Upcoming Attractions at IMAX

This morning's fourth-quarter report at IMAX (Nasdaq: IMAX  ) is a lot like the string of ads and film trailers you see before your movie actually starts. It's a mildly amusing, yet ultimately forgettable, diversion. It's not why you're here.

So feel free to head out to buy popcorn, some Twizzlers, and a $4 tub of soda as I go over the actual numbers. You won't be missing much. Revenue fell by 12% to $32.3 million, mostly because of fewer screen installations completed during the period. The net loss narrowed slightly to $0.21 a share, before tacking on a gain from the sale of a company-owned IMAX theater in Rhode Island and subtracting the writedown of film-based assets as the movie migrates to its digital platform.

Results topped analyst expectations on the top line but fell short on the bottom. I'd keep going, but I see you're back from the concession stand just as the opening credits are about to roll.

Yes, IMAX's future is going to be a lot more exciting than its past. The digital projection rollout is still on track to begin next quarter. It's an important evolutionary step for the company, and one major reason why the company has signed the two biggest deals in its 40-year history -- a 100-screen joint venture with AMC and a 35-screen international lease arrangement with RACIMEC -- in the past few months.

Just as companies like Thomson (NYSE: TMS  ) and AccessIT (Nasdaq: AIXD  ) are championing the digital migration for conventional multiplex screens, the future is going to be golden for exhibitors, movie studios, and the enablers like IMAX.

It's not just the inventory-free distribution, which is a costly burden for the industry in transporting physical reels. Digital distribution also translates into greater programming flexibility, allowing studios to tack on bonus features throughout a theatrical run to increase repeatability. Exhibitors can also screen live events. Can you imagine catching the Super Bowl or an international music festival in bigger-than-life IMAX glory?

That's why theater operators are hopping on the IMAX bandwagon. Studios love it, too. Hollywood releases rang up $145 million in ticket sales at IMAX screens last year, up from a box office take of $93 million in 2006. It's no surprise to see studios like DreamWorks Animation (NYSE: DWA  ) offering up their upcoming film slates for IMAX makeovers, like longtime IMAX partner Time Warner (NYSE: TWX  ) has over the years. It's incremental revenue at an ideal time, when mainstream movie houses like Regal (NYSE: RGC  ) and Cinemark (NYSE: CNK  ) are running flat.

So grab a seat. Work the cupholder. The lights are dimming just as the industry's prospects are brightening.

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