Imax focuses on DLP chips

Giant screens headed to South America

Imax, which is on the verge of entering the digital era, is in negotiations with Texas Instruments to use TI's Digital Light Processing technology as part of Imax's proprietary system.

Although neither company would comment on the discussions, if the deal closed it would mark a significant step forward in Imax's determination to roll out its digital projection system later this year.

Imax's digital commitment also has led to a new pact it is set to announce Monday that will bring 35 Imax theaters to Central and South America over the next six years.

Under an agreement with Giencourt Investments, a member of the Brazil-based RACIMEC International Group, RACIMEC will provide the initial down payment to purchase and install Imax systems, partnering with local exhibitors and developers to build a network of Imax theaters in the region.

Valued at more than $40 million, it's the largest international deal in Imax's history and its second-largest overall theater deal, eclipsed only by its recent pact with AMC to place 100 Imax theaters in that North American chain.

Imax, which is sponsoring today's International Day Luncheon at ShoWest in Las Vegas, has since its inception 40 years ago used 70mm film to distribute and exhibit movies. By converting to digital, it will dramatically change its business model as digital distribution removes print costs -- about $22,000 for a 2-D print and $45,000 for a 3-D print -- from the equation.

Imax's move to TI is a blow to Sony because Imax had been developing a digital system that employed two Sony 4K projectors and proprietary technology.

TI licenses its DLP Cinema technology to 2K projector makers Barco, Christie and NEC, but it is not known which suppliers Imax will use.

DLP technology has been in theaters for nearly a decade. Digital cinema dates back to 1999, when such films as "An Ideal Husband" and "Star Wars: Episode I -- The Phantom Menace" had a limited digital release.

DLP technology is now in about 5,500 digital-cinema projection installations worldwide, including the majority of the estimated 4,754 digital-cinema screens used in the U.S.

Currently, there are 296 Imax theaters operating in 40 countries, but there are just 10 either operating or scheduled to open in South America.

"We've built a fairly sizable Imax network in North America, and the results have been quite attractive. But in some international territories, it has taken longer because there hasn't been the capital behind it," Imax co-chairman and co-CEO Richard Gelfond said.The coming of digital cinema, Gelfond said, has eliminated exhibitors' worries about the cost and delivery of physical prints. With distributors making more and more films available digitally, exhibitors also are ensured of a steady stream of movies.

Imax first began working with RACIMEC in 2005, when RACIMEC signed a deal to install three Imax theater systems in Chile and Venezuela.

While Imax typically forms joint ventures with theater chains in North America, Gelfond said, "South America is a territory we are not that familiar with. Since we did not want to form our own joint ventures there, it would have required a series of lease deals over a long period of time."

Instead, RACIMEC will determine the right locations for Imax theaters and work with local developers and exhibitors to begin opening theaters under the deal by 2010.