During the pandemic, the living room won by default. When cinemas reopened, many assumed it would continue winning by choice. Streaming had become more convenient, more plentiful and more familiar. The conclusion seemed logical: habits had changed permanently, and moviegoing would struggle to recover.
The facts behind that narrative were real. Streaming did change how people consume filmed entertainment and not every reason to visit a theatre survived. However, the investment question was not whether home viewing had become more important. It was whether every viewing experience had become interchangeable.
Pembroke’s thesis on IMAX began with a more discriminating view. Consumers might watch more routine content at home, but they would still leave home for films that felt like events. If the experience was sufficiently differentiated—larger, more immersive and shared with an audience—they might also pay more for it. IMAX offered a way to participate not in a wholesale return to old moviegoing habits, but in the portion of the market where the theatre itself remained part of the product.
What Clients Saw
IMAX can appear like a simple box-office story: a strong film slate drives results, a weak one depresses them. From the outside, the stock can appear hostage to the success of a handful of Hollywood releases.
The third quarter of 2026 seemed to confirm the simple version. The Odyssey, the first full-length feature shot entirely with IMAX film cameras, became a global event. IMAX captured 20% of the movie’s global opening-weekend box office. By early September, the film had generated $485 million through IMAX, representing 30% of its worldwide box office.
Those numbers mattered, but they are not what the thesis is underwritten on.
Not a Bet on Every Movie
The more useful question was not how many people would return to theatres in aggregate. It was whether IMAX could take a larger share of the films for which audiences cared most.
That distinction has become increasingly visible. On several filmed-for-IMAX releases, the format has generated roughly one fifth or more of the opening-weekend domestic box office, despite representing only about 1% of available screens. IMAX does not need every movie to succeed, nor does it need the wider industry to return to its previous health. It needs enough films to become cultural events and audiences to associate the IMAX format with the best way to experience them.
The company has also become better at marketing IMAX directly to consumers, turning what could once be treated as technology behind the screen into a brand that audiences increasingly seek out. Industry research suggests that the recovery in moviegoing has been particularly visible among younger audiences, who place a high value on immersive experiences and the social dimension of going to the cinema.
The opportunity has broadened beyond Hollywood as well. Local-language films accounted for almost one third of IMAX’s global box office in 2025. That makes the network more productive across the year and more relevant in markets where Hollywood alone would not support the same economics. In addition, IMAX systems are currently installed in fewer than half of the locations the company considers commercially viable. We believe the potential market may be even larger than the company estimates, providing substantial room for growth through expansion into new markets and additional installations in existing markets.
Staying Close Enough to Recognize the Turn
None of this became evident in a single quarter. Pembroke has been following IMAX for many years, through changing film slates, industry cycles and periods when the market’s attention moved elsewhere. We met regularly with management and continued to test what the company said against what the network delivered.
The value of that continuity is not access to a different set of facts. It is context. When a company is followed over time, separate developments are easier to compare with what came before. A new filmmaker partnership, an increase in local-language content, stronger system signings or better cash conversion can each look incremental in isolation. Taken together, they may signal that the economics of the business are changing.
That is the turn we were trying to understand at IMAX. The story was no longer simply that audiences had returned to the movies. The company was becoming more important to the films, consumers and theatre operators that mattered most.
When Incentives Reinforce One Another
IMAX works only if it creates value across the ecosystem.
For audiences, the format must feel meaningfully different from both a standard cinema experience and the living room. For filmmakers, it must offer a creative canvas rather than merely a larger projection screen. For studios, it must support attention, scarcity and premium economics around major releases. And for theatre operators, it must attract customers who buy premium tickets and spend at concessions, while making the wider complex more relevant.
Returns for venues vary by location, construction cost and contract structure, so a single payback figure would be misleading. More revealing is the behaviour of experienced operators. They continue to sign up for new systems, upgrade existing theatres and add locations in markets where they already know how IMAX performs. The company installed 160 systems in 2025 (98 of these at new locations) and entered 2026 anticipating another 160 to 175 installations. This is on an installed base of approximately 1,850 systems.
These relationships can reinforce one another. More filmmakers creating for IMAX brings more differentiated content. More differentiated content strengthens consumer demand. Stronger demand improves the case for operators to invest. A larger network, in turn, makes IMAX more valuable to filmmakers and studios.
The Odyssey made that flywheel unusually visible. Christopher Nolan’s large following and success are inspiring a new generation of filmmakers to imagine their movies in IMAX. That may influence how future films are shot and marketed. It also creates opportunities for a different pricing model. However, one exceptional title is supporting evidence, not the thesis. The key question is whether filmmakers continue producing films for which IMAX is integral, rather than optional.
From Attention to Business Value
A popular consumer experience does not automatically make a good investment. The company must also translate its position into earnings and cash flow.
Over the past several years, IMAX has paired network and content growth with greater cost discipline. In 2025, revenue increased 16%, while cash provided by operating activities increased significantly faster. The mix of recurring maintenance, rental and box-office-linked revenue can create meaningful operating leverage when the network performs well.
That matters because the investment case has evolved. In the earlier period, the debate centred on whether audiences would return and whether the theatrical model had a future. Today, the questions are different. Can the installed network continue to grow at a mid-single-digit rate? Will local-language content make the platform more productive and less dependent on a narrow Hollywood slate? Will filmmaker enthusiasm continue to translate into consumer preference? And will the resulting growth convert into durable free cash flow?
The share price has risen significantly, driven by much better-than-expected profits. That does not end the work. It changes it. A stronger narrative and better results must still be weighed against what the market now expects.
What This Says About Our Approach
The post-COVID narrative that streaming would replace moviegoing proved too broad. IMAX did not need a return to every old habit. It needed consumers to value a premium shared experience, filmmakers to create for it and operators to keep expanding the network.
Following the company over time helped us recognize when those incremental developments became a genuine turn, without confusing familiarity with conviction. Markets provide simple stories. Active management requires asking what those stories leave out.