The current financial disruptions in markets may not make for an optimal time to carve up a storied Hollywood brand and launch a new public company, but don’t say that to Technicolor Creative Studios CEO Christian Roberton. Tuesday morning, on Paris’ Euronext exchange, TCS launches as a pure-play creative-services firm under the ticker TCHCS.
“If anything, this is Technicolor going back to its roots, a pure-play basic entertainment company,” said Roberton. “To me, it perfectly describes the origins of Technicolor. We’re coming out at a time when the demand for our services is at an all-time high. There was never such demand for the type of work that we do.”
That work is providing visual effects and related post-production services for four distinct sectors of entertainment: movies/TV/streaming, advertising, animation, and gaming, handled respectively by MPC, The Mill, Mikros Animation, and a new Technicolor Games unit.
It’s a long ways from the original company’s storied, 106-old roots as a go-to film-processing service during Hollywood’s Golden Age, with a look so vivid that the brand itself became an adjective for the hyper-saturated, gorgeous color found in many of the films it handled.
Film processing is no longer a big business for anyone in a digital production era, however. Technicolor adapted by expanding into visual effects and other post-production services for Hollywood and was acquired by French-based Thomson. As Technicolor SA, the company also diversified with home entertainment and DVD logistics, internet routers, and connected-home technologies and services.
With the TCS spinoff, Technicolor’s non-VFX units have been renamed Vantiva, and also will remain on Euronext as a separate stock under CEO Luis Martinez-Amago. The split will give investors a clear choice in deciding where to put their money, Roberton said.
“From an investment standpoint, it wasn’t always clear what you were investing in: ‘Do I want to invest in a logistics business or creative services?’” Roberton said. “This is an opportunity to have a very pure-play investment.”
Post-production has long been a complicated business, dependent on lengthy, seasonal cycles of production for effects-heavy movies (generally timed to debut in the summer or Christmas season) or for advertising (around the Super Bowl or Black Friday), while investing heavily in creative talent and expensive, cutting-edge (and often quickly obsolete) hardware.
The mom-and-pop post-production houses that populated side streets in Hollywood, Glendale, and North Hollywood back in the 1990s have largely been rolled up in waves of consolidation. These days, the biggest VFX providers are global or near-global operators, with production facilities from Burbank to central London to Bangalore.
Technicolor’s operations, for instance, have a significant presence in India, where they can hire top technical talent at a scalable cost, Roberton said, part of production operations in 14 countries. Recent major theatrical projects include Nope, Dumbo, and the live-action Lion King sequel.
The company has largely been focused on selling its services to clients from offices in Los Angeles, New York, London and Paris, but Roberton said to expect that to change, beginning with new offices planned in Seoul, South Korea, and Shanghai, China, to serve burgeoning production needs in both East Asian markets.
“I think the Asian opportunity is a big one that’s really been untouched by the Mill,” Roberton said.
The booming game industry, generating more than $160 billion globally according various estimates, is another area ripe for further expansion, Roberton said, which is why the nascent company also has launched its games unit.
The work of the different divisions will converge over time as various platforms become more powerful and built around similar technologies. Roberton sketched a vision of the future with audiences going to a movie, seeing an immersive experience, and playing a game, all built around the same interchangeable elements.
“Rather than waiting months and months, could this be a very immersive experience for audiences?” Roberton said. “This is where I think Technicolor has a really important role to play, using technology across all these platforms.”
That said, the company expects to keep those specialized divisions separate for some time to come, focused on servicing their specific sectors and clients, Roberton said.
“I think the brands themselves have a lot of brand recognition,” Roberton said. “It’s about connecting with our clients in a way they feel comfortable. It’s where is that line where you really need to specialize for your clients, and where does that line converge?”
Technicolor’s divisions also will be working toward that much-hyped vision of the Metaverse, where different components of what they do all would come together in various ways, Roberton said. But, as companies such as Meta, AppleAAPL +0.2%, and Microsoft keep proving, the Metaverse is still a number of years away from (virtual) reality.
In the meantime, the company will look for more opportunities to acquire and consolidate operations with other companies in the sector.
“The history of this country is about evolution,” Roberton said. “We’ve gone from a photochemical company hedging on the price of silver for photographic development. We’ve evolved fairly rapidly, and did that with acquisitions of companies like The Mill. What we see is these disparate businesses coming together. We’ll look at where we’re going and try to bring in businesses. It’s part of the fabric. ”
Technicolor Creative Studios is expected to debut with a price of about 1.9539 euros per share, creating a market capitalization of somewhere between 1.2 billion and 1.3 billion euros, according to a pre-launch attestation of equity by Finexsi. Forbes