ONTARIO NEXT ARENA IN BATTLE OF THE BIG, REALLY BIG, SCREENS : COMING TO 52 THEATERS NEAR YOU.

Byline: Dave McNary Daily News Staff Writer

Ontario, a once-anonymous bedroom community halfway between Los Angeles and Palm Springs, has become the major proving ground for the future of the movie industry.

Already, AMC Entertainment has opened the world's largest movie complex with 30 screens at the massive Ontario Mills shopping center. In a few weeks, Edwards Cinema will open what it calls ``The Really Big One'' with 22 auditoriums in a building across the street from the mall.

Besides the fight between AMC and Edwards, a second battle is shaping up in the city between Imax Corp. and Iwerks Entertainment Inc., the world's leaders in showing movies in the giant-screen format.

Imax will offer a 3-D film, ``Into the Deep,'' later this month and Iwerks plans a pair of 2-D films, ``Amazon'' and ``Indy Car,'' on its UltraScreen by late spring, both on screens over 80 feet high. Both auditoriums have more than 400 seats.

``For the consumer, it's great to have the choice,'' said Vito Sanzone, vice president of marketing for Iwerks. ``The eyes of the world are looking at Ontario Mills.''

The Imax screen is one of the 22 Edwards auditoriums, while the Iwerks facility will be adjacent to Ogden Entertainment Corp.'s American Wilderness Experience, which features live animals in half a dozen California habitats. By summer, the mall's northwest corner - dubbed the Super Entertainment Highway - will also include Sega GameWorks electronic games outlet. And Texas-based Dave & Busters will open a restaurant/games location in another part of the mall next week.

Some industry trackers are amazed that there will soon be 52 movie auditoriums within 700 feet of each other, but both AMC and Edwards insist they will be profitable.

Bob Amano, director of tourism for the mall, said there is little concern about overwhelming consumers with choice. ``We think all the offerings will have a domino effect on each other,'' he said.

Iwerks vs. Imax, again

Burbank-based Iwerks is the David among all the Goliaths. Its annual sales of about $50 million are about a third of those for Imax. It operates 45 screens, compared to Imax's 149.

A collision between Iwerks and Imax was inevitable since they both have aggressive expansion plans in place. They are also veterans of firing potshots at each other.

When Iwerks moved into Imax's market in 1994 for giant-screen projectors and theaters, Imax sued for patent infringement of its projector technology, but the action was dismissed last year. Iwerks sued Imax last year for antitrust violations for having ``disparaged'' Iwerks and claiming Iwerks will be out of the large-screen business soon. Imax has said the suit is without merit.

Upping the stakes, Iwerks announced last week that it had bought projection specialist Pioneer Technology Corp. of Burbank for more than $2 million, enabling it to manufacture and sell less-expensive and more-advanced projectors than Imax. Instead of using metallic claws to advance the film reel, the Pioneer system moves the film with a column of air.

Still, Imax isn't concerned.

``We don't see them as competition,'' said Richard Gelfond, chairman of Imax.

Iwerks' redemption

For Iwerks, Ontario represents a chance at redemption after years of disappointing Wall Street in its attempt to expand beyond its core business of virtual-reality entertainment. Analyst Keith Benjamin of Robertson Stephens & Co., which underwrote the company's $44 million initial public offering, is skeptical.

``I wish Iwerks the best but my expectations are pretty modest,'' Benjamin said. ``They've disappointed me for so many years.''

Iwerks' stock has been trading at around $5 a share recently. It went public at $18 in 1993 and rocketed to $37 in a few weeks, then plunged as enthusiasm for virtual reality attractions ebbed. Its most recent quarterly results were below expectations, but Dominic Marshall of Red Chip Review subsequently said the company's products, management and strategy are strong and gave a long-term target price of $10.75.

Iwerks remains optimistic that taking on Imax in Ontario is sound strategy. The shopping mall, which opened in mid-November at the intersection of interstates 10 and 15, has about 200 stores and drew 4.5 million people in its first six weeks.

``We believe that this is the best location for a giant-screen theater because there's nothing else to do in the area,'' Sanzone said. ``There's lots of teen-agers and their options are limited. We have a captive audience.''

Sanzone also noted that the location draws from several hundred miles away. ``Everyone in Southern California passes that location at least once a year,'' he said. ``You'd have to be blind not to see it.''

Industry expands

Commercialization of the giant-screen sector began three years ago when Toronto-based Imax was bought out by Wasserstein Perella & Co. and held a public offering. The funds were used to put most of its new theaters in commercial centers rather than at museums, starting with Sony's opulent Lincoln Center complex in New York. It now has 35 ``commercial'' locations with a backlog for an additional 25.

Iwerks also is building more locations, many in Asia, but Ontario is its first foray into a nonmuseum arena. When it opens, Ogden will operate both the theater and the American Wilderness Experience, and San Bernardino County will own the facility.

Edwards opened an Imax theater last March at the Irvine Spectrum retail center and has topped expectations despite the premium $8 price for a show much shorter than a conventional movie.

``Our Imax in Irvine would be successful if it were by itself,'' said Don Barton, vice president and general sales manager. ``I think we decided to take a chance on it because we thought people wanted something different than a conventional theater.''

Edwards also is planning to install another Imax theater next year when it opens a 12-screen complex in Valencia. ``We feel, and I think Imax feels, the same way, that it's a good time to get out of the institutional atmosphere,'' Barton said.

The expansion has come about even thought the fare at the commercial Imax theaters remains pretty much the same nature-documentary style that customers expect at museums. At the Irvine Imax, for example, the current offerings are ``L5,'' a deep-space adventure; ``Into the Deep,'' filmed underwater off the California coast; and ``The Living Sea.''

There are currently only about 100 large-format movies made for showing in the theaters, which carry a price tag of about $7 million to build. Sony Pictures has started financing Imax movies and a rumor hit Hollywood recently that ``Star Trek'' producer Rick Berman and Imax were in talks about a ``Star Trek'' movie in the giant screen format.

Iwerks' Sanzone believes the fact that both Iwerks and Imax will be showing large-format films in Ontario goes to show that the format has found a niche in the marketplace.

``With a museum, there's enough interest in these that you can get by with one a year, because it's the best film and audio in the world,'' he noted. ``After all, `Star Tours' has been at Disneyland since 1984 without changing. Right now, large format is more than a novelty and less than a break-out mass market item.''

That is going to change, Sanzone said, as moviegoers' expectations rise.

``The movie-going experience has changed dramatically with food, sound and raked seating, which have made theaters really popular in the last few years,'' he said. ``But the basic image people look at has not changed in 20 years. That's where we come in, so you're going to see us start to move away from documentaries and toward mainstream-driven titles.''

Additionally, large-screen movies will become longer, Sanzone predicts.

``Right now, we're at 45 minutes long partly because theaters need to turn the audience every hour, and partly because it's hard for people to watch much more than that because it's so immersive, like telling a bedtime story with a megaphone,'' he said. ``It's a lot of information for the brain and eyes to handle and I think people would be sick if you gave them more than that.''

Paul Frazier, vice president of marketing and theater development for Ogden, agrees that the public has become accustomed to the idea of watching 80-foot-high images. Three feature-length movies that have been released - ``Titanica,'' ``The Rolling Stones at the Max'' and Sony's ``Wings of Courage'' - all performed well at the box office.

Can they turn a profit?

But the economics are tricky because films cannot cost more than $8 million to turn a profit. ``Wings of Courage'' is widely believed to be hugely unprofitable because it cost a reported $35 million and grossed just $18 million. What the industry needs to go beyond its current budget limits is a blockbuster, according to Paul Marsh, an analyst with Cowen & Co.

``The images are impressive, but I'm not going to go back until they tell me a story,'' said Richard Manly, a frequent moviegoer from Altadena.

Still, the niche is expanding. Imax plans to co-produce a project called ``Houseguest'' with Walt Disney Co. and recently announced that it would produce an Imax version of Peter Shaper's ``An American Road,'' a competitor at the Sundance Festival this year. Ogden also has moved into filmmaking, releasing ``Amazon'' and co-producing ``Mark Twain's America'' with Sony.

``It's an odd business with its own set of economics, but it's growing like crazy,'' Frazier said.

Frazier said the business is booming for Ogden, which has plans to open between 15 and 20 large-format sites in the next three to five years.

``That's just scratching the surface,'' he said. ``I'm looking at it in places like Canada, Ireland, Italy and Korea. We are awfully serious.''

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Photo

Photo: (Color) Imax will offer a 3-D film, ``Into the Deep,'' later this month.