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THINKING BIG

THINKING BIG. Juliana Hee , Steffen Janzen, Meghan Mackintosh. Introduction. Company Overview. Founded in 1967 Headquarters: Mississauga, Ontario 400+ IMAX theatres in over 40 countries

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THINKING BIG

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  1. THINKING BIG Juliana Hee, Steffen Janzen, Meghan Mackintosh

  2. Introduction

  3. Company Overview • 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.

  4. Timeline

  5. Original Business Model

  6. Comparisons IMAX Format • 48 frames per second • 40-50 minute movies ACADEMY Format • 24 frames per second • 60-180 minute movies

  7. International Expansion • 38 countries • 100 screens in 25 yrs • 60% in Canada and US • Institutional exhibitors • US • Mexico • United Kingdom • Amsterdam • India • Russia

  8. Old Business Model • Licensing agreements • Licensee pays royalties • $1.3 million for installing IMAX system • $20, 000 for 2D print • $40, 000 for 3D print

  9. Why didn’t the old model work? High film costs High installation costs High transportation costs

  10. Transitioning • 1994 - 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!

  11. IMAX Share Prices

  12. New Business Model

  13. Turning Point

  14. Joint Ventures • 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

  15. Going Digital • Cost savings = more flexibility • Able to double the amount of films showing

  16. Premium Theatre Experience • 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

  17. What does “premium” look like? • 15% bigger screen • Seats shifted forward 16 ft • Front seats removed • Better sound • Better image quality

  18. Hollywood Support • 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

  19. Rise of 3-D • IMAX has always been a 3-D leader • Already has the 3-D technology installed

  20. GLOBAL EXPANSION

  21. Why go global?

  22. Why go global? 1. Market Penetration • 40% market penetration in North America • 15% market penetration overseas • IMAX is not something you can fit in every theatre

  23. Why go global? 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%

  24. Why go global? “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

  25. Why go global? 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

  26. Global Expansion Strategy

  27. Differentiated Strategies

  28. Worldwide Expansion

  29. Theatres

  30. Joint Ventures Developed Markets

  31. USA – 1st 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

  32. Japan • Tokyu Recreation - 2009 • 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

  33. 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

  34. Austria • CineplexxKinobetriebe • Owns 20 cinemas • 160 screens • 3 cities in 2009 • Graz • Vienna • Hohenems

  35. England • 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

  36. IMAX theatre in London

  37. European Expansion Timeline

  38. Licensing Emerging Markets

  39. Factors affecting IMAX’s expansion in China China

  40. China’s Potential

  41. IMAX Milestones in China

  42. Huayi Brothers • 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)

  43. IMAX Theatres in China

  44. India • 6 IMAX theatres + Contracts for 4 more • AEREN R Enterprises 2005 • Reliance ADA Group 2009 • First digital projector in Mumbai • Heart of Bollywood • IMAX might consider agreement with Bollywood similar to Huayi Brothers

  45. Evaluation

  46. Quotes • “Our IMAX theatres are boosting attendance and driving more traffic to our multiplexes, which positively impacts our bottom line. IMAX’sdigital 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 JooHyung, CJ CGVCEO

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