Large Format Educational Films

IMAX's primary strategy was Focused differentiation that targeting at the niche market of making large format educational films and building IMAX theaters in museums and aquariums. In order to gain larger growth, IMAX changed its strategy by expanding beyond its institutional environment by opening IMAX theaters within multiplexes or converting multiplexes' screen to IMAX format and lunching Hollywood films in IMAX format. Worth mentioning that a crisis happened in the 1990s urged IMAX to change the contract with its alliance so as to pay off its debt.

IMAX evolved its strategy based on its core competences and the change of the environment. One of IMAX's core competences is its leading technology. It invested heavily on R&D, and keeps itself with top technology in film industry such as 3D camera, 3D directional sound technology and MPX technology so on so forth. The DMR technology makes it possible to convert traditional 35mm movie into large screen or even 3D format at lower price, which build the foundation of cooperating with Hollywood movies.

The other core competence is its strong partnership. The revenue-sharing contract with its partner theaters saved its advertising expenditure since the theater and the film producer will take care of that when they have a film on line. Besides, its partnership with AMC and Regal Cinemas allow AMC and Regal take the initiative to build IMAX theaters in different markets, which increased presence of IMAX in different continent and increased the brand reputation of IMAX.

According to resource based view (RBV) analysis, these core competences are hard to imitate, because its uniqueness is not built in a day but gained through years of experience in the market. The competences are not easy to be replaced by substitutes, because IMAX provides the unique movie experience to consumers that has not achieved by other ways of entertainment. Its strong branding and the continuous investment on R&D also makes the competitive advantages durable.

However, the financial performance is not quite satisfactory. In 2006 and 2007, IMAX underwent two consecutive negative income, and the revenue decreased drastically. It is true that with the technology development, substitute like DVD, TV and internet may diversify people's choice of entertainment and the piracy issue also has impact on movie industry. What more, the trend that big firms' vertically integrated of production and distribution also intense the competition. However, one should not ignore the fact that IMAX format movie has largely increased the revenue of movies, and the movie industry is growing globally. Thus there are high potential growth opportunities for IMAX. Exhibiting more Hollywood movies is one way, since it can expand from the original niche market to a bigger market by applying its technology advantage and widely spread IMAX theaters. It would not dilute the brand image, on the contrary