IMAX: Larger Than Life Case Solution

1. Analyze IMAX’s general and industry environments and identify the opportunities and challenges it faces.

IMAX with its large service range and portfolio of production, distribution, and marketing of entertainment films and educational documentaries stands a chance to survive in the highly competitive industry of film production. As for IMAX’s own environment, the co-CEOs have played a dynamic role and have continued to enhance and expand their range of services with changing market dynamics. In fact, IMAX itself identified and created a niche for itself by introducing large film 3-D projection.

The industry continues to evolve and faces a tough competition, both in terms of production and marketing of films due to some large avenues of promotion and distribution available. The opportunities for IMAX lie in some of the research findings:

• the age group of 12-24 years has the largest attendance for feature films in cinemas;

• the parents are increasingly looking towards “edutainment” for the upbringing of their kids.

This means they primarily want educational institutions and documentaries for their kids, which should be coupled with some form of entertainment to keep their interests alive. Moreover, the revenues for IMAX are now majorly coming from the Asia-Pacific region. The South Asia region that falls under the Asia-Pacific houses a very large chunk of young population who could be potential targets for IMAX.

However, the challenges for IMAX are rising, as well as those for the whole industry of feature films and entertainment. Firstly, theatres and museums are not the only media for film projection. The young generation (the primary target market) is also involved in seeking entertainment through the internet, television, and high-definition movies on DVDs. Many of these media serve as cheaper and convenient alternative to being an attendant at a theatre or cinema. Secondly, the issue of privacy plagues the production and media houses throughout the world, and also in the United States. Piracy makes available a feature film or a documentary through unauthorized media, leading to losses to producers, distributors, and marketers.

2. Discuss IMAX’s business strategy and analyze how IMAX’s resources, capabilities and competencies support its business and corporate strategies.

IMAX’s business strategy has been that of being a leading player in production, marketing, and distribution of educational documentaries for kids. The company has mainly stayed in the business of education and amusement, with the idea of providing a whole “edutainment” package to the kids and also satisfying their parents in the process as they are the ones who approve and provide for most of the “edutainment” activities for their kids. Innovation and thinking ahead of the competition appears to be a core factor in IMAX’s business strategy. Providing feature films, but in a different environment and all together in a wonderful experience to the audience has been a feature of IMAX’s services in this industry.

As for the capabilities and competencies possessed by IMAX, it must be noted that it was their co-CEOs’ vision to provide larger films and 3-D theatres to enhance the audience’s experience when they take out valuable hours in their daily routine to watch a documentary or a feature film. Hence, the initiative has always come from within the organization, and the CEOs are leading from the front in terms of innovation. Moreover, the organization spends a considerable amount of its revenues on research and development, which forms one of the core functional areas of the company. It is due to research and development initiatives of its staff that IMAX has so far stayed up-to-date with changing market requirements.

The corporate strategy of IMAX has been to engage in expansions wherever possible while keeping in mind its target audiences and also exploring potential target markets. Due to IMAX being a global company with the presence in different continents, the company’s strategy is also to engage in mergers and partnerships as required in order to give the best possible services to its audience. This is why one of the CEOs of the company also does not rule out the possibility of an acquisition in the future.

3. Why was IMAX changing its business and corporate strategies? Could IMAX thrive as a niche player that only made large format films and systems?

IMAX was changing its corporate and business strategies as it wanted to become a truly global company which provides services to kids and other audiences throughout the world. The change must have also been triggered as the company could see the potential that Asia-Pacific region held while bringing revenues and audiences much larger than those of Europe and North America. However, at the same time, the CEOs tried to contain the company’s focus on its core business, which was providing feature films and documentaries on a large format as this was the core strength that the company could compete upon.

Secondly, the management of IMAX felt that a change was needed in the business and corporate strategies as the competition was ever increasing in the industry of feature films. Moreover, various production houses were mastering productions and educational documentaries for kids, such as Pixar and Disney who came up with blockbuster productions. The competition amongst movies and their genres was also intense, coupled with increasing rivalries in acquiring the best celebrities. A change of the strategy was also needed due to rising expenditures and costs of operation. IMAX realized the importance of various actors and crew members who were involved in a production and not just highly paid celebrities.

No, it would have been difficult for IMAX to thrive alone on large format films and systems. This is because seeing the success of IMAX in this business; various lucrative and well-endowed companies could also jump in the business that had large investments available. IMAX already faces competition in large format films with Iwerks who has a similar set up and is striving for a global presence. The niche could not have possibly been exploited in the long-run. Therefore, some changes had to be brought in to the portfolio of services.

4. Evaluate changes in IMAX’s business and corporate strategies. Have the changes been effective? Could increasing the number of Hollywood movies release in IMAX format dilute the IMAX brand?

Primarily, there have been two major changes in IMAX’s business and corporate strategies. These relate to:

• expanding the reach of the company to multiplexes and not being restricted to museum environments;

• projection and presentation of Hollywood films in IMAX format.

Trends so far depict that the introduced changes in strategy have been fruitful for IMAX. The company successfully negotiated with AMC and Regal multiplexes to install the IMAX system in their premises. This has led to exposure of IMAX’s technologies, its 3-D cinemas, and large format film projection in many parts of the world, specially the Asia-Pacific region.

Secondly, keeping in mind the primary audience, that is 12-24 years age group, IMAX collaborated with various multiplexes to project its productions for kids in their conventional theatre cinemas. Hence, sales revenues for the company have picked up since implementing the company’s expansion out of the museum and aquarium environments. Moreover, the second major strategic move, that is, presentation of Hollywood movies in IMAX format, has also been a successful run so far for the company. Blockbuster movies such as Harry Potter and The Smurfs have been successfully presented in the IMAX format, using a large film concept which has attained laurels for the company.