By Richard McGill Murphy, contributor
FORTUNE -- IMAX's immersive theater technology dates back to 1967, when a band of Canadian experimental filmmakers synced nine projectors to create a multiscreen film installation. The business took off in the late 2000s, as digital technology made it cheaper for distributors to screen IMAX movies. Today a single IMAX movie print costs about $150, vs. $30,000 or so in the old analog days. Meanwhile, IMAX (IMAX) has started covering theater installation costs in exchange for a share of box-office revenues at multiplexes, where IMAX screens can generate three to four times the revenue of regular screens. "They clearly deliver the best cinematic experience," says J.P. Morgan Securities analyst Townsend Buckles.
Fastest-Growing Rank: No. 82
HQ: Mississauga, Ontario
The business: Premium digital theater technology used to project movies on oversize screens
Hits and misses: IMAX produces digitally enhanced versions of Hollywood blockbusters like Avatar and The Dark Knight Rises, along with its own documentaries. The company's volatile earnings reflect the hit-driven nature of the movie industry. Revenue and profits soared in 2010, thanks in part to the success of Avatar, only to slump in 2011. As of June 30 the company had installed 663 of its giant screens in 52 countries, and expects to reach 1,700 screens eventually. Despite premium ticket prices, China is IMAX's fastest-growing market. "Spending a few extra renminbi on something special is within the reach of the emerging Chinese middle class," says CEO Rich Gelfond. However, IMAX faces currency fluctuations and political risk in markets like China where the government has historically favored domestic films over Western imports. "China is a big part of their story, and risks come with that," says Aravinda Galappatthige, an equity analyst at Canaccord Genuity.
This story is from the November 12, 2012 issue of Fortune.
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