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Iwerks Entertainment

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in70mm.com
The 70mm Newsletter
Written by: Based on 1996 annual report. Shortened for this page Date: 02.04.2022
Iwerks was founded by Stan Kinsey and Don Iwerks in 1986. Iwerks Entertainment, Inc. and its subsidiaries is a leading provider of high-tech software-based theatre attractions for the out-of-home entertainment market. Iwerks' products combine advanced theatre systems with entertainment or educational software to create high-impact "attractions" which immerse audiences in the action. Iwerks' products include ride simulation, giant screen, 360 degree, 3-D, and various other specialty attractions. In addition, Iwerks owns and operates a fleet of touring ride simulation theatres. The Company also produces film and video software for ride simulators and special format theatres.

The primary markets for Iwerks' attractions are theme parks, museums, various types of location-based-entertainment centers, visitor centers, world expositions and special events. The popularity of entertainment attractions of the type sold by the Company has led to their increasing use as the featured attraction in these locations. In addition, high-profile retail sites and casinos are expanding their entertainment offerings to broaden appeal and stimulate repeat visits. The Company's attractions are well suited to meet this demand because, in addition to their drawing power, they require relatively little space and can be easily refreshed by changing the film or other software.

An important element of the Company's business strategy is the participation in the operation of its fixed-base attractions either through direct equity ownership or through other participation arrangements. The Company is currently a participant in four joint ventures to own and operate ride simulation theatres in the United States, Australia and parts of Asia.

Since inception in 1986, Iwerks has installed 255 fixed-base and touring attractions of which 242 continue to operate in 28 countries. Of these, 102 were ride simulation theatres, which Iwerks supports with a library of 33 motion simulation films, the industry's largest motion simulation film library. Iwerks' motion simulation film projects include: Red Rock Run, a computer generated high speed ride through a volcano; Aliens(TM): Ride at the Speed of Fright based on the futuristic movie thriller of the same name; Dino Island: a fantasy based on a newly discovered volcanic island with prehistoric mammals; Days of Thunder: The Ride, featuring a "200 mph race" to the checkered flag at the Daytona 500, for Paramount Parks; RoboCop: The Ride, a futuristic fantasy ride through the streets of Detroit with the popular movie character, "RoboCop," The Right Stuff: Mach One Adventure, a film based upon the theatrical release of the same name for Time Warner Six Flags theme parks; as well as projects for The Walt Disney Company, Universal Studios-Florida and NASA. Iwerks has the largest installed base of ride simulation theatres and the largest library of ride simulation films in the world.

BUSINESS STRATEGY

Historically, the Company's primary source of revenue has been the sale of its attractions to customers who own and operate them. Although hardware sales accounted for a majority of revenues in fiscal 1996, a key strategy of Iwerks is to continue building a recurring revenue base. To further this goal, the Company produces and licenses its entertainment and educational software for exhibition on its installed base of attractions.

IWERKS PRODUCTS

FIXED-BASE RIDE SIMULATION THEATRES. Iwerks' line of fixed-base ride simulators is marketed as Iwerks TurboRide and combines high-resolution projector film or video software, digital surround sound and moving seats to fully involve the audience in a realistic, but simulated experience. Software currently available includes a variety of live action and fantasy experiences such as flying at supersonic speeds, riding a roller coaster, white-water rafting and space and underwater adventures. The Company's ride simulation theatre product line is the broadest in the industry, enabling the Company to offer its customers both seat and platform-based simulators in a variety of configurations and at multiple price points. The Company derived approximately 44%, 40% and 44% of its revenues from the sale of fixed-base ride simulation theatres in fiscal 1994, 1995 and 1996. The Company's ride simulators are designed to operate in theatres which typically seat 18 to 100 people, and feature screens up to 52 feet high and six-channel surround sound. In these rides, guests watch a high resolution film with a fast action point of view perspective while sitting in seats that move in synchronization with the action on the screen. Films for Iwerks' ride simulation theatres typically range between three and five minutes. The Iwerks TurboRide can be reprogrammed to create new adventures.
 
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Liseberg, Göteborg, Sweden, around 1990. Picture: Thomas Hauerslev

GIANT SCREEN THEATRES. Iwerks' giant screen theatres are marketed under the name Iwerks CineDome and Iwerks Theatres, and feature screens which are much larger than standard movie screens and projection systems that deliver a sharper, brighter image than conventional movies. The result is a high-impact, immersive, sensory experience for the audience. These theatres seat up to 630 people, have steeply raked seating and exhibit films typically lasting between 15 and 40 minutes.

Iwerks' giant screen theatres are available in a variety of configurations. Its flat screen theatres use screens as large as 81 feet high by 110 feet wide, more than five times the size of a standard movie theatre screen. Iwerks' domed screen theatres use a dome-shaped screen up to 88 feet in diameter which wraps around and above the audience filling the audience's field of vision. Iwerks also offers 3D systems which use dual projectors to create a 3D image. The Company derived approximately 13%, 6% and 9% of its revenues from the sale of giant screen theatres in fiscal 1994, 1995 and 1996.

CUSTOM THEATRES. Iwerks offers a wide range of custom film and video-based theatre systems utilizing 70 millimeter and 35 millimeter film formats. Custom projects range from the sale of individual projectors to complete theatre systems.

Iwerks has a film library which includes the distribution rights to 33 ride simulation films, 3 giant screen films and seven 3D films. Iwerks' library of ride simulation films is the largest in the industry. In addition to the Iwerks' film library, owners of Iwerks' giant screen theatres have access to a library of over 100 films which are generally available in the marketplace. The Company believes that the quality and size of its film library is a significant competitive advantage in the markets in which it competes, particularly in the ride simulation market. As the installed base of theatres grows, film licensing revenue is expected to increase.

Iwerks' recent ride simulation films include Aliens(TM): Ride at the Speed of Fright based on the futuristic movie thriller of the same name; a fantasy ride through a dinosaur-inhabited island, Dino Island a space chase adventure fantasy, Moon Raid Alpha; a film for Time Warner Six Flags theme parks called The Right Stuff; a film for the Iwerks Reactor called Fly With The Blue Angels featuring the Blue Angels flight team; a film for Paramount theme parks based on the motion picture, Days of Thunder; a film based on the motion picture, RoboCop; and SOS, an underwater fantasy created by computer generated animation.
 
 
8/70mm projector at Liseberg, Göteborg, Sweden, around 1990. Note the big projection lens. Picture: Thomas Hauerslev

ENABLING TECHNOLOGIES

With limited exceptions, the underlying technologies employed by Iwerks are in the public domain and generally available in the marketplace. However, Iwerks possesses substantial expertise in the design, modification and engineering of projection, film-handling, camera and audio technologies which it believes to be an important competitive factor.

IMAGING SYSTEMS. Iwerks offers a variety of technologically advanced imaging systems.

Iwerks Quatro(TM) is a 70-millimeter projection system designed to offer small ride simulation venues high-clarity film quality in locations which were previously limited to video systems. The Iwerks Quatro(TM) houses four ride simulation films on one reel, reduction printed from the larger format 870 to 35mm image size; two operating in the forward direction and two in the reverse direction. This eliminates the need for a film storage system while providing fast cycle times. All claims have been allowed on the Company's patent application on certain features of the Quatro(TM) projection system.

Iwerks 870 is an eight perforation, 70-millimeter film system that operates at 30 frames per second. By comparison, most motion picture theatres use four perforation, 35-millimeter film that runs at 24 frames per second and standard 70-millimeter film is five perforation which also runs at 24 frames per second. The larger frame size and faster speed gives Iwerks 870 a brighter and sharper image without the flicker and stroboscopic effects common with conventional 35- and 70-millimeter film systems. Iwerks 870 is used in the Company's array of ride simulation systems and destination theatres common to museums and visitors centers where screen sizes smaller than 60' high and 80' wide or dome screens of 75' or less in diameter are suitable.

Iwerks 1570 is a fifteen perforation, 70-millimeter rolling loop projection system which handles the largest commercially available film size. This system projects an image area more than nine times that of conventional 35-millimeter film and 300% larger than standard 70-millimeter film. Iwerks 1570 is capable of achieving the screen sizes up to 81' high and 110' wide and dome screens up to 88' in diameter that are generally found in high capacity theatres at world expositions and larger museums and visitor centers. Iwerks 870 and 1570 are used in the Iwerks CineDome and Iwerks Theatres.

MOTION BASES. Iwerks' ride simulation theatres utilize seat-based and platform-based ride simulation technologies with per-base capacities ranging from two to thirty. The Turbo Tour is a compact and highly responsive three-axis system, allowing a multitude of combinations of pitch (tilt from front to rear), vertical (move up and down) and roll (tilt from side to side) movements, which keep passengers in constant motion with the image. Each motion base is a self-contained system, requiring only electronic communications and electrical power connections.
 
 
Ballantyne 8/70mm projector at Liseberg, Göteborg, Sweden, around 1990. Picture: Thomas Hauerslev

The Motion Master is four-axis seat-based technology which permits pitch, vertical, roll and sway (a lateral side-to-side movement). This system provides every rider an identical experience, generally requires less space per seat and is very cost effective. The Gemini6 and Transporter are two- and four-seat, six-axis motion bases capable of producing the most realistic motion simulation available. These six-axis systems permit pitch, roll, vertical, sway, yaw (a turning motion), and surge (forward and back), all the motions available within a given motion envelope. The Freedom Six is a large platform-based six-axis system which has generally been custom designed to meet a customers requirements for capacity.

FILM STORAGE. Iwerks' film-based systems are offered with specially designed film loop cabinets. These cabinets allow the film to be spliced into an endless loop more fully automating the projection system and providing the fastest possible recycle time for maximum theatre throughput. The loop cabinet also includes other important features: the film is housed in a dust-free humidity-controlled environment; the film is cleaned twice on each trip through the system so that dust picked up during projection doesn't accumulate; and the film picture area never rubs on itself or any other surface, eliminating degradation common on reel to reel and platter systems.


MANUFACTURING

During fiscal 1996, IWERKS manufactured and assembled its theatre systems at its facilities in Burbank, California. A majority of the components for Iwerks' theatre systems are purchased from outside vendors. Iwerks' manufacturing operations consist of assembly, testing, quality control and system integration of its theatre system components, subassemblies and final assemblies, including modifications and the programming of the show-control and motion-control components, and installation of the completed theatre systems.

Ballantyne of Omaha, a leading manufacturer of professional motion picture projectors, supplies Iwerks with its 870 projectors. Iwerks makes substantial modifications to the projectors to make them suitable for Iwerks' use. Lenses and lamphouses incorporated in the projection systems are supplied to Iwerks by third parties. If the Ballantyne projectors were for any reason to become unavailable, Iwerks believes that it would be able to substitute other projectors; however, Iwerks may experience a temporary reduction of quality until Iwerks' engineers are able to design the necessary modifications to achieve the desired quality. A reduction in quality could have a material adverse impact on Iwerks' business.

Iwerks and Vickers Incorporated, a leading manufacturer of hydraulic components, jointly developed the hydraulically actuated seats which are used in the Turbo Tour ride simulation theatre. Under the agreement pursuant to which the hydraulically actuated seats were developed, Iwerks owns all rights in and to the seats. Vickers continues as the sole manufacturer of these motion bases on behalf of Iwerks; however, Iwerks has the right under its agreement with Vickers to secure alternate sources of manufacturing at any time. The metal fabrication portion of the Motion Master is performed by a third party. To the extent that the outside supplier may be unable to produce acceptable quality or with acceptable lead times, the Company may experience a temporary reduction in its ability to deliver this product. This could have a material adverse impact on the Company's business.
 
 
INTENSE COMPETITION; UNPREDICTABILITY OF CONSUMER TASTES. Competition in each of the markets in which the Company competes is intense. IWERKS' principal direct competition for customers comes from manufacturers of competing movie-based attractions, and in the case of amusement and theme parks, manufacturers of traditional amusement park attractions. In addition to its direct competitors, IWERKS also faces competition from systems integrators and some amusement and theme parks developing and constructing their own attractions. Many of the Company's competitors have better name recognition, and substantially greater financial and other resources than IWERKS.

LITIGATION: Iwerks has been named as a defendant in an action filed on or about April 15, 1996, entitled Hollingsworth v. Iwerks Entertainment, Inc., et al., Circuit Court of the 12th Judicial District for Sarasota, Florida, Case No. CA-01 96-1930. Fred Hollingsworth III, a former director of Iwerks Entertainment, Inc. and former chief executive officer and founder of Omni Films International, Inc., filed suit against the Company and seven of its current or former officers and directors. The complaint seeks unspecified damages arising from alleged misconduct, including alleged misstatements and omissions, in connection with the acquisition by Iwerks of Omni Films International, Inc. in May 1994.

PATENTS AND TRADEMARKS

Iwerks has been issued US Patents on features of Iwerks' motion base and motion control system used in its ride simulation theatres and all claims have been allowed on its patent applications on certain features of its new Quatro(TM) projection system. Iwerks has registered its principal trademarks in the United States and selected other countries.

EMPLOYEES

At August 1, 1996 Iwerks employed 162 persons, of whom 20 employees were employed in management, finance and administration, 25 were employed in sales and marketing, and 117 were employed in operations.

Iwerks Entertainment, Inc.
4540 West Valerio Street
Burbank
Ca 91505-1046
USA
 
 
   
   
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Updated 30-06-22