Tuesday, August 2, 2011 at 10:49AM IMAX Stock Gets Crushed; Down 50% in the Last Month
Everyone talks about Netflix stock recently losing a couple of points due to lower than expected subscriptions projected into the future, however, the stock that is really losing its shirt is IMAX. Just over a month ago, IMAX was trading at $38 per share. Today, it sits at $17.70. In the world of stocks, that decline is just insane. So what is happening?
Some has to with the brand dilution. Basically, IMAX screens in theaters are just not the same anymore. Some have even gone far as to say that its "LieMax" and I have to agree. Theater chains just basically take their largest screen and put an IMAX tag on it to charge $3 or more for people to watch it on the IMAX screen. However, the real culprit in my opinion are ticket prices in general. There's a threshhold of how much people are willing to pay and for most people, the extra three bucks crosses that.
Look at it this way. If you're a family of 4 and you're looking to watch a movie, it'll cost to $40 plus drinks and popcorn. However, if you want to see it in IMAX you'll have to pay $52 which may be fine for some, but most of these IMAX screens are also showing 3D films so you're spending another $3. This means instead of pay $40 for a movie, you're spending $64 which is a 60% increase! 60% increase kind of reminds you of that Netflix deal doesn't it?
Anyway, expected revenues seem to be weaker and it seems more than more if people had the choice of watching something in 3D or on IMAX, they'd choose 3D. Because really, all the theater chains have LieMax.
What do you guys choose?
Reader Comments (3)
One way or the other they'll figure out what people want to pay. If they can make money off of those who'll pay the premium price they'll keep doing it, if not - somewhere out there you'll see a correction. I DO think though that ultimately the theater moviegoing experience is simply going to be considered just only ONE platform that a movie is introduced to an audience on and won't be considered THE mass audience format for movies as it was in the past. 3D and IMAX and whatever else they come up with is simply a way to give an incentive to that audience that sees it in a theater - and maybe even also to test and get reaction from a broad paying audience for new exhibition processes and/or adjustments to existing ones. It becomes more like Broadway shows and the audience that follows that "live', "event" entertainment form. Everybody else who just wants to watch a movie because they're bored - or just wants to keep up with what all the "cool" people are watching - can do that on their smart(er) phones.
I saw a "Liemax" at an AMC near me and the first time I looked at it, I thought it could be an IMAX. But it was just the biggest screen in the theater. But I think the reason why stocks are down for IMAX is because movies aren't actually utilizing their cameras. When The Dark Knight came out, you had to watch it in IMAX for the full effect and it was boosting sales. Avatar was big at IMAX too. I think that the stocks will rebound once The Dark Knight Rises comes out next summer.
J Bradley, you make some nice points, I agree that IMAX and 3D are reasons why people should see it in the theaters but by having to pay $6 or more for those experiences it takes away from the benefit of watching in the theater. In other words there is no "experience" savings. Now, if IMAX and 3D were free, I think a ton more people would watch it in the theaters. Btw, you gotta come write for us :)