It is worth learning about the CEO oral: How IMAX moves from a museum to Hollywood

The following is the dictation of Richard gelfond, CEO of IMAX.

I took over the IMAX company in 1994. Before that, I also worked as a lawyer and investment banker. Although I know little about the film industry, I realize that IMAX can provide an unparalleled visual experience. If we can find the right development model, it will have unlimited potential.

That year, I bought the IMAX company with another partner through a leveraged Acquisition, And then we let it go to the market in a few months. On the surface, this transaction was very successful, and the company's market value also rose sharply. However, at that time, the vast majority of Imax movies were natural documentaries played in the cinema of the Science and Technology Museum. It proved much harder than we expected to bring IMAX movies into the mainstream market.

Part of the reason is that due to the technical limitations of the digital age, it took us several years to find a way to make IMAX films show in cinemas less difficult and costly.

In addition, we have encountered cultural challenges. Over the past century, Hollywood has already formed its own operating system: film companies, directors, and cinemas depend on each other. As a new entrant, we spent several years trying to persuade Hollywood to adopt our model, but all of them ended in failure. Even when we begin to adjust our strategies to adapt to Hollywood's way of doing things, it still takes quite a while to find a pattern that fits each other.

However, over the past five years, we have finally developed an effective business model.

Since 2008, the number of cinemas has increased from 351 to 738. Five years ago, only eight films were in the IMAX format, but so far this year we have released 27 IMAX films, including Star Trek shot using an IMAX high-resolution camera: dark and unbounded, and Hunger Game 2: Starfire, these two super movies. In addition, our business in China and other new markets grew rapidly and we launched local films in Japanese, Hindi, and Russian. Director Christopher Nolan, J. J. Abrams, and James Cameron are our fans. They agreed that IMAX is the perfect medium to present their extraordinary artistic imagination. In addition, we have a large number of hardcore fans who are willing to queue up and spend more than five dollars to watch movies at Imax cinema.

"Flexible adjustment of your business model" is my most valuable experience in leading IMAX over the past 20 years. In this process, we have taken many detours and spent several years looking for the correct development model. This is not a special case. Whenever I talk to entrepreneurs who want to invest, I am most concerned about whether they can find the right business model: Have they considered the second or third plan? If your business model works from the first day, you are obviously lucky, but most people need to repeat the experiment.

A classic family of eggs

The history of Imax can be traced back to 1967. At that time, four Canadian people created the company, three of whom were high school students. The projection system they invented was capable of playing a video on a huge arc screen, as if they had surrounded the audience. The technology was first publicly tested at the Montreal World Expo in Canada.

In the 25 years since its launch, the IMAX screening system was installed in the museum, and most of the screenings were natural documentaries. Due to insufficient funds, IMAX had to choose to focus on museum screening strategies, which enabled it to go from the National Science Foundation (Canada) and the National Film Board of Canada received funding to build IMAX cinemas. You choose to take a natural documentary because you don't have to pay for it when shooting whales, bears, or seals. During that time, IMAX was more like a non-profit organization, and its corporate culture was similar to that of a university.

When we bought the company, we thought we could make some changes: We chose some new employees to go to the Toronto headquarters to gradually make the company culture more flexible and entrepreneurial. However, this goal was not achieved-I was a little impatient and had to replace more employees as expected.

However, the bigger problem is the business model.

We purchased IMAX because we saw its potential-from the museum of technology to mainstream cinemas, playing Hollywood films. However, it is extremely challenging to find the right model and obtain funds to complete this conversion.

From the 1990s s to the first few years of this century, IMAX authorized cinemas to use their technology, and the cinema owner had to pay us a fee in advance to install the projection and sound system, and we only get a small portion of the box office revenue. At that time, it would take $5 million to transform a Normal cinema into an IMAX cinema, of which $3 million was used for space expansion, and the remaining $2 million was used for technological transformation.

There is no doubt that huge pre-payment is a major obstacle to the IMAX expansion, but it is not the only obstacle. In addition, at that time, only a few films were in the IMAX format. This was a classic first chicken or an egg problem: film companies were reluctant to take IMAX movies (this required a large and expensive camera, and a large amount of film), unless thousands of cinemas are equipped with IMAX movie playing systems, and cinemas are not willing to be transformed into IMAX cinemas, unless there are a large number of Imax format films available for display.

To solve these problems, we tried our best to reduce the technical cost from $2 million to $1.2 million. We found a solution to rebuild existing multi-hall cinemas into IMAX cinemas, to avoid costly construction of new cinemas. However, other constraints still exist.

Before the advent of the digital age, movie companies need to provide separate copies of movies for each cinema. The IMAX copy price is high and scary: The cost of copying a normal movie may be USD 1000, there are just a few film clips, but the cost of copying each IMAX is as high as $30 thousand, and much larger than normal copies, it is almost necessary to use a forklift to transport it to the projector. It is no wonder that the cinema boss and the film company are reluctant to cooperate with IMAX, even though the movie watching experience is indeed unparalleled.

To increase the number of Imax films, in the 1990s S, we even tried to shoot our own film, but it didn't work. I especially remember that in 1998, we made a film called "back to the shortest" (T-Rex: Back to the Cretaceous, it is hoped that it will attract audiences from science and technology museums and mainstream cinemas at the same time.

But it is counterproductive. Neither of them buys the film: the Museum of Science and Technology does not like it and thinks it lacks scientific authenticity (there are too many dinosaur toes in the film ); mainstream cinemas complain that the film is not exciting enough (if the dinosaurs in the film eat, they will be happy ). In the end, we had to find another way to make IMAX movies crazy for cinema owners and filmmakers.

Find the answer

In 2001, we ushered in our first breakthrough.

At that time, a computer engineer at the Toronto headquarters worked out how to convert normal movies into IMAX formats through computer programs. This is undoubtedly a huge breakthrough. In this way, we no longer need to persuade film companies and directors to use IMAX cameras to take movies. Instead, we only need to convert the film into IMAX format after the filming is complete. We pay for the transfer, and the film company agreed to give us 12.5% of the IMAX version of the box office revenue.

In 2006, we began to innovate our business model. Instead of charging cinemas $1.2 million for technical changes, it is better to install the IMAX screening system for them for free. However, cinemas still need to pay us for expansion and renovation-typically $0.15 million per screen. Nowadays, the conversion fee of the video format is quite cost-effective. In exchange for a return on technological investment, cinema agreed to pay us about 20% of the box office revenue for each IMAX screen.

This new business model works because the audience is willing to pay the price difference for IMAX movies. At the same time, we found a "three-win" premium sharing solution. If the price of a new prefix is $10.5 or $11, the IMAX price can be $15 or $16. This means that even if the film companies and cinemas need to allocate US 12.5% and 20% respectively at the box office, they will still be able to make and play IMAX films for more profits. In addition, the cinema owner found that the IMAX movie hall can significantly improve the overall loading rate of the cinema.

Going digital is the last step to boost the success of IMAX.

Since the 1990s s, it has become an inevitable trend for cinemas to say goodbye to traditional movie screening systems, just as households have switched from home tapes to DVDs. However, it is still unknown when the changes will be made, because this will inevitably lead to a rise in costs. At that time, cinemas will have to borrow money to build large-scale multi-hall cinemas.

In 2006, this uncertainty really constrained the development of Imax: cinemas are reluctant to install the IMAX screening system, because they may soon be converted into digital cinemas. As a result, we decided to make a bold move towards Digitalization and began to install new systems in 2008. This shift has benefited companies a lot: plug-and-play hard drives replace heavy copies that require forklift delivery, and the cost has also dropped from $30 thousand to $150, this action makes IMAX videos cheaper and easier to play.

Despite the favorable factors that are booming, IMAX is also likely to be able to overturn the ship. It can be said that we have gone through two to three crisis tests. In the early years of this century, most cinemas in the United States and even the world were facing a bankruptcy crisis, so we were unable to clear large amounts of accounts. At that time, IMAX was heavily in debt because of the leveraged Acquisition in 1994. Sometimes we doubt whether the company can make a profit and pay off the debt.

In 2001, the company's share price fell to 55 cents per share, and some of its holders even began to buy the company's shares, trying to force us to declare bankruptcy. In 2006, we tried to sell the company, but the prospects were so uncertain that no one was willing to buy it at a reasonable price.

During this time, we were struggling: Imax's survival and my determination were all tested. Of course, these experiences also highlight the key role of leaders-encouraging and motivating teams to tide over the difficulties.

Thank you, Avatar.

In the end, we showed a real appeal in 2009: both performance and stock prices were improved, and some debts began to be paid off. The Bank also made loans to us again, and doubts began to fade away. When the movie "Avatar" was released in December, I was sure that the "First Day" was approaching. Watching the IMAX version "Avatar" became a global craze. In China, the audience even waited in queue for 6 hours to get tickets, some fares are even sold to scalpers for up to $100.

The IMAX version of "Avatar" finally won a global box office of $0.25 billion, from which we made a lot of profits and became a turning point in the company's financial position.

This success convinced cinema owners that IMAX can boost the development of the entire film industry. Industry insiders have been worried about the future of the film industry since the beginning of this century: as TV grows, cinemas are getting cheaper, and video websites allow viewers to watch various movies at any time, people will be reluctant to pay for new movies in the cinema.

To cope with these threats, cinema owners have bought large screens and equipped them with sound systems with better results to create an incomparable movie watching experience (they also introduced 3D technology, but this technology is basically not as expected ). This trend has helped IMAX find its position, as more and more world-class filmmakers, film companies, and exhibitors are turning to the formats that give viewers an unprecedented viewing experience.

Our close cooperation with key partners and our persistence in the value of delivering high-standard and cutting-edge entertainment experiences have helped IMAX build a brand and win a reputation worldwide.

In the past few years, we have created 150 to 200 cinemas each year. In the past, we begged the film company to take IMAX movies. Now many Hollywood filmmakers agree that "without the IMAX version, your movies are not really super movies ".

Naturally, our profitability is getting better and better. Our business model is a bit like HBO: every new subscriber provides us with extra revenue, but almost no extra cost. We have been here for a long time. Looking back, this is not a bad thing. If it is not so difficult to build this business, I am afraid we will not be able to buy it at such a low price, because any film company may seize the lead in this business.

I visited overseas frequently these days. IMAX has developed rapidly in these markets. I visited China for the first time 15 years ago, which has been a loyal supporter of IMAX. Today, IMAX has more than 90% brand recognition in China. Currently, we have 117 IMAX cinemas under construction in China. After completion, we will increase the number of Imax screens in China to 250, and demand will continue to rise.

As the layout expands, the importance of the IMAX brand is also expanding.

From the first day, I recognized the importance of the IMAX brand and delivered its values (high quality, innovative, and exciting new entertainment experience. Through the long-term promotion of these values, we have established a strong reputation in the market, which allows us to go beyond the traditional cinema business and "Open the ground" in the new field ".

For many years, we have been expecting to create another "IMAX Miracle" in our home cinema business ". Recently, we launched the "IMAX private cinema" project, which will set a new benchmark for the high-end cinema market.

Before taking over IMAX, all my experience and background were related to transactions: I started to take over a new business and considered selling them; what I did on Wall Street also facilitated buying and selling between companies, and never operated a business for a long time.

When I first arrived at Imax, I didn't plan to run the company for a long time. My partners and I originally planned to hire a CEO to take care of the Company or change it as soon as possible. But in the end, I found that I really love this career, so I decided to stay. In the past, I was a lawyer and investment banker. people didn't understand what I was doing, but now everyone is talking about IMAX. My daughters have grown up, but I still feel happy and satisfied when I think about taking them to the movie premiere.

In this industry, I deal with all kinds of people. They have different responsibilities and come for creation, art, money, or competition. It is no easy task for all of them to focus on making profits or creating a "win-win" situation, both from inside and outside. However, I have established a deep friendship with many senior film companies, exhibitors, actors and directors who have become IMAX fans and promoters. At the same time, running this company also makes my life rich and colorful, but it would not happen if I had no risk, determination, or a great management team.

It is worth learning about the CEO oral: How IMAX moves from a museum to Hollywood