Sebastian OMILESCU Sorin FITERO Group No: 06 Sameer Ashar03 Ravi Chhangani11 Ramesh Mallya30 Viral Pandya36 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), Bureau of Economic Analysis, and Bureau of Labor Statistics, Movie Theater Attendance: 1.47 Billion Average Ticket Price: $7.50

Central Issue Profitability  Poor financial performance  Significance decrease in (Exhibit 5 Net income reduce from to 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 buyers Substitute 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

StrengthsWeaknesses Opportunities Continue creating innovative educational entertainment, now with IMAX 3D. Distribute educational and Hollywood large-format films worldwide. Leverage 3D technology. Hollywood film conversion to eliminate debt. Offer digital re-mastering technology and enter revenue-sharing agreements worldwide. More R&D to bring down conversion/hardware costs (tech gets cheaper). Threats Increase R&D investment to constantly improve the cinematic experience when profitable. Form partnerships with Netflix, Red/Blue Box to distribute educational films. More digital download outlets to combat piracy: iTunes, own store? Partnerships with theaters, studios, and distributors. Make your company indispensable. Always invest as much as possible in R&D. TOWS Analysis

VRIO FrameworkV Yes R Yes I Yes O Yes 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.