With all due respect to my Dueling partner W.D. Crotty, "it's different this time" is the oldest line in the book. Why is the IMAX (NASDAQ:IMAX) growth story any more believable than the XM Satellite Radio (NASDAQ:XMSR) one? The parallels are uncanny. Both are higher-cost, technologically superior entertainment delivery services. Both are largely valued based on their potential to take over their industry, rather than on any significant, visible shareholder-delivered results.

Plus, as W.D. acknowledges, more than 98% of IMAX's profits comes from its hardware. That's a one-time installation fee, plus the maintenance agreement. Sure, software companies such as Oracle (NASDAQ:ORCL) can charge a hefty portion of the initial purchase price for ongoing support among clients. The high concentration of ownership among theater operators gives those companies more leverage, though, than the average business has over Oracle. This means that any scale benefits that IMAX may get from its expansion will be largely tempered by its customers' expectations of purchasing efficiencies for their large volumes. It's a double-edged sword, similar to being a supplier to retailing giant Wal-Mart (NYSE:WMT). Yeah -- a company can profit, but the rest of the value chain expects its outsized share of the pie as well.

One-hit wonders
Let's not forget, too, that the theater business is profitable only when Hollywood produces blockbusters. The vast majority of revenue from early ticket sales goes back to the filmmakers, producers, and distributors. The theater's cut becomes sizable only if the film sticks around for quite some time. With "one major Hollywood release every six to eight weeks," in W.D.'s own words, IMAX is pretty well depending on every movie on its screens to be a blockbuster success. That's highly unlikely, especially as the novelty wears off and folks revert to their established entertainment patterns.

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IMAX and XM are both Motley Fool Rule Breakers recommendations.

Think you're done with the Duel? You're not! Go back and read the other three arguments, and then vote for a winner.

At the time of publication, Fool contributor and Inside Value team member Chuck Saletta had no ownership position in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.