IMAX case study
Issue
Two issues identified in the case include: 1) if an increased number of Hollywood films released in IMAX format would weaken the brand and cause IMAX to lose its differentiation; and 2) if IMAX is capable of surviving in the industry without being acquired by a larger studio.
Analysis
IMAX is part of the motion picture production and distribution industry, which boasts large firms and studios to compete with, such as Disney/Pixar, MGM, and Regal Entertainment. The industry itself is tough to survive in, as roughly only six out of every ten movies produced actually recoup their original investment. In addition, firms in the industry rely on vertical integration for growth, which increases their size gap relative to IMAX. Emerging technologies are both helping and hindering the industry. The ease of online piracy is allowing more consumers to access films for free on their computer in the comfort of their own homes, rather than paying to see them in theatres. However, certain technologies such as cheaper HD and 3D cameras allow for companies in the industry to continue efforts to reduce their costs. The economic conditions have a large effect on profitability in the industry, as consumers will spend less money on entertainment activities during economic recessions.
IMAX’s competitive advantage began when it was founded as the only company worldwide involved in all the aspects of large format films. Over the years, they have maintained their competitive advantage through profuse Research & Development – even being awarded an Academy Award for their advancements and innovation in the industry. IMAX’s main sources of revenues were long-term theatre system leases and the ensuing maintenance agreements, film production and distribution, and theatre operations. Theatre leases were generally 10-20 years and renewable by the customer. As part of their leases, IMAX consulted their customers on theatre design, supervised installation, trained theatre staff, and
Two issues identified in the case include: 1) if an increased number of Hollywood films released in IMAX format would weaken the brand and cause IMAX to lose its differentiation; and 2) if IMAX is capable of surviving in the industry without being acquired by a larger studio.
Analysis
IMAX is part of the motion picture production and distribution industry, which boasts large firms and studios to compete with, such as Disney/Pixar, MGM, and Regal Entertainment. The industry itself is tough to survive in, as roughly only six out of every ten movies produced actually recoup their original investment. In addition, firms in the industry rely on vertical integration for growth, which increases their size gap relative to IMAX. Emerging technologies are both helping and hindering the industry. The ease of online piracy is allowing more consumers to access films for free on their computer in the comfort of their own homes, rather than paying to see them in theatres. However, certain technologies such as cheaper HD and 3D cameras allow for companies in the industry to continue efforts to reduce their costs. The economic conditions have a large effect on profitability in the industry, as consumers will spend less money on entertainment activities during economic recessions.
IMAX’s competitive advantage began when it was founded as the only company worldwide involved in all the aspects of large format films. Over the years, they have maintained their competitive advantage through profuse Research & Development – even being awarded an Academy Award for their advancements and innovation in the industry. IMAX’s main sources of revenues were long-term theatre system leases and the ensuing maintenance agreements, film production and distribution, and theatre operations. Theatre leases were generally 10-20 years and renewable by the customer. As part of their leases, IMAX consulted their customers on theatre design, supervised installation, trained theatre staff, and