Imax Corporation Business Information, Profile, and History

Company Perspectives

At the heart of the IMAX vision lie three qualities: a commitment to our customers and shareholders; a commitment to excellence; and a commitment to delivering the best entertainment experiences through new technologies.

History of Imax Corporation

IMAX Corporation, founded in 1967 and headquartered in Mississauga, Canada, is the pioneer and leader of giant-screen, large-format film entertainment. Using its proprietary technology, the company projects movies on screens that are up to eight stories high and 120 feet wide in theaters owned by museums, science centers, and commercial operators. In 2002, the company launched IMAX DMR, which allows any feature film to be digitally re-mastered to fit an IMAX screen. IMAX DMR releases include Apollo 13, Star Wars Episode II: Attack of the Clones, The Matrix Reloaded, The Matrix Revolutions, Harry Potter and the Prisoner of Azkaban, and SpiderMan 2. In 2004, Polar Express became the first Hollywood movie to be released in IMAX 3-D. The movie became the company's highest and fastest grossing digitally re-mastered release. In 2006, there were 250 IMAX theatres in 36 countries across the globe.

Young Filmmakers: 1965-67

Founded in 1967 by a group of five filmmakers and inventors who wanted to show off the beauty of the medium, IMAX Systems, as it was known then, has since consistently delivered the world's premiere cinematic experiences on huge screens. Independent filmmaker Graeme Ferguson had attended Galt Collegiate Institute in Galt, Ontario, Canada, where he met Robert Kerr and Bill Shaw, and the three men founded a student newspaper together. Ferguson went on to the University of Toronto, where he began making films. One summer, he was selected to be an intern at the National Film Board of Canada (NFB), and he went on to become an independent filmmaker, eventually working in New York. In 1965, Ferguson was asked by the Canadian Expo Corporation to do a film for Expo '67 in Montreal, but it had to be produced by a Canadian company. Kerr was at the time serving as mayor of Galt and still managing the printing company he had sold. Ferguson approached him about setting up a film production company. Kerr agreed, and they produced the film Polar Life for Expo '67.

Meanwhile, film producer Roman Kroitor had also been a summer intern at NFB. He began working there full-time after finishing college. In 1965 he suggested the board form a committee to produce a multiple-image, experimental film for the 1967 Expo. Kroitor's concept was selected, and he produced Labyrinth.

Expo '67 proved to be the birthplace of big-screen movie production. Other forerunners in big-screen production were in attendance there, including Colin Low, Kroitor's codirector on Labyrinth; Christopher Chapman; Francis Thomson; and Alexander Hammid, all of whom Ferguson would turn to as IMAX Corporation developed.

A New Company: 1967

In 1967 Fuji Bank of Japan asked Kroitor to produce a film for Osaka, Japan's Expo '70, with partial financing provided by Fuji. Kroitor turned to Ferguson and Kerr to help him do it. Multiscreen Corporation was created, with Ferguson as the president. In order to showcase the new film, the company would have to create new technology for it, including a new camera to shoot images on a film frame ten times larger than the normal 35mm format, new equipment to project those larger frame images onto a six-story-high screen, and other accoutrements such as new lenses, sound equipment, lighting, and seating arrangements.

Norwegian-born inventor Jan Jacobson, located in Copenhagen, Denmark, was able, in less than three months, to design a new camera to use 65 mm film horizontally. But the projector proved to be a tougher issue to handle. The company acquired a patent for a Rolling Loop projector from Ronald Jones, a machine shop owner in Brisbane, Australia, but it needed to be adapted to handle the larger size film. The partners turned to old friend Bill Kerr. Kerr had gone to work for Ford Motor Company for a few years as an engineer, eventually moving on to CCM, a sporting goods and bicycle manufacturing company. Kerr and Jones worked together via airmail across two continents to develop the projector. Meanwhile, Kroitor moved to Japan, along with Canadian director Donald Brittain and cameraman Georges Dufaux, to work with Asuka Productions to develop the movie they would show. Despite drawbacks, cash flow problems, and bouts of frustration, the projector and film were finished, and Tiger Child played on the big screen at Expo '70, while the audience was carried through the theater continuously on a large rotating platform, each observer viewing the endless film from a different starting point.

In 1971, Ontario Place, a government-sponsored theme park in Toronto, included Cinesphere, a theater showcasing new technology. Ontario Place bought the Expo '70 projector, which was brought back from Japan, refined a bit, and installed in the spring of 1971. That first IMAX projector was still running at Ontario Place at the end of the 20th century. The first film shown there, North of Superior, was produced by the company, which quickly gained a reputation for its projectors and sound systems, as well as for showing educational films created by institutions such as The Kennedy Space Center and Grand Canyon National Park. Over the next decade, the company would not only change its name several times, but change leadership and ownership as well, nevertheless while building more IMAX theaters and creating more movies for the medium.

Competition Grows and Raises Technical Standards

In 1983, Douglas Trumbull, special effects wizard (2001: A Space Odyssey; Close Encounters of the Third Kind; Star Trek: The Motion Picture) and director (Brainstorm), and Robert Brock, restaurant and hotel mogul (Brock Hotels, Park Inns International Inc.), founded Showscan Film Corporation, an IMAX competitor. Showscan revolutionized the industry, releasing a new cinematographic technique in February 1984 that offered a three-dimensional picture without viewers having to wear the infamous blue-and-red glasses. Showscan began showing films at 60 frames per second, rather than the normal 24 frames per second. The company built four prototype theaters, including one in Dallas, connected with Brock's Showbiz Pizza Place restaurant outlets, and began showing a movie called New Magic. In August 1990, the company changed its name to Showscan Corporation. Meanwhile, in 1986, Iwerks Entertainment Inc. sprang up in California, reincorporating in Delaware in October 1993 under the same name. A year later, Iwerks acquired Omni Films International Inc. for approximately $19.17 million.

At Expo '90, also held in Osaka, Japan, IMAX unveiled its new 3-D technology, IMAX Solido, which gave new life to a medium plagued with terrible 3-D renditions. The film shown there, the first of many to be produced eventually by the company, was Echoes of the Sun, a mostly computer-generated picture coproduced with Japanese company Fujitsu, and shown on a wrap-around screen and viewed with battery-powered goggles. The first 3-D IMAX theater was built in Vancouver that year.

New Owners: 1994

In August 1994, competitor Showscan, with which Douglas Trumbull was associated, changed its name to Showscan Entertainment Inc. to reflect its more comprehensive focus. That year, WGIM Acquisition Corporation (made up of investment group Wasserstein Perella & Company, owned by Bruce Wasserstein and Joseph Perella, both formerly of First Boston; Cheviot Capital Advisors, led by Bradley J. Wechsler and Richard L. Gelfond; and some private investors, including Douglas Trumbull), bought out IMAX's five original owners and The Trumbull Company Inc. for approximately $100 million. Later that year, IMAX went public, selling its stock for $13.50 per share.

With the acquisition of Trumbull, IMAX also acquired Trumbull subsidiary Ridefilm Theaters, a motion simulator company known for its creation of rides based on movies. Douglas Trumbull was the creative mastermind behind the design of IMAX Ridefilm, described by the company as "the most immersive, dynamic and realistic simulation product available." The 18-person modular system featured 180-degree, spherically-curved screens; proprietary orthogonal-motion base technology; high-speed, high-resolution projector technology; and six-track DTS sound. The attraction remained unparalleled by the end of the century, leaving IMAX as the industry leader over competitors such as Iwerks and Showscan, with more than 20 ride locations throughout the world, including the United States, China, France, Japan, Korea, the United Kingdom, Thailand, Norway, Canada, Brazil, Argentina, and the Philippines. Entertainment produced on the rides included features such as Asteroid Adventure; Crashendo; Dolphins--The Ride; Fun House Express; In Search of the Obelisk; and ReBoot: The Ride and ReBoot: Journey into Chaos, based on the computer-animated television program of the same name.

Using IMAX HD Dome and motion simulation, the most advanced motion picture and special effects technology, IMAX Simulator Rides revolutionized the attractions industry. In 1997 the company built its first motion simulator theater ride in Thailand, at Major Cineplex's entertainment complex on Sukhumvit Road, near the city of Ekamai. By this time, the company already featured simulator rides in Germany, at Caesar's Palace in Las Vegas, and at Universal Studios in both Los Angeles and Orlando, showing such features as Race for Atlantis, Asteroid Adventure, and Back to the Future--The Ride. Meanwhile, in July 1997, Showscan Entertainment acquired 15 percent of Reality Cinema Pty. Ltd. in Darling Harbour, Sydney, Australia.

Also in 1997, in order to allow more than one theater to open per year, the company hired Toronto-based Young & Wright Design Architects to design a prototype theater which could be duplicated across the country, a move many other companies were preparing as well. Additionally that year, the company received the only Oscar Award given for Scientific and Technical Achievement by the Academy of Motion Picture Arts and Sciences. Total IMAX revenue for 1997 reached $158.5 million.

In January 1998, despite the Asian economic crisis, interest in the entertainment industry in that region of the world was increasing. Early in the year, IMAX Corporation entered into an agreement to build a 600-seat IMAX 3D theater in Bangkok, Thailand (the first in that country). The theater was to be operated by Cinema Plus Ltd., IMAX's Australian licensee, and Major Cineplex Company Ltd., a 40-year-old company operating in the areas of entertainment, retail, and real estate, with 75 screens in Thailand.

That March, the company revolutionized three-dimensional cinema again with a new prototype theater, the IMAX 3D SR, located at the Arizona Mills shopping mall in Tempe, Arizona. It was the first of 12 3D screens to be built by the joint venture between IMAX Theater Holdings Inc. of Canada and Ogden Film & Theater Inc. of New York. The addition of the $7 million, 59-X-82-foot screen and 22,000-square-foot theater made the greater Phoenix area the only marketplace supporting two IMAX theaters; the other, which featured a regular IMAX screen, was located in Scottsdale, Arizona, another suburb of Phoenix. Two additional 3D screens opened that year in Nyack, New York, and Miami, Florida, marking another milestone for the company: this was the first time it had featured multiple screen openings in one year. The new technology offered both two-dimensional, regular movie format, and three-dimensional features requiring the use of a headset and cordless ski-goggle type headsets containing liquid-crystal lenses which worked in sync with the projector lenses.

As of early 1999 there were more than 180 permanent IMAX theaters in 25 countries, with a backlog of more than 75 theater systems scheduled to open in 15 new countries during the next few years. Over 500 million people had seen an IMAX presentation since the medium premiered in 1970, and the company had forged strategic alliances and relationships with some of the most prominent corporations in the world, including The Walt Disney Company, Famous Players Inc. (a subsidiary of Viacom Inc.), and Loews Cineplex Corporation, to name a few. The agreement with Famous Players included building IMAX 3D theaters in ten of Famous Players' new and existing theaters in Canada. For fiscal 1998, total revenue climbed again, reaching $190.4 million, with a net income of $1.8 million.

At the beginning of 1999, the company estimated that more than 65 million people worldwide would attend an IMAX theater during the calendar year, and with more theaters opening around the world, the company moved into the 21st century with the potential to continue dominating its niche markets, especially since it had signed a deal with Disney subsidiary Buena Vista Pictures for the exclusive giant-screen release of Fantasia 2000, a remake of the classic animated feature.

IMAX in the New Millennium

IMAX faced challenges in 2000 brought on by a slowing North American entertainment market. When the company issued profit warnings in its third quarter, share price fell by 70 percent. Overall, approximately 12 of its customers went bankrupt that year, leaving IMAX with nearly $100 million in debts. The company launched a cost cutting program and began to develop new technologies that would fuel its future growth.

In 2000, the company sold its first commercial digital DLP Cinema Projector used in a multiplex to Japan's T-Joy Co. Ltd. This project displayed digital images from satellite or DVD, versus a 35 millimeter film reel. Two years later, the company launched IMAX DMR, which allowed feature films to be digitally re-mastered into the IMAX format. The first film released in the new format was Apollo 13: The IMAX Experience. Co-chairman and co-CEO Richard Gelfond shed some light on the company's DMR strategy in a December 2005 USA Today interview claiming, "We were aware that in order to really grow our business, we needed to penetrate the commercial market. It was just too expensive to make original films, and we didn't want to be in the business of making bets on which films were going to be winners and which were going to be losers. So we developed the technology that enabled us to take the best of Hollywood's films in a year, typically about five or six or seven, and turn them into IMAX films."

Another important new development in IMAX's offerings was IMAX MPX. The MPX format enabled multiplex operators to install IMAX theaters in existing locations at a lower cost than building a new theater from the ground up. The company's first MPX contract was with Jack Loeks Theatres in 2003. That same year, The Matrix Revolutions: The IMAX Experience made its debut. Its release marked the first time that a movie simultaneously hit screens in both regular and IMAX formats.

The company signed a lucrative deal with National Amusements in 2004 that called for the opening of 18 IMAX MPX theaters over the next several years. At the same time, The Polar Express became the first movie to be released in IMAX 3-D. It quickly became the company fastest and highest grossing digitally re-mastered IMAX release. By March 2006, IMAX's version of the movie had grossed over $60 million.

In January 2005, IMAX expanded its reach in China by teaming up with Lark International Multimedia to install six MPX theater systems. It signed a deal with Racemic International Group to install three theater systems in Chile and Venezuela. The company was also focused on growth in Russia, Poland, and India. Later that year, AMC Entertainment Inc. announced it would install five MPX theater systems in its largest megaplexes in the United States.

With revenues and profits on the rise, IMAX appeared to be on track for growth in the years to come, especially in international markets. While management remained optimistic about the company's future prospects, IMAX's success hinged on consumer demand for its larger-than-life movies. Gelfond summed up his take on IMAX movie-goer's experience in the aforementioned interview-- "It's like first class in the airlines or it's like Starbucks, where a certain segment of the population will pay a premium price for a premium experience. I think it gives consumers something they couldn't get in the home ... a really special movie experience."

Principal Subsidiaries

David Keighley Productions 70MM Inc.; IMAX II U.S.A. Inc.; IMAX Chicago Theatre LLC; IMAX Indianapolis LLC; IMAX Japan Inc.; IMAX Minnesota Holding Co.; IMAX (Netherlands) B.V.; IMAX Rhode Island Limited Partnership; IMAX Sandde Animation Inc.; IMAX Scribe Inc.; IMAX Space Ltd.; IMAX Theatre Holding Co.; IMAX Theatre Holdings (OEI) Inc.; IMAX Theatre Management Company; IMAX Theatre Services Ltd.; IMAX U.S.A. Inc.; Miami Theatre LLC; Parker Pictures Ltd.; Nyack Theatre LLC New York; Ridefilm Corporation; Sacramento Theatre LLC; Sonics Associates, Inc.; Starboard Theatres Ltd.; Tantus Films Ltd.; Wire Frame Films Ltd.; RPM Pictures Ltd.; Tantus II Films Ltd.; Big Engine Films Inc.; Taurus-Littrow Productions Inc.; 3D Sea II Ltd.

Principal Competitors

Regal Entertainment Group; SimEx-Iwerks Inc.; Tix Corporation.

Chronology

• Key Dates
• 1967 A group of five filmmakers and inventors establish IMAX Systems.
• 1970 The company's large-screen projector debuts.
• 1990 The company unveils its new 3-D technology, IMAX Solido.
• 1994 WGIM Acquisition Corporation acquires IMAX; the company goes public.
• 1997 IMAX is awarded the only Oscar Award given for Scientific and Technical Achievement by the Academy of Motion Picture Arts and Sciences.
• 2002 IMAX DMR, digitally re-mastering technology, is launched.
• 2003 The IMAX MPX format enables multiplex operators to install lower-cost IMAX theaters in existing locations.
• 2004 Polar Express becomes the first Hollywood film to be released in IMAX 3D.