4. Overview Background, Industry Central Issues PEST Analysis Porter’s 5 Forces SWOT Analysis VRIO Analysis TOWS Framework Our Evaluation Questions?
5. Company Background Idea for IMAX originated in 1967 First film premiere was in 1970 at the Fuji Pavilion in Osaka, Japan About 471 theatres in 45 different countries 50% located in museums, aquariums, zoos, and other institutions By the end of 2007 there were approximately 226 films
6. Film Industry 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
7. Industry Facts Movie Theater Attendance: 1.47 Billion Average Ticket Price: $7.50 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.
8. Central Issues How does IMAX resolve its long-term debt issues from the 90’s theater industry crisis? 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?
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12. Porter’s 5 Forces Photographic Equipment and Supplies (SIC 3861) Motion Picture and Video Tape Production (SIC 7812) Motion Picture and Video Distribution (SIC 7822)
13. Competitive Rivalry Competition with Pixar/Dreamworks 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. Entrants into the film industry value chain are rare. Porter’s 5 Forces Photographic Equipment and Supplies (SIC 3861) Motion Picture and Video Tape Production (SIC 7812) Motion Picture and Video Distribution (SIC 7822)
17. 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.
18. 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 1The claim mentioned in the case that the brand’s trustworthiness is tied to institutional settings (educational entertainment) was done in 2000.
