Marketing and Big Screen Business Assignment

Marketing and Big Screen Business Assignment Words: 9423

A Case Study for HSC Business Studies WORLD’S BIGGEST SCREENS Pty Ltd LG IMAX Theatre Sydney CONTENTS 1. Introduction …………………………………………………………………………………………………………. ………… ….. 2. Curriculum Links …………………………………………………………………………………………. …………………… ….. 3. You Business Studies Excursion …………………………………………………………………………………………………. 4. What is IMAX? ………………………………………………………………………………………………………………………. 5. IMAX in Australia …………………………………………………………………………………………………………………… 2 3 4 5 7 Core HSC Business Studies Topics: 6. Business Management & Change ………………………………………………………………………………………………. . Financial Planning & Analysis …………………………………………………………………………………………………… 8. Marketing …………………………………………………………………………………………………………………………… 9. Employment Relations …………………………………………………………………………………………………………… 10. Global Business …………………………………………………………………………………………………………………… 11. References & Resources …………………………………………………………………………………………………………. 8 13 20 41 46 48 World’s Biggest Screens Pty Ltd LG IMAX Theatre Sydney 31 Wheat Rd DARLING HARBOUR NSW 2000 Ph: 02 9213 1600 Fax: 02 9281 3833 Email: [email protected] om. au Website: www. imax. com. au ?? Copyright World’s Biggest Screens Pty Ltd 2007 This publication is copyright and may only be reproduced by teachers for use with student groups as part of a Business Studies excursion to IMAX. Any unauthorised copying or distribution is strictly prohibited. Page 1 1. INTRODUCTION Big Screen Business is a case study of the IMAX Theatre designed for use speci? cally with HSC Business Studies students.

Education Pack This Education Pack is available for teachers and contains comprehensive information relating to the 5 key topic areas of the HSC syllabus: ??? ??? ??? ??? ??? Business Management & Change Financial Planning Marketing Employment Relations Global Business In addition to detailed background information for teachers, this pack also contains articles, ? lm updates and a range of student activity sheet masters for use on site. This pack is available free with every Business Studies excursion to the LG IMAX Theatre Sydney. Student Activity Sheets A set of student activity sheet masters are provided at the back of this pack.

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Please copy and distribute these to students for use at the theatre. It is intended that students work independently through the sheets under teacher supervision. Business Talks A series of IMAX Business Talks have been developed to complement the Big Screen Business Education Pack and provide students with an overview of business operations and marketing. These talks are held in the theatre at 9. 30am on a range of selected dates only. Business Talks may be scheduled upon request on dates to suit individual schools. Check our website for a list of current dates available: www. imax. com. u/business Please enquire with our Bookings Of? ce about availability of Business Talks on Ph: 02 9213 1600; Fax: 02 9281 3833; or email: [email protected] com. au Big Screen Business Page 2 2. CURRICULUM LINKS STAGE 6 HSC Business Studies Source: NSW Board of Studies Business Studies syllabus 1999. Business Management & Change H2. 1 Describes & analyses business functions & operations and their impact on business. H3. 2 Evaluates the effectiveness of management in the organisation & operations of business and its responsiveness to change. H4. 2 Evaluates management strategies in response to internal and external factors.

Content: Managing change Financial Planning & Management H2. 1 Describes & analyses business functions & operations and their impact on business. H3. 2 Evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change. H4. 2 Evaluates management strategies in response to internal and external factors. Content: Role of ? nancial planning Marketing H2. 1 Describes & analyses business functions & operations and their impact on business. H3. 2 Evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change.

H4. 2 Evaluates management strategies in response to internal and external factors. H5. 2 Plans & conducts an investigation into business to present the ? ndings in an appropriate business format. Content: Nature and role of marketing; Elements of a marketing plan; Market research; Customer & buyer behaviour; Developing marketing strategies Employment Relations H2. 1 Describes & analyses business functions & operations and their impact on business. H3. 2 Evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change.

H4. 1 Critically analyses the social and ethical responsibilities of management. H4. 2 Evaluates management strategies in response to internal and external factors. Content: The nature of employment relations; Key in? uences on employment relations; Effective employment relations; Legal framework of employment; Industrial con? ict; Ethical and legal aspects Global Business H1. 1 Explains the impact of the global business environment on business role and structure H2. 1 Describes & analyses business functions & operations and their impact on business. H3. Evaluates the effectiveness of management in the organisation and operations of business and its responsiveness to change. H4. 2 Evaluates management strategies in response to internal and external factors. Content: Global business strategy; Speci? c in? uences on global business; Managing a global business Big Screen Business Page 3 3. YOUR BUSINESS STUDIES EXCURSION OPTION 1: Teacher Led Visit With teacher led visits, session times and ? lm titles may be decided by teachers, subject to booking availability. 1. Arrive at theatre Teacher arranges payment with the Box Of? ce and students are seated in the Theatre. . Film Screening Students remain in their seats to experience the unique IMAX ‘product’ by viewing a ? lm such as Shackleton’s Antarctic Adventure, which is currently used as an example in the Education Pack. 3. Student Activity Sheets Students work through activities and questions independently under teacher supervision, observing the theatre at work. (Optional) COST: $9. 00 per student (single ? lm) $14. 50 per student (double ? lm) Includes complete resource pack on CD for teacher. OPTION 2: Business Talk & Film Screening With visits that include a Business Talk, a limited range of dates and time are available.

Please check with IMAX Education staff about availability of talks. 9. 15am: Arrive at theatre Teacher arranges payment with the Box Of? ce and students are seated in the Theatre. 9. 30am: Big Screen Business Student Talk Student PowerPoint??? presentation in the IMAX auditorium (30mins). (We are unable to offer talks at other times of the day due to operational commitments of the theatre. ) 10. 00am: Film Screening Students remain in their seats to experience the unique IMAX ‘product’ by viewing one of the many IMAX ? lms currently screening. To compare both the 2D and 3D ? m formats, take advantage of our Double Film Deal for schools. 11. 00am: Student Activity Sheets Students work through activities and questions independently under teacher supervision, observing the theatre at work. (Optional) COST: $14. 00 per student (single ? lm + student talk) $19. 50 per student (double ? lm + student talk) Includes complete resource pack on CD for teacher. Big Screen Business Page 4 4. WHAT IS IMAX? IMAX is the largest and most exciting ? lm format in the world. With crystal clear images, ten times larger than traditional cinema format. The IMAX Difference

Since the earliest days of cinema, ? lmmakers have realised that the bigger the image the greater the impact on the viewer. Imagine the difference between watching a ? lm at home on video and the same ? lm at a normal 35mm cinema. The ? lm might be the same, but the experience couldn’t be more different. Well consider the jump from traditional cinema to IMAX as a similar dramatic leap. With IMAX?? 3D we then add, quite literally, a new dimension to the whole experience. Using state-of-the-art 3D glasses, the IMAX?? 3D experience has brought 3D enjoyment a long way from the cardboard glasses of the 1950s.

Sight & Sound The screens in IMAX Theatres are the biggest in the world. Up to eight stories high, they are ten times larger than a traditional cinema screen and ? ll the whole ? eld of human vision. Sound is critical to the IMAX experience. The ? lm soundtracks are delivered through a 15 000 watt digital surround sound system manufactured by Sonics Associates Inc, one of the world leaders in sound system design. Projection & Film To project such large ? lms IMAX have built the most advanced, high precision and powerful projectors. IMAX ? lms are shot and projected on 15 perforation /70mm ? lm – the largest ? m format in existence. It is only possible to project these onto the huge screen because of the remarkable high de? nition and clarity of these ? lm frames. And it is these huge ? lm frames that are at the heart of the IMAX experience. Three times larger than the traditional 70 mm cinemascope frames they have pushed the quality of motion picture images to new heights (quite literally). The key to their superior performance and reliability is the unique “Rolling Loop” ? lm movement, interestingly an Australian invention, developed by Ron Jones. The Rolling Loop advances the ? lm horizontally in a smooth, wave-like motion.

During projection, each frame is positioned on a ? xed registration point and the ? lm is held ? rmly against the rear element of the lens by a vacuum. As a result, the picture and focus steadiness are far above normal standards and provide outstanding image clarity. The powerful 3D projector uses two 15,000 watt bulbs (the average 35mm projector uses a bulb between 2,000 and 4,000 watts). The huge heat generated requires a dedicated cooling system that pumps 1,600 cubic metres of air and 36 litres of distilled water through the lamp housing every minute to keep the projector cool. Big Screen Business

Page 5 IMAX 3D The three-dimensional effect is an optical illusion based on human vision. A person sees the world in 3D with our two eyes which are set slightly apart. When you look at an object, each of your eyes sees a slightly different view. Through a process called ‘stereopsis’ your brain brings the two views together into a single three-dimensional image. IMAX 3D cameras incorporate two identical lenses that are precisely spaced to match the distance between your eyes. This interocular distance allows each lens to ‘see’ both left and right views exactly as your eyes would see them.

This helps to create the realistic 3D images once projected. During shooting, the images register on two separate rolls of 15/70 ? lm that run through the camera at the same time and speed. The IMAX projector runs two separate rolls of ? lm simultaneously past twin projection lenses. The enable the 3D effect, the lenses are carefully aligned to project both left and right eye views onto the giant screen. To see images in 3D, the audience wears either polarized glasses or a headset. The polarising glasses worn by the audience are precisely matched with the polarizing ? lters of the projector’s twin lenses.

While the lenses superimpose separate left and right eye views onto the screen, the glasses make sure that each eye sees the appropriate image, allowing you brain to create a single 3D image. The two lenses on the IMAX?? 3D camera roughly match the distance between our eyes and so each lens “sees” a slightly different view. The images are photographed onto two separate rolls of ? lm – corresponding to a right eye and left eye image – which run simultaneously through the camera. These two ? lms are then alternately projected in the theatre. The shutters on the projector alternate between left and right images 96 times per second.

Infra red sensors in the headsets worn by viewers alternately switch off the left and right eye liquid crystal lenses in sync with the images projected, creating the illusion of three dimensions. IMAX DMR (digitally re-mastered feature ? lms) Selected feature ? lms are now being converted to the giant screen format, using technology developed by IMAX Corporation known as “DMR” (or “digital re-mastering”). Films such as 300, Spiderman 3 and Harry Potter and the Order of the Phoenix have all been converted to the giant screen format using this proprietary technology, effectively bringing a new range of ? m product to audiences and theatres. IMAX digital re-mastering starts by converting a 35mm frame into digital form at very high resolution, capturing all the detail from the original. The proprietary software analyses and extracts the important image elements in each frame from the original ? lm to create a pristine form of the original photography. This is the most complex step in IMAX digital re-mastering. The image on a 35mm ? lm frame is comprised of a ? ne grain structure like that of all photographic images. This grain when projected on to the IMAX screen looks like a TV channel with bad reception.

IMAX DMR removes this grain while preserving the quality of the underlying image making what you see on the screen crystal clear. Some animated feature ? lms such as Open Season and The Ant Bully have not only been enlarged but they have also been converted to IMAX 3D, taking the process of digital re-mastering to yet another level. Big Screen Business Page 6 5. IMAX IN AUSTRALIA World’s Biggest Screens Pty Ltd operates one IMAX Theatre: LG IMAX Theatre Sydney Located on the waterfront in Darling Harbour, Sydney IMAX boasts the world’s biggest cinema screen at more than eight stories high.

Open every day of the year, the 500 seat theatre also features a Candy Bar on the Mezzanine Foyer. The distinctive eye-shaped building is clad in aluminium and features an eye-catching black and yellow checkerboard facade. In 2003, LG was signed as the new sponsor of the Sydney theatre replacing Panasonic’s sponsorship when ended in 2000. The theatre is formally known as the LG IMAX Theatre Sydney. A HISTORY OF MANAGEMENT CHANGE World’s Biggest Screens Pty Ltd at one point also operated theatres in Melbourne, Brisbane and Adelaide.

While opening to successful numbers the Brisbane & Adelaide Theatres ultimately closed because they couldn’t sustain commercially viable operations. The primary factor in the closures was the population base of those cities, resulting in low attendances. In the case of the Melbourne IMAX Theatre, ownership & management has been taken over by the Melbourne Museum (the IMAX Theatre is actually located inside the Melbourne Museum). Management within World’s Biggest Screens Pty Ltd has shifted focus to concentrate only one Theatre only ??? in Sydney.

The Adelaide theatre, formerly located in The Rundle Mall, closed in January 2002 and the Brisbane theatre, located in Southbank, closed in February 2003. The Melbourne IMAX Theatre was taken over by the Melbourne Museum at the end of 2004. The Australian IMAX Success Story In 2002, the IMAX Theatre Sydney was the 3rd best attended IMAX 3D theatre in the world. With over 220 IMAX theatres operating in 193 markets and 30 countries, this is an outstanding achievement. Today, the LG IMAX Theatre Sydney ranks consistently as one of the top 5 performing theatres in the world, in terms of admissions.

Since opening in 1996, the LG IMAX Theatre Sydney has received over 6 million admissions and grossed more than $60 million (based on an average ticket price of $10. 00 per person). The LG IMAX Theatre still holds the record as the Largest Cinema Screen in the WORLD! Big Screen Business Page 7 6. BUSINESS MANAGEMENT & CHANGE A PERIOD OF CHANGE IMAX was ? rst introduced to Australia in 1996 when the Sydney IMAX Theatre opened in Darling Harbour. Operated by Cinema Plus Limited, a publicly listed company, the Sydney IMAX Theatre was the ? rst in a chain of theatres established around Australia.

At the time, the aim of Cinema Plus Ltd was to develop a chain of large format theatres in large population centres such as Sydney, Melbourne, Brisbane, Adelaide, Perth, Auckland and Bangkok. The company vision at the time was: “To be widely recognised as the premier operator of IMAX Theatres in the world”. As such, a plan for aggressively expanding IMAX theatres around Australia and also in the Asia Paci? c region was the major priority of the company. Over the next 3 years, Cinema Plus Ltd opened 6 new theatres in Australia and overseas. However, this phase of rapid expansion resulted in a cash ? ow problem for the company as a whole.

While the Sydney theatre was well on its way to establishing itself as a leading player in the out of home entertainment industry in Australia, other theatres in smaller locations were not performing to budgeted levels and therefore had dif? culties in achieving ? nancial targets. Theatre buildings were over-capitalised and the company had entered into rent agreements based on certain levels of theatre attendance, which were ultimately not achieved. In particular, the Auckland and Bangkok theatres were a signi? cant part of the demise of Cinema Plus due to their inability to contribute an adequate return on investment (ROI).

In 2000, administrators were appointed with a view restructuring the debt, coming to an agreement with creditors and setting the company on a path for rehabilitation. However, the proposals put before creditors were not regarded as credible options and as a result, Cinema Plus Ltd was liquidated. It is important to point out that during this period, the theatres continued to trade as normal until new owners took control later in 2000, thus maintaining continuity with the general public. While the liquidation process damaged the company, importantly, it did not kill the business.

THEATRE LIFECYCLE: Determinants to Success or Failure The following Theatre Lifecycle diagram illustrates how patterns of attendance ? uctuate SUCCESS: Attendances increase above 250,000 admissions, buoyed by new film product, effective management and a strong population base (ie. located in cities with >3million people). Successful theatre. 1. LAUNCH: Honeymoon period of strong attendances because product is new, unique and attracts high consumer interest. 2. PEAK: Attendances reach their peak rapidly. 3. PLATEAU: After the peak, attendances drop, followed by a plateau effect which can either make or break a commercial IMAX theatre.

FAILURE: Attendances decline below 250,000 admissions, the result of a combination of film product, management decisions and size of population base. Theatre finds it difficult to survive; eventually closes. Big Screen Business Page 8 WORLD’S BIGGEST SCREENS PTY LTD With new ownership, there has been a signi? cant change in management vision, with the aim of ensuring ? nancial stability. Attention is now focused on consolidating the success of a smaller number of theatres in Australia only. World’s Biggest Screens Pty Ltd LG IMAX Theatre Sydney COMPANY MISSION

To operate giant screen IMAX theatres as leading entertainment facilities and tourist attractions in the expanding out-of-home entertainment market and build theatre attendance to provide the highest pro? table return on investment. COMPANY VISION To provide visitors to IMAX Theatres with a high-value, leading-edge entertainment experience in a consistently high-quality environment. To be recognised as a unique cinema experience that is both entertaining and educational. Objectives This vision is being achieved through the following objectives: ??? High quality ? lms; ??? Regular release of new ? lms throughout each year; ??? Satis? d customers; ??? Well-trained staff; ??? Financial responsibility and accountability WORLD’S BIGGEST SCREENS Pty Ltd Staf? ng Structure CHIEF EXECUTIVE/ Marketing Director Accountant Operations Manager Group Sales & Marketing Mgr Duty Managers Chief Projectionist Group Sales Coordinator Cinema Workers: floor staff, box office, candy bar Big Screen Business Page 9 MANAGEMENT STRUCTURE The management structure is very simple and features a streamlined, multi-functioned staff reporting through a limited chain of managers. A Chief Executive Of? cer at Head Of? ce level oversees a small team of 3 key areas: Marketing Operations Finance

The Chief Executive Of? cer also assumes the role of Marketing Director. This team works across each of the company’s theatres to ensure that ? nancial targets are being reached and that marketing activities and operational procedures are consistent. Operations Manager: The Theatre is managed by an Operations Manager, who is responsible for the day-to-day activities within the theatre. This includes box of? ce & candy bar functions, ? nancial reporting, cash handling, security & cleaning etc. The Theatre also employs a Chief Projectionist who is responsible for the operation and maintenance of the specialised IMAX projection equipment.

Other projectionists report to the Chief Projectionist. Group Sales and Marketing Manager: This position reports to the CEO/ Marketing Director and is responsible for marketing the theatre to the specialist groups sector, which includes schools, groups, functions & events and tourism. IMAX BUSINESS FUNCTIONS & OPERATIONS Operations: ??? Theatre management ??? Duty managers ??? Projectionists ??? Cinema workers eg. box of? ce, ? oor staff, candy bar staff ??? Outsourced: cleaners, waste removal, security, technicians, Marketing: ??? Local theatre marketing ??? Niche marketing eg. education, groups, tourism ??? Outsourced: ? m publicist, advertising agency, graphic designers, printers, mailhouse, brochure distribution, catering etc Finance: ??? Accounts payable/ receivable ??? Human resources ??? Payroll ??? Financial analysis and reporting Big Screen Business Page 10 MANAGING CHANGE The nature and sources of change in the IMAX business External in? uences Financial markets: exchange rate changes impact on pro? tability as ? lm costs (eg. print fee, royalties etc) are based in US dollars Economic factors: may reduce or increase spending power of consumers and the number of international visitors Technological: advances in IMAX technology may produce a new range of ? m product Eg, New “DMR” technology has enabled 35mm Hollywood blockbusters to be enlarged to the giant IMAX format, providing a completely new range of ? lm product for some theatres. Social: changing patterns of leisure will impact greatly on attendance; varies also with the time of year and cycles of school holidays Geographic: changes to theatre access, parking or public transport will impact on attendance Consumer: ? exibility in scheduling allows the theatre to respond to changing consumer demand for ? lms; word-of-mouth is very important is in? uencing the success of any new ? lm

Internal In? uences Technological: expansion of e-commerce in marketing activities Eg. Introduction of ticket purchasing via the internet has bee extremely successful since its introduction at the start of 2004. New Systems & procedures: introduction of electronic link to bank for credit card transactions has increased productivity at box of? ce (EFTPOS & credit card); new approach to timetabling ? lms for schools to allow for greater teacher choice Financial: changes to budget will impact on the degree of marketing undertaken for particular ? lms Product: changes in programming and ? m selection will in? uence attendance levels; development of new products eg. education talks, will broaden the theatre market; targeting corporate sector for theatre hire/ events and other groups such as seniors, can potentially create new ‘streams’ of business; introduction of feature ? lms broadens the traditional audience base for the theatre Structural Responses to change One of the key changes that have occurred in the operation of the Theatre has been the streamlining of management structures and consolidation of operational and marketing activities into a range of core essentials.

As part of this process, the company has responded by introducing: ??? ??? ??? Flatter management structures Outsourcing of some roles formerly undertaken in-house, such as publicity Enhanced alliance with tourism networks to leverage awareness through joint promotional activities Rather than resisting change, the company has embraced changes with a view to increased pro? tability and overall success of the company. Big Screen Business Page 11 Managing Change Local Theatre Attendance Patterns One of the main features that remain constant in the IMAX business is CHANGE.

Fluctuations in attendance patterns are probably the most visible element of change experienced at the theatre. The fact that attendance levels change is not a concern in its own right, but it is the company’s ability to manage those changing attendance patterns which sets it apart from competitors. As a result, knowledge of peak trading periods is crucial in the planning process. PEAK TRADING PERIODS: The key focus of the marketing strategy is to maximise returns during the four peak trading periods of the year: ??? ??? ??? ??? January holidays Easter Mid winter holidays Spring Holiday Admissions

IMAX Theatre Sydney: Monthly Attendance Fluctuations (2005-2006) 70000 60000 50000 40000 30000 20000 10000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Month During these periods our strategy is ‘to ? sh while the ? sh are biting’. Major ? lm releases are timed to coincide with school holiday periods and the lion’s share of marketing funds are spent at these times of year as well. The graph above shows the natural fluctuations in theatre attendance over the course of a year. Peaks attendances occur during key school holiday periods and troughs occur most commonly in periods between.

The aim of the sequence of film releases, spread evenly throughout the year, is to ensure the corresponding ‘evening out’ of these peaks and troughs into steady patterns of attendance and cash flow. NON-PEAK TIMES OF THE YEAR: During the non-peak periods (ie. in between school holiday periods) the strategy aims to maximise returns from three speci? c trading periods: ??? Weekends: families visiting Darling Harbour ??? Mid-week mornings: schools visiting on organised excursions ??? Min-week venings: adults/ tourists/ general cinema goers (non-family market) In general 50% of attendance and revenue in any given week outside of the school holidays is accounted for during the weekend, when both our two key target markets (local Sydneysiders and tourists) have available time and a pre-disposition to out-of-home entertainment. The education market is recognised as a key segment for daytime attendance between 10am-1pm, when there is limited potential for attendance by core theatre markets.

Schools represent just over 20% of the total theatre attendance averaged across the entire year; yet it represents more than 40% of attendance within the mid-week/ non-peak time of the year. Thus, the education sector is considered to be of high importance to the theatre, particularly in the context of ? uctuating theatre attendance patterns. Local conditions and the location of each theatre then create a variety of opportunities for capturing other markets during this daytime attendance. Big Screen Business Page 12 7.

FINANCIAL PLANNING & ANALYSIS FINANCIAL PLANNING CYCLES The role of ? nancial planning is extremely important at IMAX. A number of different reporting systems are used to monitor performance against budget. Financial planning generally takes place at the start if the ? nancial year (general budget setting) and also prior to the released of each new ? lm. Prior to the start of the ? nancial year At this time, general ? nancial planning takes the form of setting the budget for the ? nancial year ahead. This usually takes place in March or April.

This phase of planning involves projecting attendance for the year ahead, based on a proposed range of ? lms and taking into account results from the previous year. Results are analysed as follows: ??? ??? Average Ticket Price (ATP): An average of all tickets sold. Sales Per Paid Admission (SPPA): The amount a visitor spends, per admission ticket, at the Candy Bar. The ATP and SPPA targets are determined by management and then total theatre revenue projections are established for a range of new ? lm releases. Some of the key line items of the theatre’s budget include: Income in the form of: ??? box of? e admissions ??? candy bar (food & beverage) sales ??? other sources such as sponsorship or theatre hire/ functions Major expenditure includes: ??? the costs of prints and royalties ??? general theatre operations ??? various marketing activities ADDITIONAL SOURCES OF REVENUE: Food & Beverage sales (Candy Bar) account for a significant portion of the revenue of the theatre. Approximately 15% of total theatre revenue is obtained from purchases at the Candy Bar. Ticket prices have relatively low margins compared to Candy Bar sales, which provide the theatre with opportunities to maximise profits.

Any capital expenditure is added to the budget and can take the form of: ??? ??? ??? ??? ??? a new air conditioning system for the theatre refurbishment of of? ces/ candy car new carpet for foyer upgrades to the ticketing system computer equipment for of? ces etc The diagram below explains the key elements of the budget for the Sydney IMAX Theatre: Big Screen Business Page 13 OVERVIEW Theatre Income & Costs – Box Office Sales General theatre admissions Schools Tourists (accounts for approx. 85% of revenue) Other possible source of income: – Sponsorship – Theatre hire (accounts for less than 5% of revenue)

Food & beverage Candy Bar Functions (Food & Beverage sales) (accounts for approx. 10-15% of revenue) INCOME (Revenue) – Cost of Sales Print costs Licence fees Film Royalties Food & beverage THEATRE BUDGET (accounts for approx. 30-35% of costs) COSTS (Expenditure) Marketing Costs – Advertising agency – Directory advertising – Publicity – Printing eg. film flyers, what’s on flyers – Design costs – Banners for building – Special promotions – Film launches – Tourism brochure & distribution, advertising in tourist publications – Education eg. ewsletter & mailouts, teacher preview events (accounts for approx. 20-25% of costs) Operating Costs – Rent – Staffing – Ticketing system – Security – Projector consumables – Staff uniforms – Cash handling fees – Cleaning – Administration eg. stationery, postage, couriers – Services & utilities eg. phone, electricity, water (accounts for approx. 50% of costs) Big Screen Business Page 14 Prior to the release of each new ? lm FILM COSTS ANALYSIS: Traditional IMAX ? lms (45 mins duration) The following simple analysis compares the costs associated with releasing and screening a new ? m against the estimated total number of admissions for that ? lm. This analysis takes into account costs associated with purchasing the print, marketing the ? lm, running the theatre, paying staff and the royalty fee. The total ? gure represents that portion of the average ticket price which is consumed by costs. Film Cost Example The following breakdown is an example of ? lm costs associated with each new ? lm. ESTIMATES $2. 40 $1. 00 $1. 50 $2. 70 $0. 40 Royalty fee per budgeted admission, paid in US Dollars and subject to exchange rate ? ctuations* (usually charged as a percentage; eg. 20-25% is not unusual) Marketing spend per budgeted admission Payroll costs per budgeted admission Operating costs per budgeted admissions Print cost per admission, based on a budget of 100,000 admissions, paid in US Dollars and subject to exchange rate ? uctuations. $8. 00 (All amounts are in Australian dollars) Average Ticket Price The Average Ticket Price (ATP) is simply the average of all admissions to the theatre over a period of time. The ATP is a simple calculation as follows and usually sits at about $12. 0 (taking into account highest ticket price of $18. 00 for a 45 minute 3D ? lm and lowest ticket price of $8. 00 for school joint packages): Total Box Of? ce (revenue from ticket sales) = Average Ticket Price (ATP) Admissions (number of tickets sold) The ATP for potential new ? lms is estimated in advance, based on the track record of other similar ? lms and importantly, how well the ? lm has performed overseas. Film costs are compared against the average ticket price (ATP) for each new ? lm to determine potential pro? tability. The information that this ? ancial analysis provides, forms the basis of negotiations with ? lm distributors on ? lm royalties and terms of exhibition. Royalty Fees One of the main elements of change within this ? nancial framework, is the royalty fee paid to ? lm distributors. This either charged as a ? at royalty fee per ticket or a percentage of the gross box of? ce (total revenue). This fee can range anywhere between 18-25%, and sometimes also features a sliding scale, which reduces the amount of royalty to be paid over time. Note: Feature ? lms have a completely different ? ancial structure, with the key difference being much larger royalties paid to distributors, yet offset by no print or marketing costs (these are covered by the distributor). Big Screen Business Page 15 On-Going Analysis & Evaluation FEEDBACK On-going analysis and evaluation of results takes place on a weekly basis, providing managers with important feedback. Weekly Management meetings are held to review attendance patterns against budget, with a view to closely monitoring how the theatre is tracking against its set ? nancial objectives.

These weekly meetings analyse attendance patterns for the ‘cinema’ week, Thursday to Wednesday (and in particular, the 4 days from Thursday to Sunday). The following example illustrates the type of ? nancial comparisons made on a week to week basis. This is carried out for each individual theatre for every day of the year. Example Date Thursday Friday Saturday Sunday Monday Tuesday Wednesday Admissions Sydney 3023 3608 3895 4071 1983 3810 3261 23651 Admissions Budget 3000 3000 3000 3000 3000 3000 3000 21000 Admissions Last Year 2951 2970 3117 1701 2065 2250 2363 17417 14597 4 Days (Thurs-Sun) FEED FORWARD

In tandem with the review of past attendance, analysis of future attendance (eg. advance bookings for schools and attendance projections for new ? lms) is a fundamental part of the ? nancial planning process. These ‘feed forward’ controls enable changes to be made quickly if indicators show that a ? lm is not performing to expectation or performing above expectations. Because of the tight margins and the numerous external factors which can impact on theatre pro? ts, constant feedback and feed forward controls are an integral part of the theatre’s ? nancial planning. Big Screen Business Page 16

CASE STUDY: Candy Bar The Candy Bar is an extremely important part of the IMAX business, contributing about 15% to the overall revenue of the Theatre annually. Various Combos are created to encourage sales for more than one product. See details below: Selected Candy Bar Price List: Description Popcorn & Softdrink Combo Large Popcorn – Lge Coke ??? Lge Choc Top Chocolate Billabong – School Special Mt Franklin Water Price $10. 00 $7. 00 $4. 00 $3. 00 $1. 00 $3. 50 The Candy Bar Sales are tracked daily and by session, recorded in the table below: Time Film Film Adms Total Adms Candy Bar Sales (cumulative) $48. 0 $129. 50 $333. 30 $634. 00 $1,032. 00 $1,444. 50 $1,768. 70 $1,957. 10 $2,096. 10 $2,161. 30 $2,258. 80 $2,304. 80 $2,397. 30 0 $2,397. 30 Session (individual sales) $48. 60 $80. 90 $203. 80 $300. 70 $398. 00 $412. 50 $324. 20 $188. 40 $139. 00 $65. 20 $97. 50 $46. 00 $92. 50 Session SPPA Total SPPA 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 Total: Nile Safari Lions Deep Sea Lions Deep Sea Lions Deep Sea Lions Deep Sea Lions Deep Sea Haunted 24 38 122 189 162 221 157 136 62 65 41 108 33 4 62 184 373 535 756 913 1049 1111 1176 1217 1325 1358 1358 $2. 03 $2. 13 $1. 67 $1. 59 $2. 46 $1. 87 $2. 06 $1. 39 $2. 24 $1. 00 $2. 38 $0. 43 $2. 80 $2. 03 $2. 09 $1. 81 $1. 70 $1. 93 $1. 91 $1. 94 $1. 87 $1. 89 $1. 84 $1. 86 $1. 74 $1. 77 $0. 00 should match $1. 77 1358 The key measure of the success of the Candy Bar is the SPPA, known as: Sales Per Paid Admission (SPPA), which is a simply all candy bar revenue divided by the total number of admissions. The goal, or key performance indicator, is set at $2. 00 SPPA per person. With schools, this ? ure is less (as large school groups may not purchase anything at all) and on weekends the ? gure may actually be higher. Big Screen Business Page 17 CASE STUDY: Opening Weeks Film Trading The following chart illustrates one of the key methods used at the Theatre to track attendance patterns and monitor performance of ? lms. This report shows the ? uctuations in attendance on a weekly basis, from launch in Week #1 at 3309 admissions, to a peak in attendance in Week #7 at 9229 admissions, which coincides with the winter school holidays. This con? ms the Theatre’s experience of long ? lm seasons compared to mainstream cinema and the absence of the “blockbuster” opening weekend effect that so characterizes mainstream releases. IMAX ? lms generally take 4-6 weeks to reach their peak in attendance, yet have a very long life cycle (at least 12 months usually). The following sample data is for illustrative purposes only and relates to no speci? c ? lm. The trends highlighted by the data however can be applied across many of the titles released at the Theatre. Week 1 2 3 4 5 6 7 8 9 10 11 12 13 weeks + Season to date

Admits 25/05/2006 1/06/2006 8/06/2006 15/06/2006 22/06/2006 29/06/2006 6/07/2006 13/07/2006 20/07/2006 27/07/2006 3/08/2006 10/08/2006 3309 2903 4433 2965 3831 6630 9229 7523 4277 3708 6427 5742 60977 98401 159378 Print cost Marketing Queens Birthday Weekend Winter school holidays GBO $41,119. 00 $40,914. 00 $62,572. 20 $39,968. 40 $48,917. 40 $86,195. 00 $120,076. 45 $100,639. 00 $61,356. 00 $52,799. 90 $61,088. 00 $52,806. 00 $768,451. 35 $1,328,289. 00 $2,096,740. 35 Royalty 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0% 25. 0%

Margin $30,839. 25 $30,685. 50 $46,929. 15 $29,976. 30 $36,688. 05 $64,646. 25 $90,057. 34 $75,479. 25 $46,017. 00 $39,599. 93 $45,816. 00 $39,604. 50 $576,338. 51 $996,216. 75 $1,572,555. 26 ATP $12. 43 $14. 09 $14. 12 $13. 48 $12. 77 $13. 00 $13. 01 $ 13. 38 $14. 35 $14. 24 $9. 50 $9. 20 $12. 60 $13. 50 $13. 16 Capacity 21. 21% 21. 47% 25. 07% 16. 29% 21. 67% 37. 50% 43. 29% 37. 10% 23. 50% 20. 37% 34. 33% 31. 55% 28. 32% Sessions All seats 30 26 34 35 34 34 41 39 35 35 36 35 414 15600 13520 17680 18200 17680 17680 21320 20280 18200 18200 18720 18200 215280 1. 91% 7. 15% $40,000. 0 $150,000. 00 $ 1,382,555. 26 estimate Daily Telegraph Free ticket period SAMPLE FILM Opening Weeks Trading 10000 No. Admissions 8000 6000 4000 2000 0 1 2 3 4 5 6 7 8 9 10 11 12 Week No. Big Screen Business Page 18 CASE STUDY: Ticket Price Distribution An analysis of ticket price distribution con? rms that adult cinema goers are the major visitor group (40% of attendance), with families representing15% and schools 20% of all ticket sales. Annual Ticket Price Distribution Adult tickets Child Tickets Family Tickets Schools Sub total 40% 5% 15% 20% 80% IMAX Ticket Distribution

Remainder 20% Adult Tickets 40% The remaining 20% is a mix of all other tickets eg. seniors, student concessions, tour groups and other group tickets. About 3% of all tickets are complimentary (about 15,000 tickets per year, given away as part of promotional campaigns and ? lm publicity). Schools 20% Family Tickets 15% Child Tickets 5% Big Screen Business Page 19 8. MARKETING THE IMAX BRAND In today’s highly challenging global environment a strong corporate brand is essential. High consumer recognition is a major measuring tool in determining a brand’s strength in the marketplace.

Having now been established in the Australian marketplace for over 10 years, IMAX?? is considered a well-known brand, clearly differentiated from conventional cinema. IMAX??, the international brand While not owned by IMAX Corporation, World’s Biggest Screens Pty Ltd is of? cially licensed to use the IMAX?? logo in all our corporate branding. The IMAX?? brand is one of the most powerful and respected brands in the entertainment industry. The IMAX trademark is a very valuable asset. Our logo symbolizes our brand and our promise to provide ‘entertainment that illuminates’. MAX?? Corporation Trademark and Logo Usage Guidelines

Local branding Local level branding incorporates the international logo, with the addition of a local sponsor in the form of electronics company LG. (Panasonic sponsored the Theatre in the ? rst three years of operation, when it was then known as the Panasonic IMAX Theatre Sydney. ) The checkerboard design featured on the exterior of the building has also come to signify the Sydney Theatre and is sometimes used alongside the traditional logo to reinforce branding. The checkerboard motif used in the design of the building has been carried through as a motif in general company branding.

It has been featured on flyers, brochures and other advertising material. Positioning of the Brand Market research carried out by World’s Biggest Screens Pty Ltd has helped to de? ne the IMAX brand in the competitive ? lm market and understand the key drivers (and barriers) to attendance. The lessons drawn from the research indicate that IMAX can sustain a positioning as a premium cinema destination not simply because it offers a better experience than other cinema destinations, but because it offers a very different cinema experience.

IMAX is perceived as being at the cutting edge of new cinema, potentially offering new experiences in ? lm. The IMAX Experience gives visitors the sense of real exhilaration ??? a real ‘buzz’. It is also about the strong sense of realism of the ? lm style which allows visitors the feeling of destination exploration; the feeling of ‘being there’. Big Screen Business Page 20 MARKET OVERVIEW In Australia, the LG IMAX Theatre operates in 3 distinct market segments: ??? Australian Cinema (? lmed entertainment) ??? Tourism ??? Education 1.

The Australian Cinema Experience The 1990s witnessed growth in all areas of the cinema exhibition business with a clearly de? ned trend in consumer behaviour from the city to the suburb, where a trip to the cinema became no longer a ‘big night out’ but very much a part of consumers’ regular entertainment pattern. During this decade, the Australian cinema exhibition business experienced a period of growth both in the number of new screens and in seating capacity: ??? Growth from: 851 screens with 295,000 seats to 1748 screens with 446,000 seats Gross box of? e revenue and attendance also increased: Growth from 46. 9 million admissions generating $325 million to 88 million admissions generating $704 million ??? This period also saw two signi? cant shifts in the dynamics of cinema exhibition: ??? The growth of multiplex theatres, and ??? A signi? cant shift of screens from city centres to suburban locations. In 2000 however, this trend of continuous growth in admissions and revenue came to an end. The industry experienced a: ??? 7. 8% decrease in admissions from the previous year ??? 2. 1% decrease in gross box of? ce. Decline in the actual number of theatres (even though the number of screens increased by 69, due to growth of multi plexes). Factors including the introduction of GST and the Olympics have been cited as the cause for the decrease in attendance. Despite the decline in 2000, the out-of-home entertainment market continues to represent a robust segment of the economy with 70% of the Australian population indicating they regularly participate in a cinema visit. In value terms, only gambling is bigger. For more detailed information on current trends in the Australian Cinema Industry, refer to: www. fc. gov. au/gtp/ 2. Tourism International International tourists accounts for approx. 20% of all visitors to the IMAX Theatre Sydney. With its location in the tourist precinct of Darling Harbour, the Theatre is situated perfectly to capture the attendance of at least a small portion of international visitors. ??? Over 50% of all international tourists visit Sydney. Sydney’s Darling Harbour is ranked as the third most popular destination by international visitors. ??? Darling Harbour is a vibrant destination for tourists and school groups alike.

Located with easy access to transport and with a wide variety of other venues and activities available nearby, the precinct offers groups the scope to create themed full day excursions ??? all within easy walking distance. Big Screen Business Page 21 The trend in tourism is toward FIT visitors (free independent travellers) rather than structured groups. The structured group market, where travel is pre-arranged, has continued to decline. Even traditional structured group markets like Japan have seen a shift to FIT travel by the younger generation of traveller.

As a consequence, the number of tourists likely to visit the IMAX Theatre as a result of participating in a structured package are limited. The key opportunity to win this business is to reach the FIT traveller at key information stages ??? prior to departure and then once they are on the ground. Domestic tourism The variable nature of the value of the Australian dollar results in ? uctuations in domestic tourist patterns. When the dollar is strong, overseas travel is more affordable; when the dollar is weak, domestic travel may appear more attractive.

And the impact of global events cannot be understated. Terrorism and SARS impacted on the number of overseas holidays made by Australians. 3. Education School visitors account for approx. 20% of all attendance at the Sydney Theatre. Since the range of ? lm titles is well suited to school excursions, with strong links to curriculum and support in the form of teacher resources, the education market is regarded as an important revenue source for mid-week sessions during out-of school holiday periods.

One third of all school group visits are as part of Joint Excursion Packages, visiting other educational venues or attractions in Darling Harbour. Another third of school visits are for Single IMAX ? lms, while the remaining third are Double Film Deals, where schools see 2 ? lms in one day for a discounted price. School visits are concentrated within the 10am-2pm timeframe, Monday to Friday during school term. In fact, if it weren’t for schools, and the attendances they bring, the theatre may not open its doors until about 12pm each day mid week.

Schools are also important in what is termed “generational marketing” where IMAX is experienced from a young age, and hopefully continuing to occupy an important place in the educational/ leisure activities as an adult. In NSW, there are about 1. 2million students and IMAX attracts around 10% of these students every year as part of pre-booked school excursions (120,000+ students per year). Schools vs Theatre Attendance 700000 600000 Admissions 500000 400000 300000 200000 100000 0 2000- 2001- 2002- 2003- 2004- 200501 02 03 04 05 06 Year All Other Admissions Schools

Big Screen Business Page 22 TARGET MARKETS Who are our target markets? Sydneysiders 60% The major visitor group to the LG IMAX Theatre in Darling Harbour is local Sydneysiders ??? regular cinema goers, family groups, adult couples etc. IMAX Target Markets Tourists 20% Schools 20% NSW Some from ACT & Qld A mix of primary and secondary schools from all school systems Tourists 20% international 10% domestic 10% Schools 20% General 60% Our research has con? rmed that our Primary market is made up of cinemagoers. These are people who regularly attend cinemas and are identi? d as the people most likely to visit an IMAX Theatre. As such, the core cinema-going markets include: ??? ??? families with children under 15 who love the thrill of the physical realism of the ? lms and the exploration of unknown territory single adults 25-34 who enjoy the new cinema experience The 16-24 market, traditionally a strong cinema audience generally, shows the greatest possibility for potential growth as visitors to IMAX theatres. Secondary markets include tourists, schools and other groups (seniors, corporate, youth groups etc).

While IMAX audiences are more likely to be from upper socio-economic groups the volume of our business will still come from the conventional cinemagoer. These consumers fall into the four following psychographics: Socially Aware… Social Issue Oriented Politically/community active Arts & Culture, top jobs Wealth Managers Young Optimism… Young and progressive Experimental Lifestyle Seek new and different things Trend Setters Visible Achievement… Success & Career driven Recognition & Status Seekers Good Family Living Wealth Creators Something Better… Upwardly Mobile couples Career & Lifestyle driven Financially Stressed (special occasion)

Big Screen Business Page 23 SWOT ANALYSIS: LG IMAX Theatre Sydney Strengths ??? Unique, innovative product ??? Location: proximity to Sydney CBD and tourist precinct of Darling Harbour ??? Visibility & unique appearance of the Sydney building itself ??? Constantly changing program of ? lms ??? Educational links: attractive to schools; library of ? lms titles accessible to schools, gives greater choice for teachers ??? Worldwide IMAX brand awareness ??? International support from IMAX Corp Weaknesses ??? Documentary style: increasing demands for dramatic ? lms, particularly after 6pm ??? Lack of Australian ? m content: not ideal for tourism & school target markets ??? ‘Perishability’ of product: an unused seat cannot be resold once the ? lm has commenced (an opportunity cost that is part of the business) Opportunities ??? Packaging with other attractions/ restaurants eg. for schools and tourism target markets ??? Candy Bar ??? Expansion of Darling Harbour as a destination for tourists and Sydneysiders generally ??? Darling Harbour shows, events, promotions & festivals etc ??? New ? lms & styles of ? lms in production ??? Increasing consumer interest in 3D ? lm product

Threats ??? Primary threat: Conventional cinemas ??? Home viewing: Pay TV, Video, free to air TV ??? Other Darling Harbour Attractions: Sydney Aquarium ??? Other Sydney Attractions: harbour cruises, shopping, The Rocks area, Opera House tours, Taronga Park Zoo, Sydney Tower, bus tours, museums & art galleries Big Screen Business Page 24 THE MARKETING MIX Elements of the Mix: Product Price, Place, Promotion … People Product ??? ??? ??? Unique, innovative ? lm experience Large format ? lms (15/70mm) in both 2D & 3D New technology: Advances in technology (ie. igital enhancements) have resulted in a wider range of product available or example: Single Adult (45 min ? lm) $18. 00 Single Adult (feature ? lm) $22. 50 Price ??? Price variance for traditional IMAX ? lms (45mins) and Feature Films (60mins+) ??? ??? ??? ??? ??? Discounted rates for schools & inbound New product: feature ? lms converted to the large tourism groups screen format using digital technology eg. Spiderman/ Harry Potter available in the IMAX format Note: Price has been proven NOT to be a major factor in market research results.

People are prepared to pay a premium price for a premium cinema experience, but quality of ? lm product Highest quality ? lm experience must be high. Fun and educational Leading edge, state-of-the-art technology Promotion ??? Advertising: TV, press, outdoor (billboards, bus shelters etc) Direct Mail: schools, inbound tour groups & other groups Flyers: distributed via direct mail & box of? ce Public Relations: ? lm openings, special events, word of mouth previews Website/ email: session times; up-coming ? lms; eNewsletters; Online booking facility

Place (Distribution) ??? ??? Sydney, Darling Harbour One of the top tourist destinations in Australia, located on the Cockle Bay waterfront. Close to transport (Town Hall & Monorail) and the city CDB activities. ??? ??? ??? ??? ??? People: The role of highly skilled, dedicated staff cannot be overlooked. They are our visitors’ ? rst contact with the IMAX experience. At each theatre, staff bring a diverse range of skills: operations management, communications, education & tourism, accounting, customer service, marketing and administration. Big Screen Business Page 25 PRODUCT LIFECYCLE

During the launch of a theatre, the marketing mix is traditionally focused on establishing the IMAX experience generally, including the IMAX brand. During on-going theatre operations, the marketing mix will be increasingly ? lm-based. The lifecycle graph below re? ects the pattern of growth for the IMAX Theatre Sydney. The graph indicates a rapid increase in attendance & brand awareness with the opening of the theatre, followed by a steady increase in attendance, spurred along by the launch of 3D, the release of new ? lms and promotion of new marketing initiatives.

IMAX Theatre Sydney ??? Lifecycle to date 2. Peak of 850 000/ year in attendance 650 000/ year 1. Theatre is launched in 1996 and attendance builds along with brand awareness. 4. In 2002 the theatre experienced continued growth in attendance, spurred by a better quality film product and more frequent releases. 3. Period of uncertainty during liquidation and restructuring in 2000. Poor film line up, combined with the aftershocks of company restructuring, resulted in low attendance figures. Low of 450 000/ year 1996 1999 2000 2002 2004 2007 Key Success Factors The key elements that in? ence the success of theatre business are: ??? Size of the population ??? Film product ??? Sound management practices The following graph illustrates the ? uctuating pattern of annual theatre attendance since opening in September 1996 to the present: Total Theatre Attendance 1996-2006 1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 200597 98 99 00 01 02 03 04 05 06 Year Big Screen Business Admissions Page 26 IMAX Theatre Sydney ??? A Year in the Life January School Holidays: The busiest time of the year.

Each year is punctuated by a series of sharp attendance boosts that coincide with each school holiday period. A steady flow of visitors during non-school holiday times ensures core levels of attendance are maintained. Peak attendance is experienced during the 4 days Thursday ??? Sunday, with school groups featuring prominently during the daytime mid-week hours. Dec/ January Easter July Sept/ October Film Product Lifecycle (Sydney Theatre) IMAX films traditionally start off slower than conventional cinema. ie. The ‘blockbuster’ opening weekend is not common to IMAX.

FILM LAUNCH The gradual decline of a film is punctuated by a series of attendance boosts with each consecutive school holiday period. Attendance gradually builds to a peak about 6 weeks after release. IMAX films generally have a much longer shelf life than conventional cinema releases. about 6 weeks later 6-12 months later Once ? lms have run their course in Sydney, they become part of the Film Library, used for specialist school and group screenings. The cycle then starts over again. Big Screen Business Page 27 Case Study: IMAX Films Key Stages in Film Lifecycles FILM SHACKLETON’S ANTARCTIC ADVENTURE 248,914 admissions No. ? lm in Sydney LIFECYCLE IN SYDNEY Launched in October 2001, Shackleton’s Antarctic Adventure received the highest praise from media and has been hailed as a resounding success. Schools Success: Over 90,000 school students have seen this ? lm since 2001, making it the most popular educational title of all time. Strong links with primary school curriculum, including studies of Antarctica, will make this ? lm a regular favourite year after year. Also popular with corporate groups, as part of team building & leadership training sessions. Launched in Feb 1998 in Sydney, Everest screened for well over 2 years.

While it was one of the Theatre’s top grossing ? lms, it is now no longer part of the regular lineup of ? lms, having exhausted its life in Sydney. Everest enjoyed a mildly successful return season in 2003, screened as part of a special speaker event series with mountaineer Peter Hillary, son of Sir Edmund Hillary. Launched in Sydney in 1996 when the Theatre ? rst opened. Screened for over one year and then gradually phased out of the timetable. It was not screened for a couple of years, but then was re-launched to the schools market in 2001 with great success.

Continues screening very successfully to schools at limited times of the day. Antarctica has become a strong feature of the school ? lm timetable, working well as a joint package partner with Shackleton’s Antarctic Adventure. Launched in 1999, Cirque du Soleil 3D no longer features on the ? lm program, but has the current standing as the most successful ? lm of all time screened at the Sydney theatre. It screened continually for over 3 years before becoming part of the Film Library. Launched with great fanfare in 2002, including a visit by a NASA astronaut and the ? lmmaker from IMAX

Corporation. A huge premiere party was held and wide media covered gained, including excellent ? lm reviews. While Space Station 3D does not feature regularly as part of the general timetable any longer, it holds a strong and continued place in the school ? lm library. (launched May 2006) Launched in May 2006, Deep Sea 3D has performed exceptionally well in Sydney, reaching 150,000 admissions in its ? rst year, of which just over 23,000 were school students as part of organised excursions (about 15% of the ? lm’s total attendance). Based on the high calibre of the ? m and its performance to date, Deep Sea 3D will have a long life at the Theatre for both public sessions and also schools and within the next 12 months, should take its place ? rmly within the top 10 ? lms screened here in Sydney. During the ? lm’s peak trading period in the Winter school holiday period (July 2006) more than 23,000 people saw the ? lm. The trends in attendance for the ? lm’s opening 12 weeks are highlighted below: EVEREST 291,462 admissions No. 2 ? lm in Sydney ANTARCTICA 261. 348 admissions No. 4 ? lm in Sydney CIRQUE DU SOLEIL 3D 301,208 admissions No. 1 ? lm in Sydney SPACE STATION 3D 268,347 admissions No. ? lm in Sydney DEEP SEA 3D 150,307 admissions No. 17 ? lm in Sydney DEEP SEA 3D: Opening Weeks Trading 10000 No. Admissions 8000 6000 4000 2000 0 1 2 3 4 5 6 7 8 9 10 11 12 Week No. Data current as at 31 Jan 2007. Big Screen Business Page 28 IMAX THEATRE SYDNEY – MARKETING STRATEGY Aims 1. To effectively communicate to target audiences that The IMAX Experience??? is a dynamic and ful? lling entertainment choice. To do this we will tap into the mood and mind of the conventional cinemagoer with communication that will focus on selling the IMAX experience through the launch of a range of new ? m titles per year in each theatre (usually 6-8 titles). To achieve this we will: ??? Find effective means to communicate with our target markets; ??? Create entertaining and distinctive communication that differentiates the IMAX experience from other entertainment choices; ??? Conduct public relations activities and events aimed at local residents that position the Theatre as a vital part of the cultural life of the city. 2. To create the desire to visit and re-visit the Theatre to enjoy the ever-changing program of ? lms To do this we will develop launch campaigns for each ? lm that utilise the full marketing mix.

These campaigns will sell the IMAX experience through the title and present consumers with a dynamic new reason to trial or revisit. 3. To maximise opportunities to increase revenue through food & beverage, group sales and promotions To do this we will create marketing and sales tactics that will increase business levels during both peak and non-peak periods and seek business partners that allow us to leverage our marketing dollar for maximum return. The philosophy underpinning this strategy is: ??? IMAX is different things to different people For general consumers, whether a ? m title is a 2D natural history documentary or a 3D visual showcase, IMAX is always entertainment. For schools, the educational qualities of ? lms work in tandem with the entertaining qualities to create unique, inspirational learning experiences. For families, it’s often a mix of the above. ??? We never lose sight of our difference The IMAX Experience is unique. We do not compete with mainstream cinema on a title-by-title basis. If there is a choice, that choice is between a mainstream title or a unique IMAX Experience. We constantly remind our audience about that difference by selling the experience through each and every title we release.

To that end we believe one large dominating image will always sell our product over and above a multiplicity of images or a montage. Strategies The key driver to attendance is ? lm product and in general the fundamentals to successfully marketing these titles remain similar in all markets. What this strategy strives to achieve in each market is: To build attendance to the theatres that provides the highest pro? table return on investment. The marketing strategy will aim to achieve its objective in three key areas: ??? The release of a minimum of 6-8 new ? ms in each market ??? A groups sales program with a key focus on niche visitor groups eg. schools, groups and functions/ events ??? Value-based promotions to drive business in traditionally softer trading periods The marketing strategy will be executed using the full range of the marketing mix including: ??? Advertising ??? Public Relations ??? Internet/ Email ??? Promotions ??? Events ??? Sales ??? Point of Sale Big Screen Business Page 29 A. New Film Releases Films are released usually every 6-8 weeks in a staggered program timed to coincide, where possible, with key school holiday periods. The release of a new ? m is the prime driver to attendance. Each new ? lm release aims to sell the IMAX experience through the title, reminding all consumers of the key IMAX proposition (ie. IMAX is a giant screen cinema experience) whilst presenting a ‘call to action’ to visit the theatre again, or to trial for the ? rst time. A speci? c marketing strategy will be devised for each title identifying the key target markets and the speci? c tactics to be used to reach them. Criteria for Selection of Film Titles The criteria for title selection is based on a number of factors: ??? Format: 2D or 3D? – 3D ? lms have now surpassed 2D ? ms as the most popular. There is however, a limited supply of 3D ? lms (they’re more expensive to make) to choose from. Experience of similar titles – An examination of the success of previous titles and the potential audience reaction to new titles. Success of titles in other markets – If a ? lm has performed well overseas, it may do well in Australia also. Title testing – Testing the appeal of a ? lm title with current IMAX audiences through surveys conducted on site. Expand the market – Titles that present an opportunity to draw a new market into the theatres and encourage trial. ??? ??? ??? B. Film Title Marketing Film marketing takes the form of a combination of elements: advertising, publicity & promotions, word of mouth, website and e-communications. 1. ADVERTISING To keep the ? lm titles top of mind and to guarantee exposure in media IMAX uses paid advertising. In general these mass market campaigns play a pivotal role in penetrating this market and maintaining the pro? le of the IMAX brand in each market. DIRECTORY ADS Aside from the physical theatre itself directory advertising represents the most consistent visible presence of our business.

Expenditure on this form of advertising takes up a s

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