part of it is because our network is growing so big that we have the ability to take certain markets, where we have a lot more theaters than we used to, so lets take L.A. when the Dark Knight opened in 2008, the original Dark Knight. We had four theaters in the L.A. market.

The Dark Knight rises opened literally four years later and we have 24 theaters in the LA market. So that gives us inherently more flexibility to be able to figure things out. If things aren’t working or things are working to be able to put more theaters, more of that film into the entire network so what any given time internationally especially we’re playing more than one movie right now, internationally we’re playing The Dark Knight Rises. We’re playing Spiderman. We’re playing total recall. We’re playing the Bourne Identity and we still have in Japan we’re playing Avengers. So, we’re able to have flexibility internationally as well.

Bryan Goldberg - Bank of America Merrill Lynch

I think the shift to potential threat to your model. I mean, the success of your large formal experience certainly hasn’t gone noticed I mean there are some computing products entering the market. There is also a lot more options for consumers to consume contented home, home entertainment. So I am just curious what do you think as the biggest threat to your business is it fairly competition in the exhibition space or is it shipping consumption have it towards the home.

Greg Foster

Neither, in my opinion, the biggest threat to our business is not focusing on our business. It’s spending our time worrying about what other people are doing as opposed to spending our time worrying about what we're doing it. If we deliver a high-quality experience to our customers, we have shown and they have shown they will continue to come back for more.

We’re playing defensive and focus solely on what our competitors do and I put the word “competitors” in quotes because in my opinion IMAX is the one and only and there can be lots of people who attempt -- attempt being the key word to deliver what we do.

But we are the only company in that business that actually works closely with filmmakers for months and in some cases years before the movies come out and often the design of the movie has IMAX and mine from its very conception. Where a lot of the other companies that you noted where the parts of delivery systems that you noted their exposure to the movie is the day before the movie comes out.

They get email that says the hard drive of this movie is being sent to your blank theater and here is the FedEx Treking number it will be there by 10 o’clock in the morning. That’s not what we do. So I think if we spend our time focused on what other people do that’s going to be a threat. If we do our job really well and pay attention to the quality and honor our relationships and work really closely with the filmmakers things are going to be positive.

Jessica Reif Cohen - Bank of America Merrill Lynch

Can you just talk a little bit about the opportunity of new laser projector technology, how will it benefit you and is there benefits to your executive partners that you have?

Greg Foster

So the new laser technology, which includes these very intense patents that we bought from Kodak are able to take an image and put them on a screen with laser lighting that can go up to a 140 feet in width. The biggest screen in the world right now is the Darling Harbor IMAX theater that’s 120 feet in width. And in fact, the digital system that currently exist can’t really like a screen with the proper contrast and foot lamberts over 80 feet in width.

So this change which will start taking place at some point in 2014 will enable the biggest screens in the world to have better brightness than they currently have and will also be because they are laser based, we will not have to replace the bulbs all the time. Once they are done, they are done.

And it will deliver contrast and brightness at a level that we currently can do. So in my terminology, the horsepower will be of a level that we’re not even close to on digital map. So we’re really excited about it. We had a demonstration of a prototype of the system in April in L.A., invited some filmmakers, invited some studio partners, invited some exhibitors that went over really, really well.

We’re going to have another demonstration at some point in the next six months I would suspect of a higher level of the prototype and it’s headed in a very exciting direction.

Bryan Goldberg - Bank of America Merrill Lynch

The Korean multiplex firm that’s created 40x, the new experience with a sensory component like (inaudible) mechanized deeds.

Greg Foster

Did you talk about CJ CGV?

Bryan Goldberg - Bank of America Merrill Lynch

You got it. So is this a threat to IMAX or something that maybe you guys could throw in certain aspects of that model?

Greg Foster

It’s a debate within the company. We have a spectacular relationship with CJ CGV, [Mickey and Jae Lee]. They are good friends of ours. They have a country exclusivity arrangement with IMAX in Korea. Every single IMAX theater in Korea is one of their theaters. We also have many theaters with them in China and we’re working on Vietnam and some other territories. They are great partners of ours.

We actually -- I state this affectionately that every time we see [Jay], he talks all about 40 and he is obsessed with 40. And I've seen it and for me as a 50-year old, it's probably not the thing that I would want to do. But for my 17, 19, and 22-year-old son, I think they would. So there is some debate within the company about whether we do it or not. I think it would be an interesting thing to test, not to agree to anything other than test.

We've actually already said that we would do that but we'll see. It’s a work in progress. No promises, no commitments, no nothing other than I think, it’s always good to try and be innovative and try things. So I definitely don't think of it as a threat. If anything I would think of it as an additional complement in certain locations to some of what we do if we do it but again I want to be really clear.

I’m looking at Terry. She doesn’t think that I’m promising something that we may not do. We don't know that we’re doing that, but obviously we’ve read a lot about what their rollout, how wide it’s getting and it’s something that we’re noticing.

Jessica Reif Cohen - Bank of America Merrill Lynch

We’ll ask one more question and open it up for audience, I just want to be heads up. So as theme of this year conference, we focus on the Latin American market and the opportunity the folk presents despite the comments I received, recently made some changes that you partner in lifetime. Could you talk about some of the noticeable differences in the business that you’ve made for this adjustment and would it last before you -- the adjustment was slow?

Greg Foster

No. The adjustment already happened and at the end of they year, we’ll do another assessment of where it is. We made a deal with a lovely gentleman who -- I think was probably four or five years ago and little slower getting jumpstarted than we had hoped but recently it’s kind of ratcheted up a bit. Again as I mentioned our theater in Sao Paulo, where Cinépolis is doing really well. I think we have five or six theaters so far in Brazil.

We have a national amusements theater in Argentina that’s doing really well. We have a theater in Columbia. We have theater in Ecuador. We even have a theater in Costa Rica that's doing very nicely.

Our business in Latin America and South America is very much on the forefront of our focus. It’s something we talk about all the time. We have a game plan for whether things happen at the speed with which we want them to or not. We have both under -- we have a plan for both of those options and we’ll see where it goes by the end of the year. But it's of huge importance to us.

There are lot’s of malls being built in Brazil. Lots of developers are spending time talking with us about possibly being in their business in Brazil in particular. Larry O'Reilly and [Bob Riposa]. Larry is our head of sales and Bob is specifically in charge of the Americas. And Mark Welton and Rich Gelfond have all been there many times and it's definitely a high priority for our company.

Bryan Goldberg - Bank of America Merrill Lynch

Let’s just quickly talk about the new film import rules into China. Obviously, they are going to let more Hollywood product in and there seems to be a current 3D IMAX product along with the greater share of the box office for the studio. So what's your current update for us. How that change is impacting your business. How do you gauge it right now?

Greg Foster

Our brand is very significant in China. And we also have some incredible partners in China particularly Wanda obviously. But again CJ is a great partner. We have many great partners in China but Wanda is a unique relationship that we have. Anything that expands the business and particularly allowing Hollywood films into China is terrific.

But again, as we noted today, we made this deal for these four local language Chinese films. So we’re kind of covered either way. We have a big office in China and in Shanghai and our office in Beijing. It is a huge corporate strategic focus of our company and when we wake up in the morning and we think about the first two things that we think about business wise, it’s our North American business and our Chinese business.

It doesn’t mean the other markets aren’t incredibly important to us, they are. David King who is here, who runs marketing and distribution for us in Europe, Middle East and Africa, I'm sure he thinks first about Europe, Middle East and Africa but the first thing that I think about it and I think Rich probably thinks about.

Rich has more brainpower than I -- so he probably thinks about everything. I focus on the U.S., North America and China.

Jessica Reif Cohen - Bank of America Merrill Lynch

Let’s open it up if there are any questions in the audience.

Bryan Goldberg - Bank of America Merrill Lynch

No questions.

Jessica Reif Cohen - Bank of America Merrill Lynch

We’ll each go for one more then and then we’ll [throw above]. More than half of the latest Dark Knight we shot with IMAX film. Given the films strong clarity on network, that’s probably helped on. What are you doing to address, increase these film in IMAX?

Greg Foster

I’m glad that you asked that question. We are actually in some form of conversation from serious to it’s happening with 13 films over the next two years. That includes Star Trek, that includes Hunger Games, Catching Fire, that includes some other titles that we haven’t talked about. Shooting with our cameras and specific IMAX differentiation with our specific technological bells and whistle is hugely important to us precisely for the reason that you just mentioned.

Our box office percentage on a film that has our DNA in it is much different than a regular title it just is. We also are releasing movies early. Mission Impossible was an example, Ghost Protocol as we've already announced. We’re releasing Oblivion, the Tom Cruise movie that Joe Kosinski directed a week early exclusively in IMAX and these are things that are very important to us that wouldn't happen. We’re not for specific IMAX differentiation which again means the camera, increase in the aspect ratio exclusively for us.

By the way, we make investments in these films when we do this. These don’t just happen. We actually put money up to help make that happen and we work with our studio partners and the filmmaking partners.

And so as a result, it just becomes -- these also tend to be our pillar titles. So it's a very, very important part of what we’re doing and we will continue to focus on them. And the good news is that the momentum from that is very strong. Michael Bay did that on Transformers 2 and he was just in the office this week looking at The Dark Knight Rises seeing how it worked because he is in the middle of trying to design how we’re going to do Transformers 4.

I have no idea of Transformers 4 is going to have any specific IMAX DNA to it but I hope it does and we’ll certainly find out.

Bryan Goldberg - Bank of America Merrill Lynch

Could you just follow-up on your comment about the early release that you obviously had it for the success with Mission Impossible 4 and you just mentioned another Tom Cruise…

Greg Foster

Oblivion.

Bryan Goldberg - Bank of America Merrill Lynch

Now, what’s the current strategy with this type of release window, early release. Is it more for aging franchises that (inaudible)?

Greg Foster

Oblivion is -- that franchises no one knows about. No not at all. It’s for titles that have differentiation. We won't do it if there's no differentiation to it, IMAX differentiation. It’s for titles that have very high playability. You wouldn’t release the movie early if you didn't think it was a terrific movie.

So if for whatever reason, the movie doesn’t have very high playability, you're probably not going to want to release it early. And lastly, it has to be for movies that also have a strategic and marketing reason to take advantage of the early release. So Mission Impossible was -- I don’t know if I call it an aging franchise but at the time the version 3, Mission Impossible 3 was the lowest grossing of the first three franchises.

So they needed a little bit of a jump start and Brad Bird and Tom Cruise and J.J. Abrams to produced it and Paramount, Brad Grey and Rod Moore decided to shoot part of the movie with IMAX cameras and from day one, their vision was to release it early IMAX. Well, Mission Impossible 4 goes protocol with the highest grossing of the four franchises and the Paramount guys will tell you, as will Brad and J.J. and Bryan Burk that IMAX had awful lot to do with that.

So that strategy worked and I think that as you looked at the release late over the next year, you will see there is some other titles that could fit that bill that might take advantage of that but you cannot decide to do that until you're confident that the movie is a good movie.

Jessica Reif Cohen - Bank of America Merrill Lynch

With that, we have been a [little late].

Greg Foster

Okay.

Jessica Reif Cohen - Bank of America Merrill Lynch

Thank you so much.

Greg Foster

Thanks guy.

Bryan Goldberg - Bank of America Merrill Lynch

Thank you.

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Source: IMAX's CEO Presents at Bank of America Merrill Lynch 2012 Media, Communications & Entertainment Conference (Transcript)

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