2011: The Year of IMAX?

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The IMAX (Nasdaq: IMAX  ) machine keeps pumping great news week after week, and this Fool is getting sick of it, literally. After I consumed a record amount of popcorn doing "research" in 2010, I may have to postpone any further starchy snacking until 2012.

IMAX doubled gross box office to $546 million in 2010, and it's building an even better overall lineup for 2011.

Today, Viacom's (NYSE: VIA  ) subsidiary Paramount Pictures announced that it would release four films in IMAX during 2011. Super 8, Transformers: Dark of the Moon, Mission: Impossible-Ghost Protocol and The Adventures of Tintin: The Secret of the Unicorn will all hit the monstrous screens.

Disney (NYSE: DIS  ) and Dreamworks recently announced two more films for IMAX, bringing the 2011 total to 15 films so far. Just two weeks into the year, the schedule is starting to fill out, and IMAX will be cashing in a new film once every three and a half weeks on average. Some will be bigger than others, but there are at least a couple of guaranteed hits: Pirates of the Caribbean: On Stranger Tides and Harry Potter and the Deathly Hallows: Part II, along with the big-name Paramount films.

An ever-expanding theater base is helping drive IMAX results higher, but its true success hinges on a great lineup of films. So far, 2011 looks to be shaping up nicely, and I expect a few more titles will be slipped in throughout the year just for good luck.

I've made IMAX my stock pick for 2011, and our Motley Fool Rule Breakers team is already on the IMAX bandwagon. How high do you think IMAX shares can go this year? Leave your thoughts in the comments section below.

Interested in reading more about IMAX? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

More Movie Talk:

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.

Walt Disney is a Motley Fool Inside Value recommendation. IMAX is a Motley Fool Rule Breakers selection. Walt Disney is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (11)

Comments from our Foolish Readers

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  • Report this Comment On January 12, 2011, at 3:55 PM, Gonzhouse wrote:

    I agree that IMAX is on a roll most stocks would die to be in. And I got in at an average price of $6. The caveat here is that the days of IMAX being had in the teens or even low 20's are gone; the price appreciation skyrocket won't have the same trajectory going forward. It will do better than most stocks in 2011. I'm holding on not because I think it will just keep appreciating but for the ultimate payday: buyout.

  • Report this Comment On January 12, 2011, at 4:02 PM, LMSolo2 wrote:

    Let me start by saying that I own IMAX. It has done very well for me, even after shorting it a half dozen times. I think I've had my fair share of success with this investment.

    According to my crystal ball, 2011 may be a stellar year for IMAX-- but I also feel that the stock has had more than its share of growth. Not that IMAX isn't a great company and a fine investment. I'm not concerned with competition either. Nevertheless, I don't believe that IMAX as we know it today will be with us 5 years from now.

    My reasoning? Technology moves on at an alarming rate. IMAX is definitely a mature industry. By industry, I'm referring to projection-based exhibitions. In a few short years we've seen all by the demise of 35mm film projection. It has been replaced by digital HD video projection. To date, a large percentage of IMAX "Experiences" have hit the silver screen with HD video projection and not motion picture film. Why the sudden change? Simple- an HD disc and player cost a fraction of the cost of renting reels of motion picture film- and this translates into greater profits for the theatres.

    In recent months, I've looked closely at the IMAX screens and find myself thinking, "Wow, that's really BIG-- but is it really brighter and sharper than my HDTV playing a Blu-ray?". I conclude that the answer is a resounding NO. Of course, you can't build an LED screen the size of an IMAX screen-- OR CAN YOU?

    Image an enormous HDTV screen the size of an IMAX screen. Science Fiction? I don't think so. In fact, I am confident that jumbo LED screens will eventually replace projected images, be they film or video. Where does all this leave IMAX?

    Remember, IMAX makes its profit from installation of IMAX screens and technology. Unless IMAX is well ahead of the game and in the process of creating such a system, those big IMAX screens will inevitably be replaced by stunningly bright, saturated and crystal clear LED display monitors- theatre size. Take a good look at your HDTV playing a Blu-ray 1080p disc and ask yourself, "Size aside, is IMAX really as good as state of the art home theatre." You make the call.

    Projected images on a silver screen today are really no different in concept from the silent films created by Thomas Edison. Much like the LP turntable, you can improve on the idea just so far. In the end, you still have a needle tracking an engraved groove-- which can't compare to digital audio. The most sophisticated theater still shines a light through film frames at a rate of 24 frames a second and projects then on a big cloth screen.

    In the years to come, projected images, big small and inbetween will go the way of the phonograph. Where will this leave "The IMAX Experience"? Your guess is as good as mine. One thing is certain-- the IMAX theatre as we know it today is at the end of its lifespan. Care to invest in a soon to be obsolete technology? IMAX had better be in the development stages of HD/LED technology--and be able to make a profit installing such systems. If not, one day very soon the curtain will fall on motion picture projectors--and heaven only knows where that will leave IMAX.

  • Report this Comment On January 12, 2011, at 11:29 PM, TMFFlushDraw wrote:

    Thanks for the great comments.

    I agree the trajectory probably won't be the same (although I would love if it was) but I will take a better than market return any day. I hope we can at least expect that.

    As for the future of theater...

    If you have confidence the screens will be TVs (in essence) and not projectors you may want to look into OLED technology. It's the only technology I know of that would make the type of screen you write about possible, with reasonable cost. PANL is a ticker to look at.

    To say IMAX will be left out of the future assumes IMAX doesn't have the ability to innovate into the future. The company has actually done a pretty good job expanding including a 3D channel (launching soon) and the digital transition. I expect a little more than just standing pat, but only time will tell.

    Travis Hoium

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