Imax's Global Footprint Stands Out

How often does a company with $160 million in debt and nearly $17 million in losses in fiscal year 2006 capture my attention? Rather infrequently I must confess. However, the IMAX corportation (IMAX) has achieved the status of an exemption. IMAX controls a niche in the specialty exhibition business, and they may finally be leveraging that status into prolonged profitability and growth.

In December, IMAX announced a deal with AMC Entertainment to install 100 digital projection systems in theatres in 33 American markets. In July of 2008 the company will roll out the first 50 units. In January they followed this pact with the announcement of 12 more screens in China and the Phillipines. This deal increases the IMAX footprint by nearly 40%. And certainly caught my attention. But as I thought about the IMAX story further I came to a couple of conclusions.

For some time, the motion picture industry has been struggling to attract viewers to theatres. Over time, and you can really go back decades, film attendance has been trending downward. There's perhaps a myriad of reasons for this, from competition from television and the internet to increasing sophistication of in home entertainment systems. However, IMAX, by the nature of 40 by 75 foot screens, provides an experience that can not be replicated in the home. It provides a unique experience for the consumer and it's larger-life-life nature compliments the blockbuster film, both live action and animation. Evidently, moviegoers agree.

IMAX recently announced that box office receipts for 2007 topped $145 million, up from $8 million just five years before. Hollywood studios are increasingly incorporating IMAX exhibition into their broader release plans for their largest, most commercial offerings. Five of the ten highest grossing motion pictures of 2007 were also released in the IMAX format, with up to 13% of the total box office originating from IMAX exhibition. This seems likely to continue as IMAX continues to expand operations worldwide.

Disclosure: I do not own shares in any company mentioned.

Comments

[tessant:]

i was an early investor in imax. wish i was part of this comeback..

scott w
growthportfolio.ning.c...
"the facebook of technology and investing"

2008 Feb 04 04:23 PM