IMAX Corp (USA) (IMAX)

IMAX is a solid long term investment. It has a stellar brand name, superior technology, and is positioned to profit from current trends. However, it is in trouble with litigation from a creditor and has delayed financial disclosures. It has not had a profitable year since 2005. They probably won't start to make money until the end of this year.

Movie goers will drive to a far away cinema and pay a substantial premium to have an "IMAX experience." IMAX films are huge. The screen fill your entire field of view bringing you into the film. They run the movie at 48 frames per second instead of the standard 24. This makes fast action much smoother and brings out details of fast movie objects. 24 frames per second really is too slow for any movie with even moderately fast motion. Even DVD is 30 frames per second. HDTV can be up to 60. If you are actually interested in investing watch "Dark Night" at an IMAX theater when it comes out. Even if a competitor came out with a better system people will still demand IMAX because of the "IMAX experience" brand.

I briefly mentioned that HDTV has a higher frame rate than standard films. It also has equivalent picture quality. In some cases better because HDTV does not have the jitter of standard film projectors (IMAX fixes this with a proprietary system). Its cheaper to rent a movie than to watch it in a theater. Because of this I almost never go to the theater anymore. According to the MPAA, admissions are down from 1.44 billion in 2001 and 1.6 billion in 2002 to 1.4 billion in 2007.

Despite sales being hampered by customers wanting to wait for digital IMAX, over the last few months, IMAX has inked a huge number of deals for new IMAX theaters around the world with AMC, Brasil, and China. Once the digital system is ready in the second half of 2008, these sales will increase.

The digital format will be great for IMAX. Right now, IMAX films are very expensive to shoot, edit, and print because the film is so expensive making studios hesitant to release an IMAX film. After switching to digital, film costs will almost not exist.