MGT 401 H
01 November 2010
IMAX Individual Paper
After reading the IMAX: Larger than Life case and Are Movie Theaters Doomed? article, the theory learned in class is applied to decide whether IMAX would lose its differentiation if it exhibited too many Hollywood movies. Additionally, the company faces the question whether it should be sold to a larger studio such as Sony, Disney or Time-Werner. In the beginning, I discuss the impact of the General Environment on the movie theater industry. Subsequently, Porter’s five forces model is applied in identifying the opportunities and threats for IMAX. Explanation of how the resources, capabilities, and core competencies support both business and corporate strategies follow the model. The final part describes the reason behind the company changing its business and corporate strategies and if it can survive as a niche player that only produces large format films and systems. The General Environment Demographic Segment
To begin with, IMAX happens to be in three different industries: Photographic Equipment and Supplies, Motion Picture and Video Tape Production, and Motion Picture and Video Distribution. Obviously, the demographic segment relevantly applies only to the Motion Picture Exhibition industry because looking onto the demographics of the other industries is completely irrelevant. In this paper, I will mainly concentrate on the exhibition industry unless it is relevant to apply the theory to the other industries. However, I will explicitly mention if I do so. According to the IMAX case, the audience can be broken down to three categories. The 12-24 year olds represent 38% of admissions and they also happen to render 41% of the movie attendance frequency. The 25-39 year olds follow in representing 29% of admissions (IMAX p.10). Although the case does not provide statistics for the third category, the article depicts that the 40-59 year olds, the aging baby boomers, represent around 25% of admissions (Movie Theaters p. 493). Additionally in the case, the author mentions some characteristics of the audience. School groups correspond to more than 20% of IMAX audiences. The majority of the audience is at least college- or university-educated, and earns on average a yearly income of more than $70,000 (IMAX p.10). Since IMAX mainly produced educational movies at the time of the statistics, the characteristics of audience can be justified because educated parents see IMAX as an opportunity for their kids to learn and have fun at the same time. It is anticipated that the demographics would change since the company developed the MPX technology that allowed major theater chains such as Regal and AMC to convert to the IMAX format. As a result, this segment will change if the company chooses to increase the number of Hollywood movies in their format. In the article, the author mentions that the cinema industry needs to cope with the changing audience demographics. The problem exists because “young people today have very different perceptions about entertainment, and value their mobile phones and Internet access over TV” (Movie theater p.495). Thus, he is underlining the importance of targeting the so called baby boomers and facing the change. It is because the segment aged 12-24 years has declined 22% in the interval from 1975 to 2005 (Movie theater p.493). Additionally, the author points out that “people 50 and over control 75% of the net worth of US households” emphasizing a wake-up call to cinema operators (Movie theater p.495). However, I believe that the previous segment will always remain the dominant one for several reasons. In looking at the segment aged 12-24 years, it’s important to at least divide it into two separate groups; high school and college students. High school students are frequent visitors to the theaters because they do not have many alternatives to choose from in going out on the weekends. In other words, entertainment alternatives...