Shindler's Site: Heeding the Wake Up Call
By Marty Shindler
The bells have been going off for some time, but they don’t seem to have been heard. Some people may have rolled over and gone back to sleep.
Now the alarm is buzzing loudly, and suddenly everyone can hear it. Important things are happening in the LF industry and it is time to heed the wake-up call.
For years, many industry pundits, including yours truly, have been saying that fundamental changes were needed in the LF industry for it to succeed long term. These suggestions have included:
The alarms are going off all around us. Let’s look at a few of them.
Imax Corporation’s attempt to sell itself. Although Brad Wechsler denied it before the sudden stock meltdown led them to halt the process, many observers thought Imax was having a hard time finding a buyer. Could the conventional exhibitors’ financial troubles have scared off some potential buyers? Possibly, but on the other hand, there are more LF films in production than ever before, and the number of LF releases each year keeps going up.
Imax’s purchase of Digital Projection Inc. was a very forward-looking move. However, less than two years after the introduction of the technology, only 31 screens worldwide have been converted to digital exhibition. Although the worldwide theatrical market is huge – there are approximately 100,000 35mm projectors in place today – their conversion is will take quite some time. Although many of the technical problems have been solved, there continue to be financial and political obstacles.
The current Imax management has done a great deal to grow the industry in the last few years, but its aggressive tactics and general attitude have also been the subject of criticism by customers and competitors alike.
Imagica USA is for sale. The press release says that the company is profitable and the parent is only selling so it can better focus on other strategies. Is this corp speak? Unless top yen could be obtained by the sale, would you sell a profitable company? Perhaps. We will know when we see who buys it and how long it takes to conclude the deal.
Iwerks is in trouble. Its auditors have just issued a Going Concern opinion on the year-end results. The company has long been rumored to be on the brink; will this shove them off? I hope not. It is important for the growth of any industry to have several strong competitors. One strong company is not sufficient, and can in fact be stifling. Perhaps Iwerks will be consolidated in the not-too-distant future and have a resurrection of sorts. The shareholders who nixed the Showscan merger a couple of years ago are probably wishing now that they’d voted differently.
Showscan has filed for bankruptcy protection. The company worked hard for a long time to hold on. The merger with Iwerks might have offered a viable solution: a much larger library supported by lower overhead than the separate companies. Cross platforming of the product could have increased the market base considerably.
Conventional exhibitors filing for bankruptcy, including a few with LF theaters.
Executive changes at many LF companies. Of course, some of this is normal. Is this just another peak? Or does it signal something else?
Eventually the companies for sale will be sold. Any purchase would have to based on a price that will allow for a return on the investment. This would not be a corporate sponsorship of a film out of the marketing budget. Value for value is the order of the day.
Perhaps the process will start with sell-offs of divisions or subsidiaries. In most cases the sales will herald a change in management and/or operating philosophy. Probably both, and that may not be so bad. A fresh approach could take the LF industry to new levels. The other executive changes may also add to a new mindset.
It is time to wake up. The bells have rung before, but were put on snooze. Now the alarm has sounded. There is still time to heed the wake-up call.
Marty Shindler is a management consultant who provides a business perspective to creative, technology, and emerging companies. Marty may be reached at shindler@aol.com.