IMAX's Christmas Miracle

When Time Warner's (NYSE: TWX  ) The Polar Express rolled out at multiplexes everywhere last year, it was simply life imitating art. That bell that Santa doubters fail to hear in the classic Christmas tale? That was the box-office cash registers going silent as the seasonal flick tanked at the box office.

However, IMAX (Nasdaq: IMAX  ) proved to be the last bastion for believers. Presented in 3D in the company's network of gargantuan-screened theaters, The Polar Express proved to be a runaway hit. Movie watchers passed on the regular-sized version but gobbled it up on the bigger-than-life IMAX screen. That's why IMAX chose to give the film an encore presentation in 2005. Even though the DVD hit retail outlets in November, IMAX felt that it had the beginning of an annual tradition on its hands. Time Warner warmed up to the idea, even marketing the IMAX rollout as part of the DVD campaign.

After a strong opening during the extended Thanksgiving holiday weekend, attendance dipped during the first weekend in December. That was expected. It's what movies do. However, ticket sales went on to climb the following weekend. This past weekend saw attendance climbing yet again.

More often than not, when a film grows its take from one week to the next, it's because more movie theaters picked up the release. This past weekend, only Brokeback Mountain and Memoirs of a Geisha joined Polar Express in earning more than the previous week, yet those two films went into wider release on Friday. Polar Express has crept its box office take higher, showing at the same 66 domestic screens on which it's been playing since Nov. 25.

IMAX won't necessarily be getting rich off the $5.4 million in ticket sales that the 3D version has generated over the past four weeks. For starters, it pales when compared with the film's $45 million global take for IMAX last year. However, the bulk of IMAX's revenues have been generated from theater system installations, and this kind of annual rite may win over operators suffering through three straight years of movie attendance declines.

Multiplex giant AMC is already testing some IMAX installations in key markets. If successful, it's only a matter of time before the test carries over to its other multiplex strongholds. Rivals such as Carmike (Nasdaq: CKEC  ) and Regal (NYSE: RGC  ) would have little choice but to follow suit if the winning formula in a sea of multiplex boxes is to have one retrofitted IMAX screen inside each complex.

IMAX keeps inking new contracts. The company has signed double-digit screen deals in each of the past five quarters, and that streak is likely to continue. On Monday alone, IMAX signed a three-cinema deal in South America. That comes on top of new agreements in Russia and Brazil earlier this quarter.

Earlier this year, IMAX was singled out in the Motley Fool Rule Breakers growth stock newsletter service. The company is profitable, and while its growth may not appear to be stellar at the moment, its DMR technology -- which upgrades Hollywood blockbusters to create simultaneous IMAX releases -- is throwing the struggling film industry a much-needed lifeline.

Can IMAX make investors believe in the company the way the hero of Polar Express comes to believe in Santa Claus? Well, we've got two holiday seasons down -- and who knows how many more to come.

Fools, now is the time to open your hearts and wallets to worthy causes! Please support our five Foolish charities at www.foolanthropy.com.

Longtime Fool contributor Rick Munarriz didn't see Polar Express at the multiplex or at an IMAX screen last year; he caught it with his family at the drive-in. He does not own shares in any of the companies mentioned in this story. TheFool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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