LARGER THAN LIFE
Group No: 06
Sameer Ashar
Ravi Chhangani
Ramesh Mallya
Viral Pandya
03
Sebastian OMILESCU
11
30
Sorin FITERO
36
Company Background
•
Idea for IMAX originated in 1967
•
First film premiere was in 1970 at the Fuji
Pavilion in Osaka, Japan
Total Revenue in 2007
System Sales
•
About 295 theatres in 40 different countries
32%
•
50% located in museums, aquariums, zoos,
and other institutions
53%
15%
•
By the end of 2007 there were approximately
226 films
Film
Theater Operations
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
2009 Box Office Revenue ($B)
29.2
Movie Theater Attendance:
1.47 Billion
Average Ticket Price:
$7.50
Theater Fees
Studio Fees
10.6
45%
55%
Domestic
Worldwide
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.
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?
Porter’s 5 Forces
Threat of new entrants
New Entrants
Bargaining power of the suppliers
•
Unique expensive equipment
leads to low supplier power,
IMAX is probably one of their
few customers.
Supplier
Existing rivalry
in the industry
•
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.
Customer
Substitute products & services
Bargaining power of buyers
•
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.
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.
Substitutes
Porter’s 5 Forces
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.
SWOT Analysis
Strengths
Weaknesses
• Hardware, Digital
Distribution, and Support (46
Patents)
• DMR Conversion Technology
• Deals with Studios &
Theaters
• Strong Brand
• Expensive Production of
Movies/Hollywood Film
Conversion Costs
• Limited Exposure/Facilities
• Much Smaller than Hollywood
Production Studios
• Long-Term Debt until 2009
Opportunities
Threats
• Global Industry
• Hollywood Films, 3D Movies
• Growing popularity in
educational entertainment
• Alternative entertainment
sources: Netflix/Internet, Home
Video, 3D TV, Red/Blue Box
• Movie Piracy
TOWS Analysis
Threats
Opportunities
Strengths
Continue creating innovative
educational entertainment, now with
IMAX 3D.
Distribute educational and Hollywood
large-format films worldwide.
Weaknesses
Hollywood film conversion to eliminate
debt.
Offer digital re-mastering technology
and enter revenue-sharing agreements
worldwide.
Leverage 3D technology.
More R&D to bring down
conversion/hardware costs (tech gets
cheaper).
Increase R&D investment to constantly
improve the cinematic experience
when profitable.
Partnerships with theaters, studios, and
distributors. Make your company
indispensable.
Form partnerships with Netflix,
Red/Blue Box to distribute educational
films.
Always invest as much as possible in
R&D.
More digital download outlets to
combat piracy: iTunes, own store?
VRIO Framework
Core Competency: Technology & Patents
V
R
I
O
Yes
Yes
Yes
Yes
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
The claim mentioned in the case that the brand’s trustworthiness is tied to institutional
settings (educational entertainment) was done in 2000.
1