Imax, the Canadian cinema technology group, has struck an exclusive licensing deal for more than 10,000 projection patents from Eastman Kodak which will allow it to improve the quality of 2D and 3D screenings and convert its largest screens from film to digital content for the first time.

Neither Imax nor Kodak would disclose financial details, but their agreement could provide much-needed cash to the US group. The deal is understood to be worth tens of millions of dollars, according to one person familiar with the agreement.

Kodak invented the digital camera but has suffered in the age of camera-enabled smartphones, and concerns about its finances pushed its shares below $1 last month, prompting a statement that it had no plans to file for bankruptcy.

Rich Gelfond, chief executive of Imax, said the deal could generate about $200m in new revenues for his company if it retrofits all of its 80ft-100ft screens, which can currently only take traditional film. A typical film print costs $30,000 compared with $150 for a digital film, so the initial increase in Imax’s capital expenditure and royalties to Kodak will be offset by later cost savings.

The deal comes as cinema owners try to revive enthusiasm for 3D cinema in the face of public resistance to the premium prices 3D films command, and as the industry is juggling rival 3D technologies from companies including RealD, Dolby and MasterImage.

Kodak’s laser projection technology, which can show 2D and 3D films, is expected to be introduced in late 2013. It boasts deeper blacks, brighter colours and higher contrast ratios than rival options, helping answer filmmakers’ concerns that 3D films, in particular, can look too dark through tinted 3D glasses.

Mr Gelfond said he hoped the investment would help differentiate Imax’s 3D offering further, but that it would also help Imax’s 2D cinema clients as they compete with home video. “It’s going to give the public another reason to get off the couch and go to the movies, 2D or 3D,” he said.

Cinema owners have been investing heavily in digital projection equipment for smaller screens, justifying the upfront expense by the fact that the lower distribution costs allow them to show a wider variety of entertainment. “When we introduced digital into multiplex screens, the number of films we could show went from six a year to 25,” Mr Gelfond said. “Our largest screens now show 10 films a year, and I’d expect a similar result.”

Imax’s deal gives it exclusive rights to Kodak’s patents in the cinema market only for about 10 years, amid speculation that Kodak could sell much of its patent portfolio. The xenon bulbs that it uses in its current cameras cannot produce as much light as lasers without overheating, so “consumers are going to get a brighter, clearer picture than they’ve ever seen”, Mr Gelfond added.

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