Sunday, February 6, 2011

IMAX and James Cameron: Together Again

It's a reunion that should warm the popcorn-munching shareholders at IMAX (Nasdaq: IMAX).

Director James Cameron -- the man behind two of Hollywood's highest-grossing flicks in Avatar and Titanic -- is back today with Sanctum. Cameron's not the director this time around, merely the executive producer, but he's been actively promoting the underwater cave-diving adventure.

Is it blown up on IMAX? You know it!

Cameron's last brush with IMAX proved lucrative for both parties. Shares of IMAX have more than doubled since Avatar debuted on the big screen 15 months ago. The movie was more than just a box office winner for IMAX. Avatar validated the premium cinematic experience.

The company has gone on to ink deals with exhibitors worldwide, largely on the niche-defining success of Avatar, and studios have been angling to digitally remaster their releases for IMAX's superior projections. There are now a record 15 studio IMAX releases on its slate for 2011. Avatar's rich effect also enlightened theater audiences on the merits of paying up for premium screens. Leading 3-D outfitter RealD (NYSE: RLD) was able to go public last year, and box office receipts more than doubled to $546 million for studio flicks on IMAX in 2010.

Unfortunately, investors shouldn't get too worked up over Sanctum. The film is bumping up against negative reviews, with just a third of the critics tracked by Rotten Tomatoes recommending the movie.

The more encouraging IMAX development this weekend may actually be taking place in France. Disney's (NYSE: DIS) TRON: Legacy opens there next week, but the five commercial IMAX screens in France will begin screening it tomorrow.

Think about that for a bit. Studios have historically released their movies simultaneously on IMAX and traditional multiplex screens. What if studios begin tweaking their release windows, giving blockbusters a week or so head start on IMAX back home? Exhibitors would be able to charge a bit more than they typically mark up IMAX and IMAX 3-D screenings.

Studios may be hesitant at first. Would this disrupt marketing campaigns? Would buzz be lost between the two releases? However, it would definitely get studios thinking once again about maximizing their IMAX product.

It's already happening. TRON: Legacy has 43 minutes of footage specifically shot to make the most of the IMAX canvas, helping it nab $13 million in global IMAX ticket sales during its opening weekend.

Everybody wins. Studios, IMAX, and exhibitor partners AMC, Regal (NYSE: RGC), and Cinemark (NYSE: CNK) get to divvy up meatier ticket sales. A release's biggest fans can pay up for bragging rights. If this goes over well in France with five screens, just imagine what it could mean for the hundreds of domestic IMAX locations?

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