IMAX originated in 1967 and premiered its first film in 1970. It now has over 400 theaters in 45 countries, half of which are located in institutions. The film industry is highly competitive with few large format film companies. IMAX resolved its debt issues from the 1990s by digitally remastering Hollywood films for its theaters and forming revenue-sharing partnerships with theater chains. These strategies helped IMAX thrive as a niche player in the large format film industry and lower its long-term debt.

4. OverviewBackground, IndustryCentral IssuesPEST AnalysisPorter’s 5 ForcesSWOT AnalysisVRIO AnalysisTOWS FrameworkOur EvaluationQuestions?

5. Company BackgroundIdea for IMAX originated in 1967First film premiere was in 1970 at the Fuji Pavilion in Osaka, JapanAbout 471 theatres in 45 different countries50% located in museums, aquariums, zoos, and other institutionsBy the end of 2007 there were approximately 226 films

6. Film IndustryHighly competitive industryVery few/limited large format film companiesTheaters became very diluted in the 90’sTicket sales influenced by economy and consumer wallets

7. Industry FactsMovie Theater Attendance:1.47 BillionAverage Ticket Price:$7.50Source: 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 IssuesHow 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, PiracyWould increasing the number of Hollywood movies released in IMAX format save the firm or dilute the IMAX brand?Will IMAX lose its differentiation?

9. PEST AnalysisPoliticalInfluential politicians and family promoted limiting violence, sex, and vulgar languageEconomicGreatly affected by fluctuation of the economic status of consumersSocialAge of consumers

10. FamilyTechnologyVastly changing in industry

11. New film technologies (HD, 3D, Blu-ray, etc) Porter’s 5 ForcesPhotographic Equipment and Supplies (SIC 3861) Motion Picture and Video Tape Production (SIC 7812) Motion Picture and Video Distribution (SIC 7822)

12. Porter’s 5 ForcesPhotographic Equipment and Supplies (SIC 3861) Motion Picture and Video Tape Production (SIC 7812) Motion Picture and Video Distribution (SIC 7822)

13. Competitive RivalryCompetition 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 ForcesPhotographic Equipment and Supplies (SIC 3861) Motion Picture and Video Tape Production (SIC 7812) Motion Picture and Video Distribution (SIC 7822)

14. SWOT Analysis

15. VRIO FrameworkCore Competency: Technology & PatentsSustained Competitive Advantage?Yes.

16. TOWS Analysis

17. Our EvaluationWhy 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 filmsRevenue-sharing partnerships with theater chainsThese 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 EvaluationHow 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.11The claim mentioned in the case that the brand’s trustworthiness is tied to institutional settings (educational entertainment) was done in 2000.