IMAX has thrown in the towel on its virtual reality (VR) pilot initiative despite the initially promising results company executives reported last year, according to an 8-K SEC filing by the company Dec. 13.
Company CEO Richard Gelfond told the Goldman Sachs Communacopia Conference in New York in September last year that revenue results from its first location, a standalone VR Experience Centre in Los Angeles, continued to be “extremely encouraging.”
IMAX started opening select additional locations in other cities. But results at its second Centre, at the AMC Kips Bay multiplex theatre in New York City, didn’t exactly match the strong demand seen for the one in L.A. out of the gate, and the CEO told conference attendees: “I think we have to work it a little more.”
The future of the initiative was cast in further doubt after IMAX closed two of the locations a few months later and said it was weighing what to do about its once-aggressive VR strategy.
In the Dec. 13 SEC filing, IMAX said: “In connection with the Company’s previously-announced strategic review of its virtual reality pilot initiative, the Company has decided to close its remaining VR locations and write-off certain VR content investments. Furthermore, as part of the Company’s ongoing efforts to decrease costs and increase operating leverage, the Company is reducing certain functions and realigning resources in certain areas. The Company anticipates recognizing one-time impairment charges of $6.9 million in the fourth quarter of 2018 as a result of these strategic decisions.”
The company thought it “got the secret sauce” when it comes to VR, Gelfond told the B. Riley & Co. Consumer Conference in New York last year. That’s because of the strong brand name IMAX had, as well as the relationships it had with content creators and theatrical exhibitors, he said.
IMAX opened additional test locations in the U.K. and China after the one in New York, and planned to have a total of 8-10 by the end of last year, the CEO said at the time. “It’s a very complicated new business” and IMAX is “doing this in a very cautious, reasoned rollout manner” in which it’s “very focused on what the numbers are,” he said, noting: “We’re not in the VR business” yet, just “seeing where it goes.”
But IMAX’s VR plans didn’t stop at theatrical locations. On the hardware front, IMAX also partnered with HTC, Google and Acer. IMAX and Google said in May 2016 that they were developing a “cinema-grade” IMAX VR camera to create 3D 360-degree content. (https://www.imax.com/content/google-and-imax-partner-develop-groundbreaking-virtual-reality-camera)
IMAX said one day later it teamed with Starbreeze to create a “premium” VR experience using the StarVR headsets that provide a 210-degree full peripheral field of view. As part of that deal, Starbreeze made its existing library of VR games available to IMAX VR Centres. (https://www.imax.com/content/imax-unveils-comprehensive-virtual-reality-strategy-launches-location-based-initiative)
IMAX also announced content deals last year with French video game company Ubisoft and the Skydance Interactive division of Skydance Media to release five VR games at the IMAX VR locations.