IMAX forecasts profits in the field of virtual reality. Image source: IMAX.

IMAX Corporation (NYSE: IMAX)is the acknowledged industry leader in the premium large theater format and has built its reputation on the continuous innovation of its digital movie camera and high-performance laser projection system. With that expertise, it should come as no surprise that, whenAlphabet's (NASDAQ: GOOGL) (NASDAQ: GOOG) Google decided to enter the field of virtual reality, it partnered with IMAX to develop the best "cinema-grade virtual reality (VR) camera." IMAX is providing a crew of engineers and technicians that will collaborate with Google to develop a high-resolution camera from scratch to address the unique challenges presented by virtual reality. It will leverage Google's Jump platform, which stitches together 360 degree video into a seamless panoramic view, providing an immersive experience.

IMAX then announced a virtual reality location-based initiative, in a joint venture with the game developer Starbreeze AB. This agreement would integrate the company's StarVR headset, which provides an industry-leading 210-degree view, and its library of virtual reality games and entertainment with content produced on the IMAX Google VR camera. Going further, IMAX is looking to leverage its existing relationships with Hollywood studios and directors to create new movie-based content.

Google's Jump 360 degree camera rig. Image source: Google.

Several notable Hollywood heavyweights are already onboard.Lions Gate Entertainment Corp. (NYSE: LGF-A)will lend the lead character from its John Wick movies to the effort. Peter Levin, President of Interactive Ventures and Games for Lionsgate had this to say:

We are big believers in location-based entertainment VR and this is a great opportunity to expand the reach of our VR portfolio.

Michael Bay, best known as the director of Hasbro's (NASDAQ: HAS) highly successful Transformersfranchise said:

I've always been a big believer in IMAX, which has been a great longtime partner...As a filmmaker, IMAX's location-based VR offering presents an exciting opportunity to transport audiences even further into the worlds we create. We are in advanced discussions with IMAX now on some fun VR concepts and I look forward to test-driving their new technology.

John Wick joins IMAX VR team. Image source: IMAX.

IMAX envisions a communal virtual reality experience that friends would enjoy together, which would be available at multiplexes and shopping malls, as well as popular tourist destinations. Late last year, the company announced that it, and a number of its partners, had completed the first round of funding -- which amounted to $50 million -- to create 25 pieces of content over the next three years.

This technology may be in the early stages, but it is ramping up fast. A reportby Goldman Sachs estimates that virtual reality -- and its kissing cousin augmented reality -- could become an $80 billion industry by 2025. Investing now in this revolutionary technology could pay significant dividends in years to come. IMAX feels it is a natural fit with its existing business. On its most recent conference call, IMAX said:

The core requirements of launching a location-based VR experience line up nicely with our company's core skill sets. We have studio and film maker relationships on the content side; capture mechanisms for new content; relationships with exhibitors and real estate developers for potential VR sites; and a brand that is synonymous with immersive experiences.

IMAX has tied the disparate parts of the virtual reality experience together in a nice neat package. With its own cutting-edge filming and projecting technology, Google's Jump, Starbreeze headsets and games, and buy-in from Hollywood heavyweights brandishing premium content. Investors looking to invest in the nascent area of virtual reality should grab some popcorn. The movies about to start.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Hasbro, IMAX, Lions Gate Entertainment Class A, and Lions Gate Entertainment Class B. Danny Vena has the following options: long January 2018 $640 calls on Alphabet (C shares), short January 2018 $650 calls on Alphabet (C shares), and long January 2018 $15 calls on Lions Gate Entertainment Class A. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Hasbro, IMAX, Lions Gate Entertainment Class A, and Lions Gate Entertainment Class B. The Motley Fool has a disclosure policy.

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What Google and IMAX Are Cooking Up in Virtual Reality - Madison.com