The highest-grossing film of all time has helped fuel a new trend that involves funny looking glasses and movies with intense graphics. The success of Avatar, a Twentieth Century Fox film, has started a mad rush by the film industry to release more 3-dimensional (3-D) films around the world. With the trend likely in the early stages, investors can turn to companies that may benefit from the growth of 3-D movies.
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The Film Studios
The success of Avatar was a boost to the bottom line for News Corporation (NYSE:NWS), the parent company of Twentieth Century Fox film studio. The movie brought in over $2 billion in revenue worldwide and is the highest grossing movie of all-time. The stock is not a pure play on the 3-D or even movie industry, however it is a play on the entire media sector.
Another player in the movie making industry is the animation company, DreamWorks Animation SKG (NYSE:DWA). The company is ahead of the curve already because when it creates its films, they are already in 3-D format, much different than many of its competitors. With the upcoming Shrek film due to be released, DWA has announced it will re-release the first three installments of the series in 3-D on Blu-Ray.
Theaters
Without getting into great detail, an IMAX Corp (Nasdaq:IMAX) theater gives you a much more theatrical experience with a bigger screen, better picture and enhanced sound all through its technology. Avatar set the gold standard for IMAX films, pulling in $237 million on 256 screens, making it the biggest earner ever for IMAX - well above the old record of $62 million. In the last couple of weeks, the company has inked deals in Japan and China for IMAX expansion as 3-D truly goes worldwide.
IMAX is not the only theater-related company to get a boost from increased attendance at 3-D films. Carmike Cinemas (Nasdaq:CKEC) reported blowout numbers for Q4 based largely on the success of Avatar in 3-D. Thomson Reuters was looking for earnings of 9 cents per share, and the company reported 48 cents per share. Other theater companies that have been outperforming the overall market include Regal Entertainment Group (NYSE:RGC) and Cinemark Holdings (NYSE:CNK).
The Sound
A company known for its sound technology, Dolby Laboratories (NYSE:DLB) is also a player in the 3-D film world. Its technology, the Dolby 3D Digital Cinema, looks to be a direct competitor with the IMAX technology. Even if IMAX comes out on top, Dolby has a fantastic reputation in the sound area, and this is where it may win in the 3-D market.
The Bottom Line
The 3-D craze may turn out to be a short-lived fad, but it has all the makings of a long-term, money making trend for investors. (For more, see Analyzing Show Biz Stocks.)
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