Wanda Cinema Line is the operator demanding 75 new theaters in a joint revenue-sharing agreement. To put that number in context, IMAX ended 2010 with 373 commercial theaters worldwide and only had plans to install 80 to 90 theaters during 2011. After having a backlog of 224 systems to end 2010, the company has more than three years of demand for theaters. It's time to ramp up production if you ask me.
But this isn't just any theater deal. The move into China is outstanding for a few reasons.
- Locally produced films are starting to be released in IMAX. The Founding of a Party: The IMAX Experience is on the slate for June 2011 in China, and with a larger installed base of theaters, more films should be on the way.
- The joint revenue agreement gives IMAX an even larger share of box office revenue than what it normally gets from studios. That means a smaller impact immediately to earnings but an ongoing payoff in the future, something investors should be happy about.
- With the U.S.-installed base reaching 217 commercial theaters, or 58% of the installed base, IMAX needs to expand into other parts of the world. China only had 22 commercial theaters to end 2010, so this is a huge step toward that goal.
U.S. operators such as Regal Entertainment
The drivers behind IMAX
The beautiful thing about IMAX theaters is they can adapt to any experience the audience or directors demand. Unlike RealD
2011 may turn into the year of IMAX after all.
Fool contributor Travis Hoium is very happy to say he 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.
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