IMAX's Big Picture Keeps Expanding

If you're going for a one-two punch overseas, you may as well aim for the world's two most populous markets.

IMAX (Nasdaq: IMAX  ) announced a pair of deals in India (1.2 billion residents strong) and China (the global leader with 1.3 billion citizens).

A deal with India's BIG Cinemas will replace the chain's flagship IMAX screen in Mumbai with IMAX's first digital installation in the country.

Over in China, IMAX is teaming up with the moviemaking moguls at Huayi Bros. to release enhanced versions of as many as three of the studio's big-budget epics for IMAX theaters. They will be the first mainstream commercial films to be digitally remastered that didn't originate from a stateside studio.

As far as deals go, these may not be as monumental as when IMAX inked the three biggest contracts of its 40-year history last year, covering 166 new multiplex installations through joint venture deals with AMC, RACIMEC, and Regal Cinemas (NYSE: RGC  ) . However, they are clearly incremental and provide a huge statement of IMAX's global reach.

The digital upgrade in Mumbai is huge. It will allow the theater to bypass the cumbersome film prints required to screen non-digital features. This adds up to material savings in operating costs. It also translates into greater flexibility for the exhibitor to show a wider range of content.

The deal in China, which kicks in with next year's release of Aftershock, will likely inspire more Chinese theater operators to make the leap to IMAX.

We are already seeing this happen domestically. As studios like DreamWorks Animation's (NYSE: DWA  ) and Viacom (NYSE: VIA  ) are joining IMAX loyalist Time Warner (NYSE: TWX  ) in sprucing up their flicks for premium IMAX versions, more exhibitors are retrofitting theaters in their multiplexes to accommodate the bigger-than-life IMAX experience.

Studio diversity is a blessing. Shares of IMAX took a hit earlier this month, when it was announced that the IMAX version of Harry Potter's latest installment will be delayed by two weeks next month. Avid fans of the series will likely wind up seeing it on a conventional movie screen instead. This is the kind of release-slate shift that would have been devastating to IMAX a year or two ago. For now, shareholders can be comforted since IMAX will probably still have good traction on its versions of Viacom's Transformers sequel and News Corp.'s (NYSE: NWS  ) Night at the Museum: Battle of the Smithsonian.

There is strength in numbers for IMAX. If you want proof, go counting people in India and China. Don't stop until you hit 2.5 billion.