In a troubled box office, premium still sells

If it seemed to you like no one was going to the movies during the second quarter, you wouldn’t have been far off. You also probably haven’t stepped into an IMAX lately.

The second quarter was a dismal one for the U.S. box office. Sales of $1.95 billion were down 27% from the same period last year. Excluding 2020, when the pandemic closed theaters across the globe, that is the biggest drop for that period since 1976, according to data from Box Office Mojo. And that was with “Inside Out 2,” which accounted for nearly a fourth of the quarter’s total domestic box office haul despite releasing in the final two weeks of the period. The blockbuster from Disney’s Pixar studio has since gone on to become the year’s best performing film to date, with a global box office nearing $1.5 billion.

Disney has another shot at theatrical glory with the just-released “Deadpool & Wolverine.” It grossed $205 million domestically on its opening weekend—a record debut for an R-rated movie and 33% above what “Inside Out 2” managed on its opening. That was preceded by a strong launch for “Twisters” from Comcast’s Universal, which took in more than $81 million for its opening weekend—well above the $50 million range projected by various box-office tracking services.

Still, a few big hits won’t fully close the shortfall that studios and theaters are expected to see this year because of shifts in the release slate resulting from last year’s Hollywood strikes and some high-profile misfires. This year’s domestic box office is tracking about 19% below the same point last year, according to Box Office Mojo. Chad Beynon of Macquarie Equity Research expects the domestic box office to end the year around $8.1 billion—down 9% from last year and 28% short of 2019, the last pre-Covid year.

That slump is painful for exhibitors; AMC Entertainment already pre-announced second-quarter revenue down 24% from the same quarter last year. Oddly enough, though, the box office downturn is proving to be another flex for IMAX. The purveyor of large-format exhibition technology reported Thursday that second-quarter revenue fell only 9% year over year to about $89 million. That proved to be 21% higher than Wall Street’s forecast for the period and was helped by the company’s original “Blue Angels” documentary and the sale of the streaming rights of that film to Amazon. IMAX shares have jumped 13% since that report.

The company was already coming off a strong year. Revenue jumped 25% in 2023 thanks in large part to the runaway success of “Oppenheimer.” That put IMAX’s annual revenue just 5% below its pre-Covid level even as the overall domestic box office ended the year 22% short of that mark. The eventual Best Picture winner also turned out to be valuable advertising for the format, as director Christopher Nolan shot the movie on 70mm IMAX cameras. IMAX theaters showing the film in that format were still selling out more than a month after the movie’s initial release.

Other filmmakers want in on that action. The company says a record 14 movies coming out next year were “Filmed for IMAX”—meaning shot on IMAX film or with IMAX-certified cameras. It is easy to see why. IMAX tickets sell for a premium over those for regular showings, and growing preference for the format among moviegoers can even help a film that is struggling in the wider theatrical circuit. The “Mad Max” sequel, “Furiosa,” launched in late May to decent critic and audience scores but had a disappointing run, racking up less than half the global box office of its predecessor.

But IMAX Chief Executive Richard Gelfond noted in the company’s recent earnings call that “Furiosa” was the third-best title for IMAX in the second quarter. That compares with its ninth place ranking in the overall domestic market for the period, according to Box Office Mojo. Overall, IMAX says its theaters ended up accounting for 5.2% of the total domestic box office in the first half of this year; the company’s market share in 2019 was 3.2%.

The new Deadpool will help that trend further, even as it is also doing very well in the broader circuit. IMAX said Sunday that “Deadpool & Wolverine” grossed $36.5 million across its global network—its highest July opening ever. Macquarie’s Beynon expects global box-office revenue for IMAX films this year to be down only 5% from 2019 compared with a 28% drop for the overall domestic box office.

Fewer people may be going to the movies these days, but those who do clearly are willing to pay up for a better experience.

Write to Dan Gallagher at dan.gallagher@wsj.com