Claude Mc Master had one condition when he agreed to become CEO of motion system company D-BOX Technologies Inc. — it had to export.
Mc Master believed strongly that the Longueuil, Quebec-based company’s best chance for selling its unique technology was in international markets.
It’s not that Canada wasn’t a good market. It simply wasn’t big enough for what he had in mind.
“Because we were the first to develop our technology, the world was open to us,” said Mc Master, who joined D-BOX in 2003. “There was no doubt in my mind the world was ready for it.”
D-BOX’s technology enables movie theatre seats to shift in sync with the action on the big screen.
“We combine motion and vibration to make you feel like you are in the car race, or the space vessel,” Mc Master said. “It’s very immersive … better than just a theme park ride.”
D-BOX’s motion systems have been used in a variety of movies, including more recently The Martian and Goosebumps. Its system is installed in more than 506 movie theatres worldwide, with another 94 soon to be installed — and counting.
D-BOX works with theatre chains such as Cineplex, the leader in Canada, as well as Cinemark, the third largest chain in North America. It’s also in China and recently established a long-term partnership with State Production Base of China Film Co. Ltd., one of the country’s largest and most influential film enterprises.
“Since more than half of all feature films in China stem from local productions, this development is a significant step for us in a very large and savvy market,” Mc Master said in announcing the deal in August. “We’re extremely eager to use our innovative motion-coding technology to give Chinese film producers and moviegoers something to really get excited about.”
The company also has a partnership with Yueke, a subsidiary of China’s Alibaba Group, to deploy point-of-sales systems for D-BOX theatres in China.
D-BOX is also working with Los Angeles-based Virtual Reality Co. to offer more virtual reality experience for audiences, similar to what it did with the movie The Martian last year.
EDC resources to help you export
From speakers to movie seats
D-BOX started out selling subwoofer speakers in 1997. When Mc Master joined, they expanded to motion technology as well as motion simulation used in car racing and flight simulation.
The company’s first export was into the United States in 2009, followed shortly after by Japan. They didn’t start selling theatrical product in Canada until 2010. Today, the company exports its various products to companies in more than 45 countries.
Its largest market is the U.S., with about 30 per cent of sales. The company also does a lot of business in Japan and Russia, while China is becoming a huge market for the company and a growing opportunity given the country is opening about 8,000 new movie screens each year. Canada represents less than 10 per cent of the company’s overall revenues, which were about $29 million in 2016 (fiscal year ended March 31).
About 70 per cent of D-BOX’s revenue is from the motion technology it makes for theatres and theme parks. The remainder comes from high-end home-theatre systems, where it got its start, as well as its industrial applications, including those that help train pilots and racecar drivers.
The challenges and opportunities of exporting
Mc Master said doing business internationally isn’t difficult when people are hungry for the product you sell. In the case of D-BOX, theatre chains are looking for ways to improve the movie-going experience and compete with the growing number of at-home options such as Netflix and Apple TV.
For Mc Master, one of the biggest challenges is doing business in different countries, in particular how contracts are handled.
“Nobody interprets the contract the same way,” he said. “It’s different in China than it is in Japan, than it is in Germany, than it is in Canada.”
Some countries focus more on the technology, while others are more interested in the new revenues that it can generate. In some countries, particularly in parts of Asia, partners want to get to know the company and its executives better before signing on the dotted line.
The time zone difference also takes getting used to.
“You need to work a 12-hour day, or sometimes more, if you want to export,” said Mc Master. “That’s one of the biggest challenges when you start to export. Many people don’t realize how much extra time you have to invest to reach international markets.”
The extra hours are worth it, Mc Master said, to help not only reach international markets, but to diversify risk.
“I don’t believe the Canadian market is big enough to support the growth of a technology company,” he said. “You need to be where the market is. It’s the best way to optimize your chance of success.”