September 14, 2015

Tim Sarnoff: Our Expanding VFX Portfolio

Technicolor invests further in the talent and resources that drive storytelling

We are entering a new era of story-telling as developments in immersive, augmented and virtual reality mediums collide with new high-speed and wireless networks to send content to any device anywhere at any time.  In many ways, these disruptive trends are manifesting themselves faster than traditional players in the story-telling sectors of the economy – movie makers, television programmers, advertisers, brand managers, etc. – can safely absorb.  Business models are being so shaken up by the advent of Over-the-Top (OTT) content delivery and mobile consumption that major icons of the industry are scrambling to find their way.

The fact of the matter is that a lot is changing very fast. 

There is one aspect of this market, however, that has not changed: the overriding demand from consumers for good stories that are well told.  This fundamental tenet is as true for Hollywood as it is for Madison Avenue, and always has been.  The challenge is that the bar for what constitutes “a good story well told” (and a memorable one at that) has not only been raised…it is constantly rising…at an accelerating pace.  The expectations of the global consumer have risen, and brands are becoming increasingly dependent on new story-telling technologies and methodologies to capture and engage consumers.

Based on this global competition for consumer eyeballs and dollars, we anticipate the market for high-end visual effects and the utilization of emerging technologies such as virtual reality, will continue to grow in the foreseeable future.

For a company like Technicolor, this phenomenon is a terrific opportunity to focus on our established strengths as a creative technology company and to invest further in the talent and resources that will help drive this evolving definition of artistic and persuasive storytelling.  Today’s acquisition of The Mill is aligned to the growing demand for premium content and creation of new consumer experiences.

The Mill is a leading provider of VFX content creation for the advertising, gaming and music industries.  The Mill’s leading position in the global advertising VFX/post-production market aligns to our desire for immediate scale.  Their investment in developing and producing content in emerging spaces (they partnered with Google’s Advanced Technology and Projects group on a 5 minute live-action virtual reality short film) also complements our company-wide efforts in these technologies. The Mill and their passionate talent are constantly pushing the frontiers of visual narrative, which means they will avidly leverage the technical chops of Technicolor to create new solutions for their clients.

Equally, The Mill’s push into the content creation space, working closely with agencies to develop and realize their more technically complex ideas and stories, provides Technicolor visibility further upstream in the content creation value chain. 

With this acquisition Technicolor will extend its current industry-leading position and technology know-how in VFX to rapidly capture further market share within the advertising and branded experience sector.

The Mill will now join our growing portfolio of brands that includes MPC, Mikros Image and Mr. X.  So why have multiple competitors with in this segment?  Because we believe in creating premier digital content.  The Mill, MPC and Mikros Image each bring their own unique approach to the advertising market.  With this robust portfolio of VFX studios we believe that Technicolor is positively positioned to partner and lead our clients in their advertising and brand aspirations.  This acquisition also enables Technicolor’s specialized R&I teams across the globe to activate our technologies in the marketplace and lead the industry in the new demands of compelling storytelling.

To be clear, we are not investing just to remain or enhance our position in the status quo.  Technicolor is acutely aware of how dramatically the landscape is changing, and that ecosystems and value-chains will reform as the contours of the market shift.  What we are focusing on, however, is that people will find great value in harnessing new technological developments to effectively tell new stories…better stories…that take advantage of new mediums of communication to connect with consumers.

It is clear that many key relationships will change; we want to make sure that few – if any – will break.  So as we step into this new era, Technicolor is reaching out to all of its key partners in the story-telling value-chain to ensure that we can adjust and adapt nimbly to the dramatic forces that lie ahead. 

That’s our story and that’s what we are excited about.