#1597 1970 · IMAX Corporation · Cinema / entertainment technology
IMAX avoided Hollywood for two decades and built theaters only museums would pay for
the problem
A giant-screen format too expensive and demanding for ordinary theaters had no path into standard commercial cinema
background
IMAX Corporation grew out of a 1967 collaboration between filmmakers Graeme Ferguson and Roman Kroitor, businessman Robert Kerr and engineer William Shaw, initially built to solve the technical problem of making a giant-screen film experience smooth and immersive rather than jarring, work that began with an experimental multi-screen film for Expo 67 in Montreal. The resulting large-format film system, rebranded IMAX in 1970, required custom high-illumination projectors, oversized 70mm film prints and purpose-built theaters, a cost and technical complexity that made it entirely impractical for standard commercial movie theaters built around conventional Hollywood releases.
Rather than try to force IMAX technology into the existing commercial cinema market it was poorly suited for, the company's first permanent theater opened in 1971 at Ontario Place's Cinesphere in Toronto, and through the 1970s and 1980s IMAX deliberately pursued museums, science centers and civic institutions like the Smithsonian as its primary customer base rather than movie theater chains.
what everyone would do
Pursue commercial movie theater partnerships and Hollywood studio relationships from the outset, positioning IMAX as a premium theatrical format for blockbuster releases immediately, accepting the higher cost of convincing theater chains and studios to adopt an unproven, expensive technology without an established track record.
what they saw
Regular theater chains had no reason to pay for a format this expensive. Museums did — they needed a spectacle, not a profit margin. IMAX built its entire base in a market Hollywood wasn't even competing in.
the move
Museums and science centers had a fundamentally different economic relationship to the format than commercial theater chains would have: they weren't optimizing for per-screening profit margin the way a multiplex needed to, but were willing to make a large capital investment in a genuinely spectacular, educational visitor experience, documentaries about nature, space, aviation and oceans, that justified admission and drove attendance to the institution as a whole. This let IMAX build a stable, if modest, revenue base and refine its technology over roughly two decades without needing to compete for standard commercial screen space Hollywood studios and theater chains had no incentive to give up for an expensive, unproven format. Only in the mid-1990s, under new leadership focused on commercializing the platform further, and especially after the 2002 introduction of IMAX DMR technology that could convert standard 35mm Hollywood films into the IMAX format starting with Apollo 13, did the company pivot decisively into mainstream commercial cinema, eventually capturing an outsized share of blockbuster opening-weekend revenue relative to its small share of total movie screens. The museum-and-science-center foundation built over those first two decades gave IMAX the operating history, brand credibility and refined technology base that made its later, much larger commercial pivot possible.
why it works
Museums and science centers evaluated IMAX against a different economic yardstick than commercial theaters would have, valuing the technology's ability to create a memorable, educational visitor experience that justified overall institutional investment, rather than judging it purely on per-screening profit margin the way a multiplex chain competing on ticket volume would. This meant IMAX could develop and prove its technology over two decades without needing to win a battle for scarce, contested commercial screen space, and by the time it did pursue Hollywood, it brought a mature, de-risked technology and established brand credibility that made the pivot far more successful than attempting it from a standing start would have been.
the payoff
Founded 1967, IMAX spent the 1970s-80s installing systems almost exclusively in museums before pivoting to Hollywood films in the 1990s.
where it breaks
This strategy requires genuinely identifying a different market segment whose economics or incentives actually value the offering on different terms, not simply a smaller or easier version of the same target market; if no such genuinely distinct niche exists, the approach doesn't work. It also requires patience to spend years, sometimes decades, in the niche market before the larger market becomes viable, a timeline that not every company or investor is willing to fund, and the eventual pivot still requires that the technology or product had matured enough during the niche period to be genuinely ready for the larger market's more demanding requirements.
what came after
Became a frequently cited example in technology and market-entry strategy of building a durable foundation in a genuinely receptive niche market before attempting to enter a much larger but more competitive mainstream market, cited in discussions of premium and specialty format businesses since.
references
- [1]Imax brand is larger than lifeThe Hollywood Reporter, 2011hollywoodreporter.com
- [2]Graeme Ferguson, co-creator of Imax, dies at age 91The Globe and Mail, 2021theglobeandmail.com