For entrepreneurs and business innovators, growth and expansion often require a willingness to adapt and evolve. Imax, a global entertainment technology leader, has set an excellent example by transforming its business model from “make and sell” to “innovate and license.” This shift enabled Imax to solidify its position as an industry leader and serve as a blueprint for businesses seeking sustainable growth in the technology-driven market.
Imax’s Innovative Pivot
Once known primarily as a company manufacturing and selling projection technology for its unique large-format theaters, Imax has reshaped its operations around licensing and innovation. Today, Imax is primarily a technology hardware and brand-licensing company, a strategic pivot that has redefined its influence in the industry.
Rather than owning and operating most Imax theaters, the company generates revenue through:
- Selling and leasing proprietary equipment needed to operate Imax theaters effectively.
- Charging fees for digitally remastering standard films into its proprietary Imax format enhances the big screen’s quality.
This strategic pivot has proven highly successful. Between 2008 and 2019, Imax expanded its commercial theater footprint from 210 to over 1,650 locations worldwide. The firm also increased its annual Imax releases from 13 films in 2007 to an impressive 60 in 2019.
Why “Innovate and License” Works
This transition from “make and sell” to “innovate and license” unlocks multiple long-term benefits that set businesses up for sustainable growth. For entrepreneurs and technology-driven organizations, here’s why licensing matters:
- Scalability Without Direct Ownership
Licensing enables businesses to expand their reach and generate revenue without heavy physical assets or operational infrastructure investments. For Imax, this meant relying on third-party theater operators while benefiting from its proprietary technology and brand.
- A Focus on Core Competencies
By shifting its focus from owning theaters to licensing its technology and brand, Imax was able to concentrate on advancing its proprietary technology, improving customer experiences, and building stronger partnerships with filmmakers.
- High-Value Revenue Streams
A licensing model offers businesses recurring revenue opportunities. For Imax, this came from leasing hardware, acquiring fees for film remastering, and charging royalties for its proprietary format. Licensing intellectual property (IP) can create consistent income for other innovators.
- Expanding Market Reach
Imax’s model allowed it to grow globally, reaching new audiences and markets. Likewise, licensing can enable businesses to partner with established players in new locations or industries, expanding their influence without overextending their resources.
- Resilience in a Changing Market
By relying on a licensing-based model, Imax ensured it wasn’t solely dependent on owning theaters or specific market trends. This diversified approach allows businesses to adapt to unpredictable changes in the landscape more effectively.
Steps to Transitioning to a Licensing Model
If you’re considering a pivot toward an “innovate and license” strategy, here are some actions to consider for a successful transition:
1. Identify Your Unique Value
Begin by determining what makes your business stand out. This could be a proprietary technology, innovative process, or a strong brand. For Imax, it was its superior projection technology and brand cache. Similarly, your value proposition should be something others would want to adopt or use under your licensing model.
2. Secure Your Intellectual Property
Protecting your IP is critical when transitioning to licensing. Patents, copyrights, and trademarks will ensure your innovations remain exclusive, providing you with a competitive edge. Work with legal professionals to ensure your IP is safeguarded.
3. Develop a Scalable Framework
Create systems that allow your business to grant licenses with minimal operational headaches. This includes clear terms and conditions, pricing structures, and ongoing licensee support. Scalable frameworks will help you manage multiple partnerships efficiently.
4. Build Relationships With Potential Partners
Begin collaborating with partners who can benefit from your product, technology, or brand. Strategic partnerships are key to growing a licensing model, allowing you to tap into experienced operators and established distribution channels.
5. Invest in Innovation
A successful licensing model often requires continuous refinement of your core offering to maintain demand. Imax, for instance, consistently invests in upgrading its projection technology and remastering processes. For your business, this might mean improving your product, enhancing customer experiences, or exploring new applications of your expertise.
6. Measure and Adjust
Monitor your licensing activities to ensure they’re driving growth and meeting business goals. Use insights to tweak offerings and refine agreements as your licensing model evolves. Adapting to market trends and partner feedback will ensure long-term success.
Is Licensing Right for Your Business?
Transitioning from a traditional make-and-sell model to an innovate-and-license approach may seem daunting. Still, as Imax’s story illustrates, this path offers incredible opportunities for growth and sustainability. Whether you’re a technology innovator or a brand with strong market appeal, licensing can enable you to scale without the constraints of direct ownership, expand globally, and diversify your revenue streams.
If you want to explore how licensing can work for your business, sign up for our free newsletter to access expert insights, practical tips, and real-life examples of how other companies leverage licensing for success.
Do you have questions or need personalized guidance? Schedule a free consultation call today to discuss your intellectual property and explore how licensing can transform your business into a catalyst for sustainable growth.
Final Thoughts
Adapting to a shifting business environment isn’t just an option—it’s a necessity. Imax’s transition to an “innovate and license” model is a testament to the power of adaptability, innovation, and forward-thinking. By following their lead and taking calculated steps, entrepreneurs and business leaders can position their companies for lasting success in an increasingly competitive technological landscape.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters, including the Batman Movies (1 and 2) and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money-Making Power of Licensing, was released in 2019 and is available on Amazon.com. He’s also a published writer, and his articles have appeared in several prestigious trade magazines, including The Licensing Journal, Intellectual Property Magazine, and License India.
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