Intending to get a jumpstart in the digital revolution, IMAX (IMAX Quick QuoteIMAX - Free Report) had ventured into the virtual reality (VR) space. However, it seems to have failed in achieving the desired results. Reportedly, the company plans to halt the pilot program, which started in early 2017.  

In this connection, the company has closed two of its VR centers and will shortly decide the fate of the remaining centers.

IMAX, which entered the market to offer a first-of-its-kind VR-based movie experience, was unsuccessful in generating revenues as it failed to showcase popular content, per Variety. This became evident when the company’s CEO opened up about the struggles of the pilot program during first-quarter 2018 earnings call and stated, “The consumer reaction was extremely positive, but the numbers just weren’t there.”

This comes as a setback, given IMAX’s efforts to attract a younger audience to the big screen in an age of raging popularity of online video streaming giants such as Netflix (NFLX Quick QuoteNFLX - Free Report) and Amazon’s (AMZN Quick QuoteAMZN - Free Report) Prime.

Additionally, the company could not offer a considerable differentiated VR experience to its customers compared to the already available “in-home VR market”, per Variety, adding to the disappointment of viewers.

Has IMAX Saved Itself?

IMAX, which had raised around $50 million to fund its VR initiatives, has so far used only $4 million. So, the company’s decision to halt the program comes early and makes us believe that IMAX has saved itself from recurring further losses.

Notably, management expects loss from the business in the range of $4.5-$5.5 million, down from the previous guided figure of $7-$8 million.

We believe IMAX is likely to take more time to re-think its strategy around its VR business, before it is ready to showcase blockbuster content.

Notably, Alphabet’s (GOOGL Quick QuoteGOOGL - Free Report) and IMAX partnership in May 2016 to develop next-gen, high-grade, 3D, 360-degree cameras has also been stalled after an IMAX spokesperson admitted that there has been no progress on that front.

However, the Zacks Rank #3 (Hold) stock’s robust box-office performance is driving top and bottom-line growth. Notably, in the last reported quarter, revenues increased 12.1% year over year to $98.3 million and earnings soared 200% year over year to 30 cents per share.

IMAX Corporation Revenue (TTM)