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Imax Corp. (IMX-T) has signed a deal with India's SPI Group to build four theatres in India focusing on digitally enhanced "Bollywood" movies, Chief Executive Richard L. Gelfond said.
Imax, which now has three theatres in India, has been slow to build a presence in the country, which produces 1,000 films annually and tops in the world in movie attendance.
"This agreement puts us in position to build critical mass and consider the local release of Bollywood films, which will be key to the success and growth of Imax in this strategically important region of world," Gelfond told Reuters on Monday.
So far, the Canada-based company has released only Hollywood movies in India using its digital technology on its signature giant screens.
"In India, we cannot just build a world class market with North American films," Gelfond said. "We need to make Bollywood films an important factor."
About 90 percent of revenue of the film industry in India is from non-English language movies.
Imax also plans to eventually release Bollywood films in cities such as Toronto and New York, as well as in cities in South East Asia that have large Indian populations.
The annual revenue of India's film industry is projected to grow to $5 billion US by 2014 from $3.2 billion in 2010, Imax said in a statement, citing industry reports.
Imax expects the theatres it is building with SPI to open over the next two years.
"Typically in India the partner becomes the licensee of the technology. So (SPI will) build the building and license the technology and we provide the films," Gelfond said.
Overall, the company plans to build five theatres in India in 2012 with SPI and other partners, and expects to have a total of 15 to 17 theatres in the country by the end of 2013.
"We can expect $1 million a year per screen," Gelfond said.
Imax's existing local partners include multiplex operator PVR Ltd and BIG Cinemas, which is part of Reliance Mediaworks owned by the Anil Dhirubhai Ambani Group.
Chennai-based SPI Group has interests in infrastructure, retail, manufacturing and services, as well as entertainment.
Gelfond did not disclose financial details of the SPI deal but said the cost of converting a standard format film to Imax format in North America was between $1 million and $1.5 million.
Imax plans to focus on India and Brazil in 2012, he added.
"Out of the BRICS, Russia and China have been strong for us but Brazil and India have been a little bit slow and in 2012 one of our goals is to boost growth in South America and in India," Gelfond said.
Imax now has 75 screens in China, up from about a dozen in 2008, helped by a surge in local content along with Hollywood movies. The company plans to have 200 theatres in China within the next few years, he said.
In India, the company's growth has been hampered by low ticket prices -- often about half of those in Western countries -- and the small size of multiplexes.
"It is only now developers are building larger multiplexes with eight to 10 screens, and our JV with SPI is because they are building large theatres in India," Gelfond said.
The company is in talks with several developers to sign more joint venture agreements, he said.