IMAX: Larger than life

Subject CSTG23
Lecturer’s name Indrajit Mukherjee
Submission date 24-08-2023
Batch PGDM GM 23-24
Group no 4B
G23065 – Anmol Saxena
G23072 – Bhavna Ramanathan
G23086 – Nikita Kumar
Submitted by
G23087 – Nishit Kumar
G23097 – Sagar Kuntumal
G23102 – Sayantani Mukherjee

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1 What are the main performance problems faced by IMAX? Justify
 Change in Business Strategy: Proportion of people watching educational movies or documentaries
on nature and science are less; In dilemma, whether stick to the current strategy or start focusing on
other products.
 Growing concern of losing technological differentiation in the market (Films and Projectors)

2 Critically analyse the events and facts leading to the problems (800
words)
 Change in revenue mix: The revenue streams of IMAX have evolved over the years. In the initial
days, where IMAX was known for producing educational content and documentaries based on nature
and science, now it has started producing Hollywood content. IMAX used to earn revenues by
converting a traditional theatre or establishing a theatre in museum or amusement park and leasing
them for years. Since, the movies that people can watch in IMAX is changing, IMAX has moved to a
revenue sharing model which is also helping them reduce their debt.
 Demography of the moviegoers: Within the audience landscape of feature film theatergoers, those
aged 12 to 24 constitute a substantial 38%, while the 25 to 39 age bracket accounts for 29%. This
distribution showcases the pivotal role these age segments play in the viewership of cinematic
offerings. The younger demographic, spanning 12 to 24, typifies the vitality of youth and exhibits
reduced interest in documentary or educational content. Likewise, this inclination holds true for
individuals aged 25 to 39, who also display a preference for mainstream feature films over
documentaries or educational productions.
 Outstanding response to the movies released in IMAX: The film "The Day The Earth Stood Still"
made its debut in both multiplexes and IMAX theaters simultaneously. Notably, IMAX experienced an
exceptional reception for this movie, with approximately 12% of the total revenue attributed to its
screenings. Impressively, the revenue generated from IMAX showings averaged around four times
that of conventional theaters, underscoring the heightened appeal and financial success of the IMAX
format.
 Growing concern on losing technological differentiation: The first IMAX film was released in the
year 1970. 38 years have passed on. Since the demand is huge and IMAX has monopoly, many
companies though of entering the market and eat the market share. Iwerks came with a film size of
15/70 and 8/70 that offers almost a similar experience as IMAX does. Megasystems entered into the
market with a range of projectors however, they have not shut this business and offers consulting
services.
 Evolving ways of consuming content: With the advent of Internet in the late 90s, Increasing
purchasing power of the citizens, and remote access to the content, people are shifting the base of
consuming content. The consumption of the content through cable and satellite TV and through
consumer internet has increased ~25% in the last 5 years. However, it is interesting to note that ~50%
of DVD viewers and ~38% of VCR viewers are still the frequent moviegoers.
 Producing films is a risky affair: With just 10% of films managing to recoup their investments
through domestic releases, and only 60% out of every 10 films able to achieve this break-even point,
IMAX's decision to venture into film production appears to be a calculated strategic step as IMAX is
already struggling with rising debts and falling revenues. Moreover, the investment that is required to
finance a movie is huge too and requires huge investment which IMAX does not have unlike its
competitors.

3 What is/are the recommended action plan? (150 words)

 Mozart Effect – IMAX’s USP is producing educational content which is in high demand currently.
IMAX should look to produce it and release it on different mediums and develop a new revenue
stream.
 Create IMAX content for the specific age group – The age group of 12-39 is 60%. Movies that are
preferred by this age group should be released in the IMAX theaters to increase the revenue
substantially

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 Associate with a production house to release a franchise movie on – People tend to go to watch
a movie in a theatre if it has a superstar in it or is a franchise. IMAX should associate with a production
house to release such franchise movies exclusively on IMAX or run a marketing campaign on thrill of
experiencing such movies in IMAX format.
 Enter new geographies – Asia-Pacific is dominating the global market. IMAX should enter this
market with their traditional product and also releasing content in the vernacular language.

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