IMAX Extends Cinemark Holdings Partnership Through 2026

IMAX IMAX shares have returned 14.9% in the past year, outperforming the industry’s rally of 4.8%. The company benefited from strong top-line growth as IMAX crossed the $1-billion global box office mark in 2018 for the first time in its history.

Moreover, partnerships have played an important part. The recently renewed partnership with Cinemark Holdings CNK is noteworthy in this regard.

Cinemax Partnership Details

The renewal takes into Cinemark's current IMAX locations and two new IMAX laser installations. Cinemark will bring one of the two IMAX laser theaters to Daly City, CA.

The new theater will also showcase IMAX’s “12-channel sound technology” to entertain users with high quality audio. This apart, Cinemark's existing IMAX theater in Milford, CT will be upgraded to IMAX laser.

Notably, most of Cinemark's IMAX theaters’ contracts have been extended till 2026 after the partnership announcement. Cinemark currently has 14 operating IMAX theaters with another theater set to open in fourth-quarter 2019.

IMAX Corporation Revenue (TTM)

IMAX Corporation Revenue (TTM) | IMAX Corporation Quote

Laser Technology: A Key Differentiator

IMAX’s laser technology is the primary reason behind Cinemark extending the deal, per Variety.

Notably, the laser technology provides high quality images with sharper resolution and depth and allows filmmakers to showcase a variety of colors, thereby ensuring a completely immersive experience for the audience.

Also, IMAX is witnessing increasing adoption of its laser technology by other exhibitors like Cineworld, AMC Networks AMCX and Pathé. The technology is helping exhibitors to offer a differentiated movie experience, thereby attracting more users to experience out-of-the home entertainment.

Apart from differentiating with technology, IMAX is working with exhibitors to create unique customer viewing experience including new entry ways, seating and in-theatre branding. This applies to Cinemark's deal as well with the company required to enhance in-theatre customer experience at a few of its locations under specified conditions.

Notably, in 2018, IMAX signed contracts for 203 IMAX laser systems. Additionally, the company, which had a total of 37 IMAX laser theaters globally in 2018, expects to upgrade 45 screens to IMAX laser in 2019.

IMAX DNA May Boost Box Office Numbers

IMAX is approaching Hollywood filmmakers to shoot their films with IMAX cameras. Display of movies in IMAX theaters using IMAX cameras may give IMAX another reason to attract movie viewers at a time when on-demand premium content is easily available from the likes of Netflix and Amazon.

Notably, top filmmakers like Christopher Nolan, Anthony Russo and Rian Johnson have already used IMAX cameras in their films.

Additionally, with companies like Disney DIS and AT & T’s Warner Bros. increasingly choosing IMAX DNA technology, IMAX may witness higher footprint.  Moreover, one of Disney’s most awaited films in 2019, Avengers: Endgame, featuring IMAX DNA may boost the company’s box office sales.

Notably, IMAX DNA was used in six of the top 10 highest-grossing IMAX films in 2018, per deadline. This means the films were either made with IMAX cameras or “featured IMAX expanded aspect ratio to deliver audiences up to 26% more picture.”

We believe that the Zacks Rank #3 (Hold) stock’s differentiated technology may help it secure new partnerships and expand the existing ones.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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