Market Watch

Technicolor Closes Film Plant as Digital Starts to Impact


Display Driver IC Forecast


Technicolor is to shut its 35mm release printing plant in Los Angeles due to the rise of digital cinema and loss of a significant volume contract to rival Deluxe. North Hollywood site, which employs up to 400 people, will still provide some production services such as digital dailies but all the distributor side of the business will now be transferred to the company's prime site in Mirabel (Montreal) in Canada. The latter provides 66 per cent of Technicolor's North American requirements.  In similar vein, Technicolor also closed its London lab in 2009, with Rome now providing 76 per cent of the company's European requirements.

Analysis
This is the second sign for Technicolor this year of the growing impact of digital cinema on the 35mm print business.  In May 2010, in an industry first, Deluxe and Technicolor opted to merge their print replication and distribution operations in Vancouver; the new venture being housed in Deluxe's existing site in the city. This is likely to be a pattern for the next five years, as both major service companies need to downsize their film services sections and increase the capacity of the digital side of the business. Both have been very actively developing their digital cinema activities, with Technicolor targeting animation and 3D as well as the more traditional film servicing areas. The Vancouver decision was also driven by other factors, such as the lack of local distributors in that city. Technicolor's film processing volumes have been weaker since 2007, when volumes were above 5bn feet a year, but film printing has just about held up until now, with higher print runs sufficiently offsetting the rise of digital cinema. However, the rapid acceleration of digital screens, and therefore digital copies, in 2010 has finally bitten not just in the USA but worldwide. In Sweden, the last 35mm lab will be closed by end 2011. In Europe as a whole there are now over 50 labs working in digital formats for cinema release (mastering, creating DCPs, versioning, duplicating and distributing hard drives) and a number of 35mm labs have reacted by dropping prices of film prints as a short term measure. Over 25 per cent of the world's modern screens (ie those that will be converted) are now digitised, and the pace of growth is expected to continue into 2011, although the 3D driver is likely to slow down at some point and be replaced by the wider 2D digital rollout.

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