IMAX Analysis Case Study

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Company, customers, competitors, and context

IMAX is a large format film production company that has a presence in approximately 40 countries. It focuses on film production, theatre operations and IMAX systems sales. Initially, the company was a niche player that produced and displayed educational films and documentaries; this explains why most of its theatres were located in museums, aquariums and similar educational institutions.

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However, currently the company is changing that strategy by displaying Hollywood movies in IMAX format and moving its theatre locations to other places other than educational institutions. The company’s customers range from educational institutions, conservatories, museums, theatre owners, individual movie lovers, tourists and film distributors.

Since the company converts films to IMAX formats, then it can either sell the systems to theater owners or lease them out. Here, typical clients include Regal cinemas and AMC. Movie lovers are also another client base for the organization. These are individuals who enjoy movies immensely such that they do not mind watching it again in a new format.

Most of them are educated and earn medium to high incomes. They appreciate the uniqueness that IMAX movies provide with regard to 3D movies. Therefore, many of them do not mind paying extra for this exclusive experience. Another category of customers are the educational, historical and scientific institutions. Usually, these buyers stock IMAX movies for the purpose of showing them to information seekers.

These corporations make IMAX a niche player owing to their focus on educational material. They are responsible for bringing the company’s name to the fore in terms of this need. On the other hand, IMAX also displays educational films in its own theatres. Therefore, non institutional clients also account for a large share of the firm’s sales. These include tourists, students and families (Nair 3).

Key competitors for IMAX include studios that make educational films, producers that target similar demographics like children. One such group is Disney, which offers serious competition to IMAX’s family films. The company also faces stiff competition from large format service providers like Iwerks. The later company not only produces but also displays large format films.

Another entity called Pollavisation also helps large format theatres maximize their service output. Competitors also exist in other related industries such as DVDs, TV programs and the internet. Alternative sources of entertainment drive away potential consumers who may prefer the conveniences and affordability of these sources.

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Strengths, Weaknesses, Opportunities and Threats

One of the major strengths exhibited by the company is its investment in technology. Prior to introduction of 3D films, the organization worked on its projection systems such that their images became sharper and brighter than those found in other movie theatres. Additionally, the firm has a strong research and development team that was responsible for the perfection of the 3D systems.

In film production, the company leverages on its strong brand name to minimize production costs. Unlike conventional studios that have to hire famous stars to promote their films, the business often pegs on its unique brand image. Additionally, it does not have to use conventional marketing channels to sell its movies because other parties do it for them.

For instance, when showing Hollywood movies, customers will come to watch the films in IMAX’s theatres owing to movie producers’ campaigns. By riding on other people’s marketing efforts, the organization minimizes its overhead and increases profitability. Additionally, the company does not have to use aggressive marketing because movies can stay within their libraries for years on end.

Another strength that IMAX can boast about is its unique location. Most IMAX theaters are found in areas of great historical value, such as New Jersey’s Liberty Science Center. In this regard, many potential clients can identify with the organization and thus purchase their services. The firm is also a niche player in the family entertainment sector. It has leveraged on parent’s inclinations to develop their children’s intellectual capabilities.

A need exists for education and entertainment for children, and this is available at IMAX theatres. In the theatre systems supplies sector, IMAX’s key strength is its commitment to quality. The organization maintains theatre systems for its suppliers regularly and projected maintenance updates are always quite accurately. Besides this, the organization offers advice on how to maintain those theatre supplies thus building trust among its consumers and ensuring repeat business from them.

One of the major weaknesses for the organization is its high level of expenditure and hence debt. Production and distribution of films is always a costly affair as it is technology – intensive. IMAX has had to pay a lot of money upfront before undertaking a new technology endeavor and this has increased its debts. Additionally, the organization depends on the success of its theater owners, yet their industry is quite risky.

Prior to the mortgage crisis, the theatre owners over expanded in order to accommodate IMAX’s projection systems, but this plunged them into debt. Their situations affected their ability to honor pledges made to IMAX thus dragging IMAX along with them. Opportunities for the organization include partnerships with more theatre owners to offer movies in IMAX format.

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Currently, the organization has partnered with theatre owners like AMC to offer its film in 3D. In return, the company will benefit by sharing revenue generated from their ticket sales. If the firm liaises with other theatre owners, it could increase its reach without having to run theatres on a daily basis. The company simply needs to be involved in the initial set ups; other aspects of sales should be left to partnering firms.

It needs to refrain from selling its systems to theatres as this only yields one-time only revenue streams. Making long-term agreements with the organizations can lead to long term sources of revenue. In essence, expansion of its Hollywood movie conversion portfolio could lead to greater profit margins and long term sustainability.

Additionally, the company needs to convince movie studios to release their films simultaneously in IMAX format as well as the traditional format. Some studios may worry that traditional film formats will not do as well if releases are done in both layouts. However, IMAX should use past successes on such simultaneous premieres to convince them about the viability of the idea (Nair 8).

Key threats for the company include the threat of vertical integration. Several entities in the production and distribution business are merging with members of the supply chain. For instance, Miramax has been vertically-integrated into Disent while Columbia Pictures is a subsidiary of Sony. As a result, these conglomerates have substantial control over the production process.

They can make movies at more efficient rates than IMAX and this poses a serious threat to the company. It must decide whether it is feasible to stay independent or merge with a larger production firm. Additionally, the company faces a serious threat from educational film makers as competitors are numerous and prospects for recovery of investments are also minimal.

Estimates indicate that only three-fifths of all movies recover the initial investment they made in production of the film. Therefore, profit margins in the IMAX film production department are diminishing owing to increased competition as well as risks of production. Other organizations in the film education niche are also offering similar services to IMAX, and this could undercut their competitive advantage.

A company like Pollavisation now does consulting and maintenance of large format films, yet this is a core aspect of IMAX’s business portfolio. Other threats also exist for the organization in different industries. The proliferation of the internet has intensified cases of piracy. Customers may choose to watch a film on the internet rather than watch it in IMAX theatres.

Additionally, technology development is also a threat to the organization because it enables new film entrants (like Pixar) to leverage on cheaper equipment. This could increase competition for the company. Piracy through camera recordings at theatres may also threaten the viability of IMAX’s offerings.

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Lobbyists may also act as deterrents to the organization when they object against some of the films that IMAX displays. They may oppose the use of vulgar language or obscenities found in these films. IMAX will need to consider these concerns if it plans on increasing the number of Hollywood film conversions.

IMAX objectives

IMAX’s first objective is to increase its profit margins by expanding into multiplexes and diversifying its product range by offering its films in IMAX format. After conducting an analysis on the average demographics of movie goers in its facilities, the company realized that it was missing the mark as most of its customers fell outside this bracket.

It was essential to come up with a strategy that would bring this key demographic under their wing. Statistics indicate that a fifth of IMAX’s consumers are school groups. Additionally, most of them fall within the 19 to 65 age bracket.

Conversely, the age group that accounts for the highest feature film attendance is the 12-24 year-old group. Additionally, they accounted for 41% of all movie attendants. It was essential to create a business strategy that would attract such a group (Nair 15).

IMAX’s marketing strategy and why it is changing

The company utilized its partners’ marketing efforts to sell its products. Furthermore, it took advantage of location to sell its offerings to consumers. For instance, the company partnered with successful institutions like the Museum of Science and Industry in Chicago in order to make it stand out from the rest. Clients came to trust its films through its affiliation to these institutions.

Their marketing efforts would cause clients to try out their products as well. The company also had sales teams in key destinations such as the US, Canada, China, Europe and Japan. The teams were responsible for the sale of theatre systems. Films were not part of the product package as they were sold independently to the partnering firms.

Little marketing was involved as IMAX already established long term relationships with these institutions. Additionally, the continual availability of the movies in IMAX theatres was a way of selling the product continually to the market; they were always assured of finding the product there.

This reliance on educational institutions for marketing is changing dramatically. Now the company is relying on marketing strategies made by Hollywood studios. Prior to the release of a film, most organizations will use internet websites, television advertisements, the press and commercials in order to market their films. If IMAX plans on showing a Hollywood movie in IMAX format, then it also relies on these marketing channels to sell the film.

Some studies often liaise with restaurant chains like McDonalds and other commercial enterprises to promote an upcoming film. Additionally, several of these institutions also rely on the presence of celebrities to promote a film. If IMAX plans on showing the film on concurrent dates with the traditional formats, then similar marketing channels will be utilized.

Aside from other studio’s marketing efforts, the company has also invested in its own marketing efforts. The company used conventional marketing channels like television for its Everest movie. Additionally, the organization is collaborating with some partners to promote its films in public venues.

A case in point was its collaboration of Showtime, which promoted the film T-Rex at stores affiliated to Imaginarium in US malls. As result, the company’s income increased substantially. The traditional IMAX approach is currently changing because of the strategic shift to more conventional films. Additionally, the company has realized that it needs to be aggressive about staying in business, and this explains its strategic shift.

Whether the changes have been effective

The new approach seems to be working because box office sales for marketed films are much higher than sales for un-marketed films. Additionally, using other studio’s marketing campaigns to sell IMAX converted films appears to be working as well. When IMAX and multiplex screens released the film “The Day the Earth Stood Still” box office sales reaches a soaring $31 million.

Analysts state that this was the highest rate ever reported on an opening weekend. 12% of the sales were attributed to IMAX. Other theatres made average sales of $8,100, yet each IMAX theatre made approximately $ 30, 800. This indicates that using other studios’ marketing strategies is working. Nonetheless, the organization can still do a lot to change the way it markets its own films.

Additionally, it may also develop its own advertisements for IMAX format Hollywood films. The marketing plan will entail five aspects. The first part of the plan is conducting audience research. The company needs to carry out this aspect in order to know the most effective release dates as well as the best way of reaching their clients (Wasko & McDonald 55).

The organization will commission an independent research firm to carry out position studies on when other feature films will be released. It is assumed that for Hollywood converted films, production studios will already have conducted the research on their own. IMAX needs to know when similar films will be released so that it can avoid clashing with its competitors.

In addition to positioning studies, the firm must conduct test screens of unfinished feature films such that IMAX can gauge potential likeability of its films. Thereafter, it should select advertising material and gauge how various groups are reacting to the adverts. During the premiere of the film, the company should also investigate how well audiences know about the film prior to its showing.

This will ensure that the firm can improve upon its marketing messages in the future. Audience research will give the firm a rough idea of how worthwhile their investment is in advertising. It will ascertain that promotional materials target the intended audience effectively and that feature films sell as planned.

Since IMAX is in the business of theatre operations, then the company should start with this avenue as its first marketing channel. It needs to use trailers strategically. If the company plans on releasing a new feature film, then it needs to screen trailers after every movie watched.

Trailers should have only the most impressive minutes of the movie and should be shown to audiences of all genres; Hollywood conversions, institutions and feature films. All IMAX screens should serve as a platform for these advertisements; partnering theatres should also show them. Inside the company’s theatres, there should also be trivia games and stills concerning an upcoming IMAX film.

This should occur in between movies, and should engage viewers in the details of the IMAX film. The organization will also utilize standees in a variety of its theatres. Standees are life-sized depictions of characters from the movie. They will have the same effect as 3D displays by attracting the attention of audiences (Marich 97).

Aside from working with theatres or similar partners, the company should utilize television and radio as these are also lucrative channels for film advertisement. Television advertising should account for 70% of the investment while radios should take up 30% as television is both an audio and visual medium. The advertisement should last 30 seconds and contain the same material in both media.

The firm should also liaise with successful network programs in order to expose the film. It can dedicate an entire show to the film. For instance, Showtime could illustrate behind-the-scenes in one of its movies. The company has liaised with such firms before and it should not hesitate to do so again.

The internet is fast becoming the destination of choice for many players in the film industry. Similarly, IMAX should not be left behind. The company needs to have websites for all its feature films. It can provide information about the storyline, directors, actors, premiere dates and any other aspects of production that audiences want to know.

Additionally, it needs to embrace viral marketing by placing its advertisements on film sites. The company can also use blogs to provide links to its latest trailers so as to increase the number of visits to its websites. Additionally, the company should also strengthen its merchandising endeavors. It has previously partnered with a retailer across its stores to promote its films.

Similarly, the company can work with toy makers to brand its new films. One way of achieving this can be partnering with other retail stores that sell the selected items. This will ascertain that adequate information is available for the showing of the feature films.

IMAX has substantial success in the Hollywood sector but much can be done in order to revamp its niche product, which is the feature film. The organization should be willing to invest in this marketing plan because it is likely to generate substantial income.

Works Cited

Marich, Robert. Marketing to moviegoers: A handbook of strategies and tactics. Illinois: Southern Illinois University Press, 2009. Print.

Nair, Anil. IMAX: Larger than Life. Ontario: Richard Ivey School of Business, 2009. Print.

Wasko, Janet & Paul McDonald. The contemporary Hollywood film industry. Malden, MA: Blackwell Publishers, 2008. Print.

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IvyPanda. 2019. "IMAX Analysis." December 26, 2019. https://ivypanda.com/essays/imax-analysis/.

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