Movies to the Max

06/09/2009 1:00 pm EST

Focus: STOCKS

Michael Brush

Columnist, MSN Money

Michael Brush, contributor to MSN Money, says this is one of the biggest years ever for the movies, and the screens are getting bigger, too, which should help Imax.

Recession-weary Americans are filling darkened theaters to hide from the gloom and doom, just as they did during the 1930s. That's made the film industry a rare bright spot in this economy.

Though retail spending fell 10% in the first quarter of 2009 compared with a year earlier, consumers shelled out 10% more to see movies in theaters.

Movie spending was up 14% for 2009 through early May, compared with the same period in 2008, as fans flooded the theaters to lose themselves in hits such as "Monsters vs. Aliens," "Fast and Furious" and "X-Men Origins: Wolverine."

And the trend will probably continue as film buffs enjoy potential mega-hits featuring the likes of Harry Potter and the Terminator.

"I think the summer lineup is terrific," says Michael Burns, the vice chairman of Lions Gate Entertainment (NYSE: LGF).

The new "Star Trek" movie proves that an old TV series can live long and prosper. This movie beams Trekkies back to the USS Enterprise's maiden voyage. (It has grossed over $200 million at the box office so far—Editor.)

But it may not even be the biggest summer hit from Viacom's (NYSE: VIA) Paramount Pictures, which has "Transformers: Revenge of the Fallen" waiting in line. The sequel will open June 24, [and] BMO Capital Markets thinks the film could gross $400 million. [Harry Potter will return to battle the evil Lord Voldemort, who has tightened his grip on the Muggle and Wizard worlds.

One focus this summer will be on new technology. More theaters are using digital versions of films that are sharper and don't wear and allow for better 3-D. Fans love the technology. About 60% of the $180 million-plus spent on tickets to "Monsters vs. Aliens" was for the 3-D version, according to the National Association of Theatre Owners.

This could make a big winner out of Imax (Nasdaq: IMAX), whose technology immerses viewers fully in movies with bigger screens and sound. Imax films have been taking a disproportionate share of the box office, even though tickets cost a bit more. Imax picked up around 10% of the box office on its versions of the hit films "Watchmen" and "Monsters vs. Aliens," even though it had only around 2% of the screens.

And Imax is poised for more growth. It's aggressively converting screening rooms to its format in joint ventures with multiplex theater chains. It plans to have 250 of them by 2011, up from around 80. Imax currently has about 350 screens overall. Imax could also get a boost from "Transformers" because director Michael Bay used Imax film equipment to shoot three scenes especially for the Imax version. (Imax stock closed above $7 Monday—Editor.)

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