Imax Gets Bigger (By Getting Smaller)

High in the Himalayas, Araceli Segarra lays an aluminum ladder across an icy crevasse. Actually, it's two ladders lashed together, a bridge that wobbles precariously when the crampons on her clunky boots clang against the rungs. She glances below into infinite space. You share the view, and gulp. "When you look down, you wonder how deep is that crevasse," says Segarra's voice-over. "Well, I don't want to find out." Your stomach is already making the trip.

Luckily, you're just a voyeur at Segarra's experience, sitting safely in a stadium-style seat at the Sony IMAX Theatre on Manhattan's Upper West Side. Your nose seemingly pressed against an eight-story-high screen, you're living that perilous moment through the IMAX film Everest. Shakun Lakhani, a New Jersey homemaker, was so awed by the film that she went back a second time. "It is beyond your imagination," she said. "You are experiencing Mount Everest as if you're climbing it yourself." That's because David Breashears and Steve Judson went to the Himalayas in May 1996 to capture on large-format film the ascent of three climbers. The project itself crossed paths with a tragedy: an angry Everest had just claimed the lives of eight other climbers in the single most horrific disaster in its history.

Riding the critical success of Everest, IMAX Corp., of Mississauga, Ontario, plans to expand by taking this sensory overload to a megaplex near you. "The company is going through a huge shift from institutional sites into more commercial sites like multiplexes," says Kevin Skislock, a senior analyst at investment bank L.H. Friend, Weinress, Frankson & Presson.

The 80-ft.-high theater-system screen is a major attraction at museums, science centers and vacation destinations like Las Vegas. Now the company is bringing scaled-down versions to smaller cities, betting that even a 55-ft. version will shake 'em up in such places as Tulsa, Okla., and Fresno, Calif. "The IMAX format is the best theater presentation in the world, bar none," raves Bruce Olson, president of Marcus Theatres, which has signed on to build two 3-D theaters, in Columbus, Ohio, and Addison, Illinois. Since 1997, IMAX has signed deals for 73 new theater systems from Canada to New Zealand. By year's end, 60 IMAX theaters with 3-D capability will be operating.

Going smaller is the strategy devised by IMAX's co-CEOs, Bradley Wechsler, 46, and Richard Gelfond, 42, two former investment bankers who were part of a group that acquired IMAX for $90 million in 1994. They saw in the Canadian firm a sleepy moneymaker. IMAX, founded in 1967, was "run like a candy store by its five original founders," says Wechsler. "There was really no business discipline." Since then, revenues have doubled, to $158.5 million in 1997, while profits have increased, to $20.7 million from a loss of $11.6 million in 1994. In the first quarter, revenues were up 11%, to $36.1 million.

Since IMAX went public in June 1994, its stock price has risen from about $6.75 a share to $29 in March before settling at about $22. That makes the company worth around $650 million. The two co-bosses took advantage of that upturn to sell 100,000 shares each recently, but analysts still see IMAX as a coming attraction. "It's a very undervalued company," says senior analyst Steven Bernard at Everen Securities. "We don't think it's well known on Wall Street."

Suburban movie-theater owners say that in a world of media choices, the bulked-up metroplex is the best way to keep customers coming. "People want a reason to leave home," says Dennis Kucherawy, vice president of corporate relations at Famous Players, a Viacom subsidiary that is building IMAX theaters in Canada. "We wanted to restore the excitement of the movie palace of the past. We are building the movie palace of the future."

The movie palace of the future isn't cheap to build: as much as $8 million for an IMAX screen, in contrast to about $1 million for a conventional one. The projection system uses the largest commercial film format available--15-perforation 70 mm--10 times as large as conventional 35 mm. But IMAX and the theater owners hope to scale down costs too, for instance by replacing the $300 liquid-crystal eyeglasses used for 3-D movies with disposable polarized goggles. (The 3-D system can also show 2-D movies like Everest) IMAX films are shorter, so more customers can file in--450,000 a year, nine times the attendance at conventional movies.

Going smaller has some bigger risks, though. Locations such as museums are foolproof so long as there are class trips. But by becoming more commercial, IMAX will have to compete more directly with Hollywood. Industry ticket sales increased 3.7% last year, to 1.38 billion. But the number of films increased at nearly twice that rate, as did the number of screens. So the market is hardly bubbling. And IMAX faces some competition from big-screen rivals such as Iwerks and MegaSystems

A bigger problem may be finding enough big films to fill all those big screens. IMAX is expanding its role as a producer and trying to strike more deals with studios, which have yet to embrace large-format films. The company now has some 20 big-screen projects in the works on subjects ranging from T. Rex (shot by Lawnmower Man director Brett Leonard) to (shhh, the deal isn't final yet!) Star Trek and 3-D animation. A recent release, Amazon, is a story of tribal shaman Julio Mamani and ethnobotanist Mark Plotkin.

Greg MacGillivray, producer and director of Everest, believes IMAX films like Amazon will revive the old concept of "films as road shows," with megasize movies rotating among 100 or so theaters and attracting residents from miles around. "I think you'll see them in every city with more than 300,000 people and in some cities with fewer than that. With nonfiction stories in spectacular settings, it will work really well," he predicts.

Don't expect every film to get IMAXed. "As Good as It Gets is as good as it should be in 35 mm," says MacGillivray. But, he adds, speaking for all the 10-year-olds in North America, "Star Wars in IMAX would be great."