Studios Should Take Notice of IMAX's Dominant Batman Showing

The market hasn't rewarded IMAX's (NYSE: IMAX  ) incredible performance during the release of The Dark Knight Rises, but the film has shown the power and potential IMAX has in the movie market. Despite absurd ticket prices ($18 in my local market of Minneapolis), people came out in droves to see Christopher Nolan's creation that included more than an hour of footage filmed with IMAX cameras.

Opening weekend was impressive for Time Warner's (NYSE: TWX  ) subsidiary Warner Bros. film in IMAX, but the story since then has only improved. In its opening weekend, IMAX accounted for 11.8% of the box office, largely at sold out theaters. But over the following week, when people had their choice of seats in theaters, IMAX performed even better.

 

Domestic IMAX Box Office

Domestic Total Box Office

Percentage of Total

Opening weekend $19 million $160.9 million 11.8%
First 10 days $37.8 million $287.1 million 13.2%
Second weekend $9 million $64.1 million 14%

Source: IMAX press releases.

This is partly because IMAX performs well with action films, but it is also partly due to the immersive IMAX experience Nolan was able to create. The amazing thing is that this performance wasn't even helped by the extra cost 3-D movies usually come with.

The 3-D movie doesn't appear to be the sell it once was, as RealD (NYSE: RLD  ) investors are finding out today. The company won't benefit from the biggest movie of the summer, and the second quarter was much worse than expected.

IMAX has a lot of momentum with movie studios after a strong showing from Disney's (NYSE: DIS  ) The Avengers, Lions Gate Entertainment's (NYSE: LGF  ) The Hunger Games, and now The Dark Knight Rises. I expect this to result in having more films being shot in IMAX, just as The Hunger Games: Catching Fire will be. Moviegoers seem to be willing to pay extra for the experience, and that should be music to investors' ears.

Interested in reading more about IMAX? Add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium owns shares of IMAX. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On August 02, 2012, at 1:10 PM, bbflyer wrote:

    Biggest movie of the summer?!? That would be the Avengers at $615MM+ domestically and 3rd all time globally at $1.46 Billion. The Dark Night Rises as a long way to go before it can make that claim at since it is only at $311MM domestically and $559MM Globally. Could it get there?? Maybe but doubtful as the super-hero genre tends to be front loaded.

    3D not being the "sell it once was".... Take note that domestically 3D movies account for 3 of the top 5 and 6 of the top 10 movies this year. They even do better internationally especially in China (Titanic 3D did over $150MM). I recently read that 3D accounts for 40% of China's box office which is forecasted to top $3 billion this year and surpass the US total box office by 2020 (that's over $10.5 billion a year today). China's box office has been growing at 30% y/y for the last decade. There is no reason, especially since they just change the law to allow more US movies to play in China and the studio also get a higher percentage of the revenue. Another interesting note, a natively produced Chinese 3D film just passed $100MM which is a first.

    Globally 4 out of the 5 top movies ever (not adjusted for inflation) were originally released in 3D and the one that wasn't, Titanic, was re-released in 3D and did over $300MM++ globally.

    RLD's net licensing revenue # is actually up y/y and was up over 15% for the quarter y/y. Since RLD's NLR is directly correlated to ticket sales it is the best measure on how well 3D is doing since they have 80-92% of the domestic 3D box office (depends if the movie plays in IMAX) and about 50% of the international. The miss was due to extra costs on the eyewear associated with lower recycling amounts which significantly reduces their costs. In addition, poor forecasting on NLR by the analysts using to high of a conversion rate b/c of increased 3D ticket costs associated with non-children movies like The Avengers.

    Imax is a great company and has a very good model. I take nothing away from them. Let's just keep the information accurate....

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