This company recently presented at Southwestern Showcase 2006, an annual event held in Dallas during November. Check here for a list of presenting firms; most also provided a recording of their presentations. I'll be providing a recap of the events I was able to attend; be sure to check The Motley Fool's daily headlines for updates.
Ballantyne of Omaha
Ballayntyne is one of a handful of suppliers of motion-picture equipment to major theater chains, including Regal Cinemas
That's all about to change, however. In similar fashion to the photography industry, movie-theater machinery is going digital and is expected to fundamentally alter the landscape and change the pecking order of the companies operating in the space. Ballantyne's predicament is reminiscent of Eastman Kodak's
Ballantyne is not sitting still. Last year, it announced that it became a non-exclusive distributor of NEC Solutions, a U.S. division of Japan-based NEC
The picture quickly becomes cloudy after that. I'll refer you to slide 11 of Ballantyne's presentation for its interpretation of who the players are in this area and how the industry is working to determine who should be responsible for funding the migration to digital theater equipment. In a nutshell, distributing digital is much more scalable and cost-effective for movie producers such as Lions Gate Entertainment
The rollout of digital is uncertain at this point. Management surmised that 2008 could see a significant deployment but added that the $64,000 question is when the new medium will officially take off. The company did mention in its recent 10-K filing that it "cannot assure that its [analog] equipment will not eventually become obsolete as technology advances."
In other words, right now it's too hard to tell how the industry might shake out. Ballantyne did offer an estimation that the move to digital is a huge opportunity, since there are 125,000 movie screens worldwide and it could cost up to $80,000 to retool them for digital screens, servers, and projectors.
With 37,000 U.S. screens, the potential for Ballantyne is equally compelling at home. It's just difficult to discern how it will grow into a major player, given that its dominance lies in the analog realm. Its plan currently is to align closely with NEC and grow into a leading service provider of any digital platform. Time will tell whether it can use its current relationships to successfully compete in the new landscape. This may not be an "innovate or die" situation, but it will clearly be a cliffhanger for Ballantyne from here on out.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.