Clearly, there's life after Avatar for IMAX
The company behind the gargantuan multiplex digital projectors and amped-up sound systems delivered better than expected quarterly results last week. Revenue climbed 38% higher to $55.6 million, as adjusted net income soared by 35%.
IMAX's numbers were good enough to notch an 8% gain on Thursday, a trading day where the major market indices took a dip.
There has been a fair deal of skepticism in recent months, especially given rival premium experience creator RealD's
This doesn't mean that IMAX is toast. There may never be another Avatar-esque release through IMAX, where screens are packed with moviegoers for months. However, IMAX's growing global popularity means that the company will likely make it up in volume.
After brokering yet another deal for more IMAX installations in Russia last week, contracts have been inked for 118 new screens this year, compared with only 35 signed for systems through all of 2009. As IMAX's installed base grows, the scalable model truly kicks in given the fixed costs of digital remastering.
In an homage to the network effect, more screens translate into more studios making sure that their films get the super-sized IMAX treatment. There are already eight buzz-worthy releases on the IMAX release slate for 2011. At this point last year, there were only half as many movies on board for the 2010 calendar. It goes without saying that the more releases, the less necessary it is for IMAX releases to have legs beyond the first few weeks.
IMAX used to believe that there was room for 1,000 IMAX screens worldwide. It bumped that ceiling to as many as 1,250 systems on Thursday.
The movie's just getting started. Do you really want to leave before the action heats up?
Have you paid a premium to see a movie on IMAX or any other cinematic upgrade? Please share your perspective in the comment box below.
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Longtime Fool contributor Rick Munarriz is a movie buff, but he doesn't own shares in any of the stocks in this story except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.