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Diagnosing IMAX's China Syndrome

China has become a problem territory for IMAX (NYSE: IMAX  ) , Fool contributor Tim Beyers says in the following video.

How so? Next month, IMAX will have to choose how it screens Gravity and The Hunger Games: Catching Fire in China since the two movies open on consecutive days. The overlap could prevent IMAX from maximizing profits on two huge properties in one of its key global territories. (Remember, Iron Man 3 was a record-setter for the company in that part of the world.)

Meanwhile, Gravity's worldwide success -- the film had earned 22% of its $171 million domestic haul from IMAX showings through Oct. 20 -- has rekindled the notion that premium theater experiences are the future. Maybe, Tim says, but investors thought the same of 3-D after Avatar became a $2 billion worldwide winner.

Should investors be concerned by IMAX's China constraints? Or is increasing demand a buy signal? Tim answers these questions and more in the video. Please watch now, and then leave a comment to let us know what you think.

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  • Report this Comment On November 03, 2013, at 1:32 PM, EricKave wrote:

    I believe in China, unlike other markets controlled more by the studios, IMAX can share screens between 2 movies even if they are from different studios. Of course, it would be better to get the full maximum gross from each movie while they are hot, but it does take away the sting of the release of 2 releases perfect for IMAX (Hunger Games is even partially filmed with IMAX cameras) concurrently. China does this to depress the sales of non Chinese films relative to their preference for Chinese releases. The good new is BOTH movies got into China even if they are playing games with the release dates. IMAX did get a big win when China allowed 14 additional releases per year beyond the limit of 20 only if they are in IMAX or 3D. China is a tough market for Western companies to crack but IMAX is doing better than most others.

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