IMAX Fast Facts

• Headquarters• What they do• Where – how many theatres/countries• When founded• IMAX.COM – investor relations

Company Overview• Designs, leases, markets, maintains and operates Imax film

and digital theatre systems• Develops, produces and distributes IMAX movies• Headquarters - Mississauga, Ontario• A leader in the creation and production of high-end rides,

such as IMAX Simulator Rides• Most revenue is generated from the sale or long-term lease of

IMAX theatre systems, maintenance and warranty services, installation of theatre systems, and film distribution

Traditional Film Technologies• Prior to IMAX the Industry standard for movie projection - CinemaScope and VistaVision

– widened the image projected from 35 mm film

– multiple large and awkward projectors were used to show a single movie

1960’s - 1970’s• Expo ’67 - Montreal

– two of IMAX’s founders presented films and experienced technical difficulties with the Cinerama multi-projector system they were using

– decided to develop a new system for movie projection - IMAX

• Expo ‘70 - Osaka

– first IMAX film was presented - Tiger Child

• 1971 - the first permanent Imax projection system was installed at Ontario Place's Cinesphere

1980’s

• Competition grows– Showscan Film

Corporation– Iwerks Entertainment

Inc.

1990’s

• Expo ‘90– IMAX Solido - 3D

technology• 1990

– 1st permanent IMAX theatre in Vancouver

• 1994– IMAX bought by WGIM

Corp for ~$100 million– Goes public - $13.50/share

2000’s

• Slowing North American entertainment market

• Shares drop by 70%• 12 IMAX customers went

bankrupt leaving IMAX with ~$100 million in debt

• Launch a new plan– Digital projection– Joint ventures

To add

• Different types of theatres when?• Chart...• # of theatres (100 screens in first 25 yrs)• Profits (losing money) and stock price -

volitility

Imax Today

• 2010 Current success & rapid expansion

• What happened!!!?

Old Business Model•70mm film, weighing between 200-400 pounds•$20,000 for 2-D print, $40,000 for 3-D, borne by the studio, which meant they needed sell more tickets to recoup this cost•Also the cost of the film lead them to make deals to make shorter films, say 40 minutes, which also lead them to focus on the educational film market•Films ran at a rate of 48 frames per second, twice that of the standard speed which also meant that the film lasted only half as long•All of these costs add upto anywhere from 3 to 5 times the normal production cost for a 35mm film. •Sold equipment to 3rd parties under licensing agreement•Royalties to IMAX•3rd party initial cost about $1.3 million

Some Comparisons

IMAX movie• 70mm film• 48 frames per second

Regular movie• 35mm film• 24 frames per second

IMAX

• Capacity to record and display movies with greater size and resolution by using 70 mm film frame

Facts… ?

• A 40 minute IMAX® film is 13,464 feet long and weighs over 125lbs.

• IMAX® film moves through the projector at 336.6 feet per minute or 5.61 feet per second.

Old Business Model

• Sold equipment on long-term licensing agreements

• Royalties to IMAX• High costs of prints borne by the studios• Add numbers

Issues

• High set up costs for theatres• High cost of films• High transportation cost of films• Average cost was 3 to 5 times that of regular

film• No one wants to produce films for imax – they

have to produce their own content = very expensive – cad bus article quote

International under old model

• License model• List where

Transitioning

• 1994 - New CEO’s Rich Gelfond & Brad Wechsler

• Try to move IMAX into commercial movies• Initial success, but even greater failure• IMAX up for sale in 2000 & 2006– No buyers!

Turning Point• Move to a new business model– Joint Ventures– Conversion to Digital– Premium Theatre Experience

• Market Opportunities– Hollywood support– Rise of 3-D

Joint Ventures

• IMAX puts up the cost of the IMAX system– $500,000

• JV partner puts up the cost of building/retrofitting the theatre– $150,000 to convert

• Box office profits split between the two– IMAX usually receives a 10%-15% share

Going Digital

• IMAX film cost an average of $30,000/print• IMAX digital costs an average of $400/print• Cost savings = more flexibility– Able to double the amount of films showing

Premium Theatre Experience

• IMAX scaled itself down to Hollywood’s size– Converting Hollywood blockbusters to IMAX’s

more vivid & immersive format– Screening films in reconfigured multiplexes – Premium vs truly unique viewing experience

What does “premium” look like?

• 15% bigger screen

• Seats shifted forward 16 ft

• Front seats removed

• better sound• better image

quality

Hollywood Support• IMAX needed content• Hollywood needed to increase “WOW” factor to

compete with stunning home theatre systems• Game changers - Hollywood takes notice– The Polar Express (2004)– Matrix movies (1999, 2003)– 300 (2006)– The Dark Night (2008)

• $65 million in IMAX ticket sales• 10% of total from 1% of theatres• Partially shot on IMAX cameras

Rise of 3-D

• IMAX has always been a 3-D leader• Already has the 3-D technology installed