RealD is showing signs that they have no intention of slowing the pace of their growth in the cinema marketplace. Already the leading worldwide provider of 3D technology for motion picture exhibitors, the company made two big announcements over the past week which will help push its share of the market even higher.

The first bit of news was about the XLW Cinema System, a new RealD product capable of projecting a 3D image on a screen up to 82 feet (25 meters) wide. Given that the XL Cinema System could already throw an image onto an 80 foot (24.4 meters) the big news here seems to be that the 1.0 throw ratio of the XLW.

Most throw ratios fall between 1.8 and 2.0, meaning if the screen is 40 feet wide, the distance between the projector and the screen has to be 72 to 80 feet. With a throw ratio of 1.0 and a maximum screen width of 82 feet, the XLW can project large images in a smaller space. It’s not hard to see why RealD developed the technology. With the popularity (not to mention increased revenue) of Imax screenings, many major theatre chains have begun to retrofit traditional auditoriums into branded “large screen” venues. Regal has RPX, AMC has ETX and Marcus Theatres has UltraScreen, to name just a few.

The XLW system will allow exhibitors to install much wider screens in stadium seat auditoriums which generally have shorter throws.

The second RealD announcement may be the more important of the two. Regal Entertainment Group has agreed to double down on their investment in RealD technology by installing the company’s 3D technology on an additional 1,500 screens throughout their circuit. This alters the May 2008 contract between RealD and Regal which called for the deployment of 1,500 3D screens.

Despite what some industry pundits might have you believe, Regal CEO Amy Miles claims moviegoers have not grown tired of viewing stereoscopic content:

“We continue to see high demand from moviegoers for RealD’s premium 3D viewing experience and to meet that demand Regal expects to 3D-enable approximately 40% of its screens as part of its ongoing nationwide digital rollout.”

If Regal, which is the largest theatre chain in the world, were to install 3,000 3D-capable screens out of their current 6,698, then that 40% would actually be more around 45%.

Merlin Entertainment’s London Eye is adding 4D cinema, with a new screening venue and debut short movie.

Designed to excite London Eye-riders, a short movie was written and directed by Julian Napier and stereo 3D produced by Phil Streather, CEO of 3D company Principal Large Format. The film was produced by Centre Screen Productions in association with Principal Large Format and Pablo Post.

“Having a purpose-built theatre for a 3D or 4D film is perfect because getting a film like this right relies a lot on the theatre geometry,” Streather said in a released statement. “The distance of the audience from the screen and the size of the screen itself have an enormous impact on the experience. Knowing the exact dimensions of both the screen and the theatre before we started production meant that we could craft a film that would perfectly fit the space.”

The focus of the four-minute film is a little girl on a day trip to London, whose view of the capital’s many tourist sites is obscured by people and buildings, until she arrives at the London Eye.

Principal Large Format worked with Jeremy Braben of Helicopter Film Services to design and build a gyrostabilised 3D helicopter camera mount, in order to shoot aerials for the production.

It is expected that this movie will be seen by four million people a year.

IMAX has announced a joint venture with Hoyts Cinemas, one of Australia’s largest exhibitors, to build four theatres featuring IMAX Digital technology. The theatres will be built in Sydney, Perth and Melbourne with the first three opening in November of 2008 for the release of “Harry Potter and the Half Blood Prince”. The deal, which will double the number of IMAX theatres in Australia, is the first international joint venture in IMAX’s history.

The agreement has IMAX and Hoyts splitting the profits from the four new theatres as well as the cost of building them. The latter is not insignificant as both companies have not had an easy go of it financially over the past several years. In 2006, IMAX made their second unsuccessful attempt to find a buyer and was rumored to be near bankrupt. Their stock price, which in 1999 reached a high of $49 plummeted to below $4.00 in 2007 when the company revealed it was responding to a Securities and Exchange Commission accounting investigation and that year over year revenue was off.

As for Hoyts, after two years of poor performance revenue-wise, Pacific Equity Partners bought the theatre chain in the third quarter of 2007 for AUD $440 million from James Packer’s Publishing & Broadcasting and West Australian Newspapers. In a press release statement Hoyts CEO, Delfin Fernandez, was not shy about highlighting the financial benefits of the venture. Besides offering incremental revenue from increased attendance, Fernandez said:

“. . . IMAX Digital projection system eliminates the need for film prints, which significantly lowers operating costs and enables us to offer our customers a wider range of IMAX content.”

In an effort to stay relevant during a time when the industry is trending toward digital cinema IMAX launched IMAX Digital System in June. The projection system provides the same large format visuals that IMAX built it’s reputation on in both 2D and 3D. Despite their financial woes, over the last seven months the company has been busy signing contracts with exhibitors for upwards of 180 systems, 50 of which will be installed before the end of the year. Last December, IMAX signed a deal similar to the Hoyts agreement with AMC Entertainment that will have 100 new IMAX Digital theatres opening in 33 markets across the United States over the next three years. Like the Hoyts deal, the AMC pact doubles the number of IMAX screens in the territory. Then in March, IMAX entered into an agreement with Regal Entertainment Group to build 31 new theaters in 20 U.S. markets by the end of 2010.

You might be asking yourself where the cash poor IMAX will be getting all of the dough for such rollouts, though back in May the company lined up financing through Wachovia Capital Finance Corporation as well as an USD $18 million investment from their largest shareholder.

One of the benefits for Hoyts in doing a deal with IMAX is that the chain will be able to deploy some form of digital cinema equipment at time when the company has halted such rollouts to wait out the virtual print fee (VPF) battle between Australian exhibitors and Hollywood studios. Because Australian theatres are usually alloted recycled prints, the studios have shown little interest in giving exhibitors in the territory a worthwhile VPF.

The first three IMAX theatres will be installed at Sydney’s Entertainment Quarter 12, the Carousel 16 in Perth and the Highpoint 17 in Melbourne. The fourth theatre will be built next year in Melbourne.

Regal has signed a major deal with Regal for the deployment of its digital 3D system. Major, but not as major as the previous 100 screen deal with AMC. According to Reuters:

Imax Corp said on Monday it had entered a joint venture with Regal Cinemas to have 31 of its giant movie screens installed in 20 major U.S. markets. Imax said the deal expands its joint venture partnership with Regal Cinemas to 38 theaters and will bring Regal’s total number of Imax theaters to 52 by the end of 2010.

Similarly to the AMC deal, it seems that Regal will not be shouldering the costs of the new projectors directly, according to the New York Times, which noted that “The two companies said they would share the cost of installation and the revenue, but declined to reveal more detailed financial information.”Expect more information to emerge when both companies have to file their quarterly reports, because you can’t just give away 31 half a million dollar projectors without telling your shareholders about it – as well as how you are planning on making that money back.The first installations are expected to be in place in time for the IMAX version of the next ‘Harry Potter’ film on Noevember 21st of this year.

Large format (LF) company Imax has been awarded $11m in damages by an arbitration court, ruling in the case of an alleged breach of contract for the development of Imax screens in India by local exhibitor E-City Entertainment, affiliated with the Essel Group and operating under the brand name ‘Funcinemas’ and ‘Fun Republic’. From the press release:

The case involved an agreement where Imax awarded E-City rights to develop a minimum of six Imax theatres in India.

Imax said E-City claimed the agreement was “a non-binding term sheet, that the amount of damages that IMAX was seeking for lost profits was excessive and that IMAX had failed to mitigate its damages.”

Imax said the panel found the agreement was enforceable, and that E-City had breached its obligations.

Imax was awarded all of the lost profits that it sought under the agreement.

To Imax this was about more than just a standard breach of contract. We only need to look at what Imax is doing in China to understand what ought to have been happening in India. From the Economic Time of India (no link):

“IMAX has potentially lost five years of development as a result of this deal. In fact, when we struck a similar deal in China, which was at the same level of development in 2000, today, we have four IMAX theatres in India and 13 in China – and if you look at the planned openings, it is 11 for India by 2012 against 40 for China, said [IMAX co-chairman and CEO] Mr Gelfond.

Meanwhile the flagship Imax screen in Mumbai is set for a re-vamp later this year, so while Imax might have fallen out with E-City, they still have a friend in Adlabs.

Imax and AMC really, really REALLY like each other in a digital-3D-biggest-deal-EVER kind of way. Yes, it is big. In fact, the news is so big that nobody at Imax has recovered from its impact sufficiently to post a press release on its corporate page yet. But there is plenty of coverage on the trades, regular press and blogs.

The Canadian large format (LF) film specialist is not exaggerating when it calls this deal the most important in the company’s history. This will see 100 new digital screens opening across 33 markets in the US over three years, thus doubling the number of Imax screens in the US. Varity has some of the details:

Pact between Imax and AMC Entertainment was announced late Thursday afternoon. Additional screens will be a major boost for the advancement of modern-day 3-D, since the digital Imax screens will be capable of exhibiting 3-D movies, in addition to 2-D titles.

New Imax digital projection systems will be installed in many of AMC’s top-performing theaters, including the Empire in New York City and 12 locations in the Los Angeles area, including Century City.

And:

Rollout of the first 50 screens will begin in July 2008. An additional 25 will be installed in 2009 and the remaining 25 in 2010.

But it is the more mainstream New York Times that has a better take on the financial specifics that underpin the deal:

In gearing up more theaters, Imax and AMC are chasing different goals. AMC, which is based in Kansas City, Mo., is trying to battle an industrywide slump in attendance while squeezing out more revenue from existing auditoriums. Because Imax tickets cost an extra $2 to $4, the conversion should increase revenue in the converted auditoriums by one third, according to Peter C. Brown, the chief executive of AMC.

For Imax, the joint venture carries extra weight. The company, with headquarters in New York and Toronto, has struggled to expand into mainstream movie theaters from its roots in science and history museums. Although it has persuaded some movie studios to release Imax versions of their regular films, Imax has recently suffered loses associated with regulatory inquiries into its accounting methods.

The Newspaper of Record also reveals that this is not a cheap or profitable deal for Imax:

Imax will shoulder the expense of the projectors, which cost about $500,000 each. AMC, one of the world’s largest movie theater chains, will pay to retrofit auditoriums in top-performing movie complexes in 33 cities, reconfiguring the seats and enlarging the screens.

Free projectors!! So AMC is effectively getting massively subsidized as Imax’s first digital 3D customer. What with AMC’s previous deal with Sony for 54 4K digital cinema projectors (free too?), it seems that one of the three NCM and DCIP partners believes in financial salvation through technology. The recent release of ‘Beowulf’ proved, if anything, that the greatest profits are to be made from Imax 3D, rather than the RealD‘s digital 3D (read ‘Why Beowulf spells bad news for digital 3D business‘), despite the RealD screens vastly outnumbering the Imax 3D ones.

Will this deal be enough for Imax to find financial salvation? The Motley Fool isn’t convinced (‘Why Can’t IMAX Fade to Black?‘):

If you think that the screens are big at IMAX (Nasdaq: IMAX), just wait until you see the deficits.

OK, so that’s not much of a selling point. Then again, when your third-quarter loss from continuing operations widens to $0.19 a share from $0.12 a share, you may as well dig into that popcorn tub as you take in the grandiose.

Like your sums in smaller steps? Feel free to bemoan the 4% drop in revenue to $29.8 million.

The website acknowledges that a steadier stream of Hollywood titles makes things sweeter – and this deal should be plenty of cake underneath the icing – but thinks that the best future for Imax would still be a buyout.

What nobody is questioning is whether Imax’s LF digital 3D technology actually works. I’m sure that AMC did not buy into this technology ‘sight unseen’, but pulling off a demo is not the same as making the technology work four shows/365 days a year. Particularly if it is based on LCoS/SXRD rather than the more stable DLP technology. Particularly for digital 3D, which is more complicated than even many industry people realize.

Some bloggers just hate the whole idea behind this. ‘Hollywood Needs Gimmicks to Get You into Theaters – Is IMAX or 3-D the future of cinema? How about better movies instead?’ But ultimately the ticket buying public will decide whether this move will pay off. The indication from “Beowulf” suggests that it might. Perhaps even in a big way. Just don’t expect Imax to keep giving away projectors for free to all exhibitors.