Sebastian OMILESCU

Sorin FITERO

Group No: 06

Sameer Ashar 03

Ravi Chhangani 11

Ramesh Mallya 30

Viral Pandya 36

LARGER THAN LIFE

Company Background

• Idea for IMAX originated in 1967

• First film premiere was in 1970 at the Fuji

Pavilion in Osaka, Japan

• About 295 theatres in 40 different countries

• 50% located in museums, aquariums, zoos,

and other institutions

• By the end of 2007 there were approximately

226 films

The General Environment Analysis Political / Legal

• Influential politicians and family promoted limiting violence, sex, and vulgar language

• Piracy, Copyright Infringement

Economic

• Greatly affected by fluctuation of the economic status of consumers

• Movies : Discretionary Expense

Social

• Age of consumers

• Family

• Edutainment

• Religious Groups

Technology

• Vastly changing in industry

• New film technologies (HD, 3D, Blu-ray, etc)

• Entertainment Available through a variety of Sources

• Cheaper Camcorders

Industry Analysis • Highly competitive industry

• Very few/limited large format film companies

• Theaters became very diluted in the 90’s

• Ticket sales influenced by economy and consumer wallets

Industry Facts

Source: National Association of Theater Owners (NATO), www.natoonline.org; Bureau of Economic Analysis, www.bea.gov; and Bureau of Labor Statistics, www.bls.gov.

Movie Theater Attendance:

1.47 Billion Average Ticket Price:

$7.50

Central Issue

Profitability Poor financial performance Significance decrease in 2005-2007 (Exhibit 5 Net income reduce from 14382 to -26940 rs in thousands dollars )

Could IMAX thrive as a niche player that made large format films and systems?

High Competition, High Substitution, Piracy

Would increasing the number of Hollywood movies released in IMAX format save the firm or dilute the IMAX brand?

-Will IMAX lose its differentiation?

Substitutes

Supplier

New Entrants

Customer

Bargaining power of buyersSubstitute products & services

Existing rivalry in the industry

Porter’s 5 Forces• Low due to the high overhead

and startup costs.

• Low due to expensive costs of movie making, however documentary films much cheaper.

• IMAX keeps customers with solid technical support.

• Unique expensive equipment leads to low supplier power, IMAX is probably one of their few customers.

• Medium amount of buyer power, many different cinema companies both franchise and private. However, no real alternative to IMAX.

• High buyer power, many other companies producing quality movies and films.

• Digital 3D and regular 2D 35mm are strong substitutes to IMAX movies and films.

• Many other much larger companies and studios producing movies and documentaries, often with Hollywood actors and much larger marketing budgets.

Bargaining power of the suppliers

Threat of new entrants

Existing rivalry in the industry

•Competition with Pixar/ DreamWorks / Disney for animated, high quality kid’s films.

•Iwerks is the only rival for large format films, and they focus on ride simulations. IMAX has a strong competitive advantage in technology with their patents.

Porter’s 5 Forces

Strengths •Hardware, Digital Distribution, and Support (46 Patents)•DMR Conversion Technology•Deals with Studios & Theaters•Strong Brand

Weaknesses •Expensive Production of Movies/Hollywood Film Conversion Costs•Limited Exposure/Facilities•Much Smaller than Hollywood Production Studios•Long-Term Debt until 2009

Opportunities •Global Industry•Hollywood Films, 3D Movies•Growing popularity in educational entertainment

Threats •Alternative entertainment sources: Netflix/Internet, Home Video, 3D TV, Red/Blue Box•Movie Piracy

SWOT Analysis

TOWS Analysis

VRIO Framework

Core Competency: Technology & Patents

Sustained Competitive Advantage? Yes.

Our Evaluation

Why was IMAX changing its corporate and business strategies? Could IMAX thrive as a niche player that only made large format films and systems? •Digitally-remastered conversion for Hollywood films

•Revenue-sharing partnerships with theater chains

These strategic moves were made by IMAX to lower its long-term debt. IMAX has strong branding, film industry leverage, and a technological competitive advantage.

Our Evaluation

How would you evaluate the changes? Could increasing the number of Hollywood movies released in IMAX format dilute the IMAX brand?

 

IMAX made the right strategic business decisions to overcome its debt problem and return to profitability. Increasing the number of Hollywood movies should not dilute the IMAX brand. Today the IMAX brand is more associated with 3D technology and large screen film.1

1 The claim mentioned in the case that the brand’s trustworthiness is tied to institutional settings (educational entertainment) was done in 2000.