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Cinemark to Launch IMAX Challenger

Moviegoers in about a dozen cities including San Francisco, Tucson, Las Vegas and Albuquerque will soon have an alternative to Imax when they want to see supersized flicks.

Cinemark, the third-largest theater chain, has caught the attention of the movie industry - and investors - with a plan for its own big-screen system, called Cinemark XD, in time for the Christmas movie season.

As with Imax, audiences pay $3 or so more per ticket to see 2-D or 3-D movies using state-of-the-art sound as well as the 72-foot-wide screens.

The plan could boost Cinemark's prospects in cities where rival chains have exclusive deals with Imax.

"Regal and AMC have locked up the majority of available markets in the U.S.," says Merriman Curhan Ford analyst Eric Wold.

"Cinemark needed to develop a product for those markets," Wold says.

But Cinemark boasts that XD can handle any digital movie. Imax films need special formatting.

"We can show a new movie every week," says Cinemark spokesman James Meredith.

Imax says it isn't worried.

"They're showing a regular movie on a very large screen, which leads to technical issues about how good it looks," says CEO Rich Gelfond. "And I don't know that the world is clamoring to see Tyler Perry on a 72-foot screen."

Wall Street's view is mixed.

Wold downgraded Imax last month, resulting in a brief sell-off, largely out of concern that Cinemark will woo ticket buyers away.

What's more, he says, "If Cinemark gets a few hundred screens, studios may think: Why are we paying Imax 13% of box office (revenue) if we can get the same (premium ticket pricing) on a Cinemark screen and not share box office with anybody?"

Roth Capital Partners' Richard Ingrassia saw that sell-off as an Imax buying opportunity: Imax is so well known that Cinemark XD poses a "remote" threat.

Hudson Square Research's Marla Backer shared that view, noting that Imax is busily building venues.

Imax shares closed Friday at $9.35 and are up more than 100% this year. Cinemark, at $10.35, is up 39%.

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