Juliana Hee, Steffen Janzen, Meghan Mackintosh.
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Transcript of Juliana Hee, Steffen Janzen, Meghan Mackintosh.
THINKING BIGJuliana Hee, Steffen Janzen, Meghan Mackintosh
Founded in 1967 Headquarters:
Mississauga, Ontario 400+ IMAX theatres in
over 40 countries IMAX is one of the
world’s leading entertainment technology companies which specializes in immersive motion picture technologies.
Company Overview
1960’s-1970’s
•Expo ’67 - Montreal•Expo ‘70 - Osaka•Ontario Place's Cinesphere
1980’s
• Competition grows• Showscan• Iwerks
1990’s
• Expo ‘90• IMAX bought by WGIM Corp for ~$100 million• Goes public - $13.50/share
• An Oscar!
2000’s
• Slowing North American entertainment market
• Shares drop by 70%
• 12 IMAX customers went bankrupt
Timeline
Original Business Model
ACADEMY Format
24 frames per second
60-180 minute movies
ComparisonsIMAX Format 48 frames per
second 40-50 minute movies
International Expansion
38 countries 100 screens in 25 yrs 60% in Canada and US Institutional exhibitors
• US• Mexico• United Kingdom
• Amsterdam• India• Russia
Licensing agreements Licensee pays
royalties $1.3 million for
installing IMAX system
$20, 000 for 2D print $40, 000 for 3D print
Old Business Model
High film costs
Why didn’t the old model work?
High installation costs
High transportation costs
1994 - New CEO’s Richard Gelfond & Brad Wechsler
Try to move IMAX into commercial movies Initial success, but even greater failure IMAX up for sale in 2000 & 2006
◦ No buyers!
Transitioning
IMAX Share Prices
New Business Model
Hollywood support
Rise of 3-D
Market Opportunities
Joint Ventures
Conversion to Digital
Premium Theatre Experience
New Business Model
Turning Point
IMAX puts up the cost of the IMAX system◦ $500,000
JV partner puts up the cost of building/retrofitting the theatre◦ $150,000 to convert
Box office profits split between the two◦ IMAX usually receives a 10%-15% share
Joint Ventures
Cost savings = more flexibility◦ Able to double the amount of films showing
Going Digital
Film$30,000/print
Digital $400/prin
t
IMAX scaled itself down to Hollywood’s size◦ Converting Hollywood blockbusters to IMAX’s
more vivid & immersive format◦ Screening films in reconfigured multiplexes ◦ Premium vs truly unique viewing experience
Premium Theatre Experience
15% bigger screen
Seats shifted forward 16 ft
Front seats removed
Better sound Better image
quality
What does “premium” look like?
IMAX needed content Hollywood needed to increase “WOW”
factor to compete with stunning home theatre systems
Game changers - Hollywood takes notice◦ Matrix movies (1999, 2003)◦ The Polar Express (2004)◦ 300 (2006)◦ The Dark Night (2008)
$65 million in IMAX ticket sales 10% of total from 1% of theatres Partially shot on IMAX cameras
Hollywood Support
IMAX has always been a 3-D leader Already has the 3-D technology installed
Rise of 3-D
GLOBAL EXPANSION
Why go global?Market Penetration
Importance of International Market
Imax as global standard
1. Market Penetration◦ 40% market penetration in North America◦ 15% market penetration overseas◦ IMAX is not something you can fit in every
theatre
Why go global?
2. Importance of International Market◦ Trend is that foreign box office is increasingly
larger than domestic Avatar: 74% foreign Harry Potter & the Half-Blood Prince: 68% Ice Age 3: 78%
Why go global?
3. Set a global standard◦ IMAX brand has an
opportunity to set itself as the global standard in the new areas of 3D and “premium” theatre experiences
◦ First-mover advantage
Why go global?
Global Expansion Strategy
Pick blockbuster films and make them bigger
Align with top exhibitors worldwide
Mixture of licensing and joint ventures
Differentiated Strategies• Joint ventures• Start smallDeveloped
Markets
• Licensing• Minimize riskEmerging
Markets
Worldwide Expansion
Theatres
2004 2005 2006 2007 2008 20090
50
100
150
200
250
300
350
400
450
Rest of the WorldChinaJapanEuropeMexicoUSCanada
Joint VenturesDeveloped Markets
USA – 1st Joint Venture AMC Entertainment
◦ North America’s second-largest exhibitor◦ Joint venture solution to overcoming the high cost
of installing IMAX technology◦ Tested joint venture model beginning in 2003◦ 100 theatres in 2008
Regal Entertainment Group◦ USA’s biggest exhibitor◦ 31 theatres in 2008
South Korea Joint Venture with CJ CGV - March 2010
◦ Operates S. Korea’s largest multiplex cinema chain
◦ A global firm operating in China and expanding into the USA this year
◦ Has 5 existing IMAX theatres under license model◦ Will add 10 joint venture locations in major cities
• “Our IMAX theatres are boosting attendance and driving more traffic to our multiplexes, which positively impacts our bottom line. IMAX’s digital theatre system and joint venture model improves the economics of the IMAX theatre business for us, which creates even more opportunities to expand our relationship and offer more customers the IMAX experience at more locations”–Mr. Kim Joo Hyung, CJ CGV CEO
Quotes
Austria
Cineplexx Kinobetriebe ◦ Owns 20 cinemas◦ 160 screens
3 cities in 2009◦ Graz◦ Vienna ◦ Hohenems
England ODEON cinemas
◦ Europe’s largest cinema company 2009
◦ Greenwich◦ Wimbledon◦ Market share before 50%◦ After 3 IMAX movies played market share 67.3%
Other city success ◦ Existing theatre in Manchester 108% increase in
annual ticket sales for 2007 compared to 2006
IMAX theatre in London
European Expansion Timeline
Spain 2004
Germany 2006
Austria 2009
Russia 2009
England 2009
The Netherlands
2009
Russia 2010
LicensingEmerging Markets
Politics
• Films and content are highly regulated
• Varying degrees of censorship
• Only 20 foreign films are allowed each year
Culture
• Importance of relationships
• CEO Gelfond began to travel to China 12 years ago
Factors affecting IMAX’s expansion in China
China
2002
• IMAX theatre attendance averaged 60% of capacity (4 times the 15% required to be successful)
• Often sold out at 9 or 10 am
2009
• WTO orders Beijing to stop forcing owners of copyrighted materials to deal only with a single government controlled distribution company
China’s Potential
2001
• First IMAX projection system installed in China
2004
• First commercially-operated IMAX theatre in China
2007
• MPX theatre at Suzhou Science and Cultural Art Center
IMAX Milestones in China
June 2009◦ IMAX announces a three-film deal with Huayi
Brothers First major Chinese film studio to list on a stock
exchange Voted #42 Most Innovative Company by Fast
Company Magazine (Facebook #1, Amazon #2, Apple #3, Microsoft #48, Twitter #50)
Huayi Brothers
Year Number
2006 10
2007 14
2008 18
2009 22
2010 29?
2012 42?
IMAX Theatres in China
India
6 IMAX theatres + Contracts for 4 more• AEREN R Enterprises 2005• Reliance ADA Group 2009• First digital projector in Mumbai
o Heart of Bollywood IMAX might consider agreement
with Bollywood similar to Huayi Brothers
Evaluation
Avatar in Asia-Pacific:◦ Hong Kong - $2.9 million from 2 IMAX screens◦ Taiwan - $2.3 million from 2 IMAX screens◦ Japan - $4.3 million from 4 IMAX screens◦ Korea - $5.1 million from 5 IMAX screens◦ China - $11.3 million on 13 IMAX screens
IMAX earning record profits Share price soaring Increasing demand and brand recognition
Global Success