Juliana 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.

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

ACADEMY Format  24 frames per second  minute movies IMAX Format  48 frames per second  minute movies

 38 countries  100 screens in 25 yrs  60% in Canada and US  Institutional exhibitors  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

High film costs High installation costs High transportation costs

 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!

Hollywood support Rise of 3-D Market Opportunities Joint Ventures Conversion to Digital Premium Theatre Experience New Business Model

 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

 Cost savings = more flexibility ◦ Able to double the amount of films showing Film$30,000/printDigital $400/print

 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

 15% bigger screen  Seats shifted forward 16 ft  Front seats removed  Better sound  Better image quality

 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

 IMAX has always been a 3-D leader  Already has the 3-D technology installed

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

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%

“While the domestic release is important, the international release is even more important because when you have big franchise films like Harry Potter, they make more money internationally than they do in the domestic market.” Larry O’Reilly, IMAX Executive Vice President

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

Global Expansion Strategy Pick blockbuster films and make them bigger Align with top exhibitors worldwide Mixture of licensing and joint ventures

Joint ventures Start small Developed Markets Licensing Minimize risk Emerging Markets

Developed Markets

USA – 1 st 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

Japan  Tokyu Recreation ◦ Owns one of Japan’s largest exhibition chains ◦ to open 4 IMAX theatres (3 opened to date) ◦ Japan is world’s No. 2 movie going market  Agreement follows record-setting event ◦ Tokyo Dome converted to huge IMAX theatre for release of Speed Racer: The IMAX Experience ◦ 25,000 people attended

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

 Cineplexx Kinobetriebe ◦ Owns 20 cinemas ◦ 160 screens  3 cities in 2009 ◦ Graz ◦ Vienna ◦ Hohenems

 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

Spain 2004 Germany 2006 Austria 2009 Russia 2009 England 2009 The Netherlands 2009 Russia 2010

Emerging 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

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

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)

YearNumber ? ?

 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

“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