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James Cameron Pushes Studios Into the Third Dimension

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To 3-D or not to 3-D? That has been the question for movie studios debating the extra cost associated with filming in three dimensions. Now, James Cameron, director of the two highest-grossing movies of all time, is urging studios to make the switch.

On stage with Avatar backer News Corp.'s James Murdoch at the Abu Dhabi Media Summit, Cameron said that converting 2-D movies to 3-D after filming wastes resources. 3-D is driving box office revenue higher despite a decline in attendance; as the technology improves, Cameron believes studios should embrace the movement.

That's sure to be good news for two main beneficiaries of 3-D box office, RealD (NYSE: RLD  ) and IMAX (NYSE: IMAX  ) . Both companies take a piece of box office each time moviegoers see a film on their format. The top two films in 2010 were 3-D releases, and the top six movies were IMAX releases, so the premium price doesn't seem to be a hindrance.

The success of 3-D films after Avatar backs up Cameron's point, and could force studios like Disney and Sony Pictures to go with 3-D from the get-go. The added cost seems worth the payoff.

IMAX in particular has benefited from the backing of big-name directors like James Cameron and Christopher Nolan. Nolan is even putting his weight behind IMAX's cameras for his third Batman movie. In the movie business, I want to follow the big names, and Nolan loves IMAX as much as Cameron loves 3-D. For investors in IMAX and RealD, this trend could have blockbuster potential.

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

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  • Report this Comment On March 17, 2011, at 2:54 PM, Gonzhouse wrote:

    I am long IMAX and short RealD, both in CAPS and real-money (and winning both ways). 3D is a fad that has appeared once a decade since the 60's. Even though the technology improves every iteration, it peters out as if on a schedule. James Cameron is one of the few directors who has the heft to demand 3D; he also knows what works in 3D (animation and action/adventure). 3D fizzes out every time because of the realization that drama, comedies, and other genres don't work in 3D.

    IMAX could stop 3D movies altogether and not miss a step; IMAX's appeal is the incredible growth of theatres in non-US locations. 3D is just not relevant.

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