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Iwerks Entertainment |
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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.
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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.
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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.
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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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