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WIKI ANALYSIS
IMAX Corporation (TSX:IMX NASDAQ:IMAX) is a Canadian entertainment technology company with an industry leading growth rate. IMAX's principal business is the design, manufacture, sale and lease of theater systems based on its technology for large-format, 15-perforation film frame, 70 millimeter format (15/70-format) theaters. In fiscal 2010, IMAX posted revenue of $248.6 million and net income of $100.8 million.[1]
Fiscal 2010 was another successful year for IMAX due to the growth of film technology and increased demand for 3-D films. The blockbuster film Avatar was IMAX's breakthrough film of the decade, as it generated $2.7 billion in box office revenues and created more demand for 3-D films. IMAX is also dependent on the quality and popularity of films that it shows, as 3-D box office sales are correlated to 2-D box office sales. With its domestic success, IMAX has made moves to expand internationally.
Business Overview
Business Financials
Fiscal Year 2010 Performance (Ended December 31st, 2010)
The firm reported the highest annual revenue, earnings and EBITDA for any year in its 43 year history.[1]
- Revenue increased 45.2% to $248,6 million.[1]
- Net income increased 20-fold to $100.8 million.[1]
Business Segments
- IMAX Systems (32.7% of Revenue)
- Films (32.4%)
- Theater System Maintenance (15.4%)
- Theater Operations (13.2%)
- Joint Revenue Sharing Arrangements (3.2%)
- Other (3.1%)
Geographic Locations
- United States (54% of theaters)
- Europe (14%)
- Canada (7%)
- Mexico (5%)
- China (5%)
- Japan (3%)
- Rest of World (12%)
Trends and Forces
IMAX Grows at Same Pace as Film Technology
Since superior entertainment technology differentiates IMAX from its competitors, the firm's success and growth is dependent on new technology. IMAX developed the MKII and IMAX 3D cameras to be able to film its signature shots, and the firm also developed technology to convert 2-D films to 3-D films.[2] As new entertainment technology emerges, and the demand for 3-D films continues to increase, IMAX hopes to continue profiting at a record pace.
Increasing Popularity of 3-D Films
The demand for 3-D films has grown exponentially in the past two years. Since 3-D films charge $3 per ticket more than 2-D films, having a 3-D version of a film can improve box office revenues by about 25%.[3] Evolving technology also means that IMAX competitors may be able to provide the same viewing experiences, however. For example, the launch of 3-D televisions will allow consumers to view 3-D films in the comfort of their own homes, and not in IMAX theaters.[4] IMAX plans to contribute to 3-D television popularity by writing television licenses to future 3-D films and advertisements in its theaters.[5]
IMAX Revenue Dependent on Box Office Success of Films
Like other movie theaters, such as Regal Entertainment , Cinemark, and privately-held AMC Entertainment, IMAX revenue is dependent on the popularity of the films it shows. Clearly if less blockbuster-popular movies are made, then less moviegoers will go to IMAX theaters and buy tickets. Furthermore, IMAX is reliant on films that fit to be made in 3-D, such as action-packed films and animated films. With the success of Avatar, IMAX business has increased significantly.
IMAX Theaters Expanding Internationally
With the success of IMAX theaters in the United States, the firm has made moves to have a greater international presence. The IMAX film Prince of Persia: The Sands of Time opened in 53 international theaters, spanning all continents (excluding Antarctica).[6] IMAX has been particularly aggressive in Russia, where it has worked with Russian media firm Rising Star Media to open two new theaters in Moscow and St. Petersburg.[7] IMAX has also worked with Russian retail and entertainment developer SBS to open a theater in Krasnodar, which has a population of 750,000.[8]
Competition
Movie Theaters
- Regal Entertainment Group (RGC) RGC operates hundreds of movie theaters throughout the United States, showing 2-D versions of IMAX films.
- Cinemark Holdings (CNK) Similarly to RGC, Cinemark directly competes with RGC for filmgoers ticket sales as well as IMAX for viewings of 2-D films also in 3-D.
- DMAX Chinese knock off that is offering a cheaper version of Imax. Backed by China Film Group and China Research Institute of Film Science and Technology. Plans to open 15 screens in 2012.
Film Makers
- Walt Disney Company (DIS) -- Walt Disney Company writes and produces films that compete with IMAX produced films.
- Dreamworks Animation SKG (DWA) -- Dreamworks also writes and produces films that compete with IMAX produced films, especially animated films such as Madagascar and Shrek.
References
- ↑ 1.0 1.1 1.2 1.3 IMAX 2010 10-k
- ↑ IMAX website, Corporate, Cameras & Accessories
- ↑ Business Insider, "3-D Movie Trailer Smackdown: Blockbusters Fighting To Be In Your Face In 2010," 2/16/2010
- ↑ Seeking Alpha, "How to Profit From 3D TV," 03/22/2010
- ↑ Business Insider, "3D TV Fever! ESPN; Sony, Discovery, IMAX Launching Networks," 1/5/2010
- ↑ Bloomberg, "Walt Disney Pictures' and Jerry Bruckheimer Films' Prince Of Persia: The Sands of Time Opens in IMAX(R) Theatres Internationally," 05/18/2010
- ↑ Business Insider, "IMAX's International Business Blasts Off In Russia," 02/03/2010
- ↑ Bloomberg, "IMAX Signs Theatre Deal in Russia," 05/06/2010
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