IMAX Corporation Is Letting Go 100 Employees
Famous 3D cinema theatre chain company IMAX Corp is laying off more than 10% of its workforce in an effort to cut costs. The layoffs are part of the company’s cost restructuring efforts that will help it save $20.0 million annually.
All major divisions within the Canada-based company will be hit with job cuts, including the finance, marketing, and entertainment divisions. The 100 layoffs will also affect employees at the company’s Chinese venture arm. (Source: “Imax lays off 100 employees to cut costs as box office slows,” Los Angeles Times, June 12, 2017.)
Following these job cuts, IMAX will be left with a workforce of about 600 people.
The company’s management has been forced to take this dire action after Imax stock tumbled to its lowest price in nearly four years. Shareholders have been bailing on the stock, seeing a downturn in the cinema business. (Source: “Imax Lays Off 100 Employees in Cost-Cutting Move (EXCLUSIVE),” Variety, June 12, 2017.)
The stock crash for the publicly traded IMAX could also be the result of worries about lower-than-anticipated revenue from China and a potentially shorter movie release window in the United States. (Source: “IMAX drops to two-year low,” Seeking Alpha, May 24, 2017.)
Industry-wide box office numbers have been disappointing. Memorial Day weekend numbers, in particular, fell way below expectations, creating an air of pessimism for stockholders. Some of the latest blockbuster movies like Pirates of the Caribbean: Dead Men Tell No Tales” and Baywatch have underperformed expectations. (Source: “Box Office: ‘Pirates 5’ Clears $78M in U.S.; ‘Baywatch’ Capsizes With $23M,” The Hollywood Reporter, May 29, 2017.)
According to IMAX CEO Richard Gelfond, the company’s revenue has steadily grown in the past few years, but so have the costs. The company’s revenue fell by 25% in the first three months of 2017, compared to the same period a year ago. IMAX reported a net income of merely $75,000, which was a huge decline from the $11.3 million one year ago. (Sources: Variety and Los Angeles Times, op cit.)
“The box office goes through good patches and bad patches…that’s the nature of this industry,” said Gelfond. He reiterated, however, that the company offers a unique experience to consumers, with its huge 3D screens and elaborate sound systems. (Source: Variety, op cit.)
Regardless, sluggish box office figures will continue to hurt the company if Americans lose interest in movie-going, and instead choose to stay at home and enjoy shows and movies via subscription-based streaming services like “Netflix” and “Amazon Prime.”
Nonetheless, the company has been growing its presence globally. Just a year ago, the total number of IMAX theaters stood at 1,066. Today, IMAX operates 1,226 theaters across 75 countries. (Source: Los Angeles Times, op cit.)