IMAX Case Analysis
In search of increased profits, IMAX is faced with a highly competitive market and focuses on being a leader in theater system lease and maintenance agreements, film production and distribution, and theatre operations. Key Facts IMAX provides itself on being a unique theatre experience and thrives on differentiation from any other theatre experience. The company uses extensive research and development to make continuous improvements to its technologies in theatre operations and film production. IMAX films are educational or Hollywood converted films and are played in IMAX systems located in multiplexes, museums, zoos, etc.
In 2007, IMAX generated $59. 12 million from IMAX system sales, $36. 57 million from films and $16. 58 million from theatre operations. Alternatives 1. Moving away from educational entertainment and focusing on the conversion of Hollywood movies. Pros of this alternative is that IMAX can sit back and let the Hollywood studios market and promote the films, it costs way more for IMAX to make a film then it costs to convert a Hollywood movie to IMAX, and it could potentially expand the core audience.
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Cons of this alternative are that expanding into IMAX theatres could potentially cannibalize sales for traditional movie theatres, and IMAX moves away from its original brand image as being educational entertainment. 2. Selling IMAX to a larger studio. Pros of this alternative are that a larger studio could help IMAX survive, analysts speculate IMAX is ripe for acquisition, and a larger studio could potentially take the IMAX experience to the next level in terms of quality and expansion.
Cons of this alternative is that the founders of IMAX might not find this alternative as a viable option because they have built IMAX up from nothing, and larger studios have a lot more on their plate and might not put the effort into IMAX that it deserves. 3. Invest into research and development to continue to improve the IMAX system. Pros of this alternative is that in 2007, 51 percent of IMAX’s revenue came from IMAX system sales, which makes it the most important aspect of IMAX, and continued advances in IMAX technology would make it more appealing to purchase.
A Con of this alternative is that research and development is expensive and time consuming. Recommendation A combination of alternative 1 and 3 as well as continuing to display special educational films on occasion could help satisfy the needs of consumers that IMAX focuses on. The money saved by IMAX on converting Hollywood movies instead of making all of their films, and the money saved by letting the Hollywood studios market the films could be invested into research and development for IMAX technologies.