Holland America Case Competition Presentation

IMAXExpansion in BRIC EconomiesSTEVEN XU, MADELINE DOWN,BEN HAGEN, & MIDORI NG

A G E N D A

Clarify ChargeQualitative AnalysisFinancial AnalysisGrowth StrategiesRisk MitigationResearch & DevelopmentQ&A

C L A R I F Y C H A R G EHow should IMAX allocate further expansion in BRIC countries by 2020?

Growth strategies and risk mitigationrecommendations?

How much should IMAX invest into Research & Development initiatives?

• CHARGE ANALYSIS GROWTH STRATEGIES RISK MITIGATION R&D

Q U A L I TAT I V E A N A LY S I S M E T H O D O L O G Y

CULTURAL ANALYSIS POLITICAL ANALYSIS ECONOMIC ANALYSIS

CHARGE • ANALYSIS GROWTH STRATEGIES RISK MITIGATION R&D

IndulgenceLong Term OrientationUncertainty AvoidanceMasculinityIndividualismPower Distance

Ease of Doing BusinessVoice and AccountabilityPolitical StabilityGovernment effectivenessRegulatory QualityRule of LawControl of Corruption

Target MarketHollywood InfluenceIMAX per capitaBox Office Revenue

Q U A L I TAT I V E A N A LY S I S R ESU LTS


Brazil Russia India China

Cultural Analysis

Political Analysis

Economic Analysis

Cumulative Score

43

45

39

41

47

47

73

59

28

42

45

40

40

30

51

43

TA R G E T M A R K E T M E T H O D O L O G Y


TOTAL POPULATION MIDDLE

CLASS

URBANPOPULATION AGE

DEMOGRAPHICADDRESSABLE

MARKET

TA R G E T M A R K E T I N D I A E X A M P L E


410,970,797 37,168,199 16,835,9571,270,000,000 69,865,036

TOTAL POPULATION

URBAN POPULATION

MIDDLE CLASS

AGE DEMOGRAPHIC

ADDRESSABLEMARKET

R E V E N U E M E T H O D O L O G Y

Avg. IMAX Movie Ticket x Addressable Market = Total Theater Revenue

Total Theater Revenue x 20% Revenue Share = Total IMAX Revenue

Total IMAX Revenue – Cannibalization = Net Revenue


R E V E N U E M E T H O D O L O G Y I N D I A E X A M P L E


Avg. IMAX Movie Ticket x Addressable Market = Total Theater Revenue$6.00 x 16,835,957 = $101,015,742

Total Theater Revenue x 20% Revenue Share = Total IMAX Revenue$101,015,742 x 0.20 = $20,203,148

Total IMAX Revenue – Cannibalization = Net Revenue$20,203,148 – 0 = $20,203,148

F U T U R E E X PA N S I O N A L L O C AT I O N S

400 / 1600screens to be installed in BRIC countries

Country Screens to add by 2020 Percentage of Allocation

Percentage of Screen Growth

Brazil 64 16.00% 24%

Russia 61 15.25% 13%

India 100 25.00% 31%

China 175 43.75% 8%


M E T H O D O L O G Y C O N T ’ D

We feel confident that our recommendation is sound based on two independent models which take into account provided quantitative data and external research.


&CHINA INDIA

CHARGE ANALYSIS • GROWTH STRATEGIES RISK MITIGATION R&D

TO P T W O C O U N T R I E S

CHINA INDIA

G R O W T H S T R AT E G Y


GEOGRAPHY PARTNERSHIPSMARKETING

123

NATIONAL HOUSEHOLD INCOME

STRATEGY: Start with successful cities, roll out to new


C H I N A G E O G R A P H Y

$6,180 USD (in 2013)

Cinema

Market Share

Dalian WANDA Group

Shanghai Film Group

China Film Stellar

Guangdong DadiShenzen China Film

Other

14.3%

8.8%

8.4%7.5%7.1%

C H I N A P A R T N E R S H I P S


C H I N A M A R K E T I N G

“Trading Up to 2020”


Protectionism

Dislike of Western Culture

Corruption

High Power Distance

C H I N A C O N S I D E R A T I O N S


I N D I A G E O G R A P H Y


STRATEGY: Urbanized and infrastructure focused

NATIONAL HOUSEHOLD INCOME

$3,168 USD (in 2013)

Current PartnershipsCinepolis, PVR Films


I N D I A P A R T N E R S H I P S

I N D I A M A R K E T I N G


“Aspirants”into2020

“Trading Up to 2020”

I N D I A C O N S I D E R A T I O N S


Luxury product perception

Government

Infrastructure

Fast followers

I N T E R N AT I O N A L R I S K M I T I G AT I O N

CHARGE ANALYSIS GROWTH STRATEGIES • RISK MITIGATION R&D

1. FOREIGN ENTRY PREMIUMSMitigation: Research and Relationships

2. IP RISKMitigation: Become subject matter specialists

3. FOREIGN EXCHANGE RISKMitigation: Currency hedging, contract terms, and temporary price changes

4. STREAMING SERVICESMitigation: Invest a portion of R&D to new movie-watching source

10% of revenue $28M

CHARGE ANALYSIS GROWTH STRATEGIES RISK MITIGATION • R&D

R E S E A R C H & D E V E L O P M E N T

175 100

6461

LOCATIONS

10% of revenue for IMAX at homeR&D

GROWTH STRATEGY1.Geography 2.Partnerships3.Marketing

CHARGE ANALYSIS GROWTH STRATEGIES RISK MITIGATION • R&D

C O N C L U S I O N

Q&ATHANK YOU!