Both companies have gotten into digital post and distribution services in a big way, Deluxe purchasing several companies recently and making agreements with companies such as EchoStar for satellite distribution direct to cinemas. Technicolor has been growing into these services more organically. But as the 50% penetration of digital media players and projectors is approaching and the tipping point of more digital ‘prints’ than film prints is also reached, film becomes legacy.
No news about who gets the volume discount remuneration from Kodak at the end of the year or how studios will mark up the interstitial services.
Original SOURCE Deluxe Entertainment Services Group Inc.-18 July 2011
Technicolor Source:Digital Cinema Buyers Guide – Latest News
Signs subcontracting agreements with Deluxe for Film services in North America, Thailand and UK
Technicolor announces the launch of phase II of its photochemical film activities optimization. This follows the completion of the first phase of rationalization launched in October 2010, and will enable the Group to optimize worldwide 35mm print manufacturing capacities as well as leveraging its North American theatrical distribution infrastructure.
This phase II is structured around subcontracting agreements with Deluxe, covering:
· 35mm release print manufacturing
· Subcontracting agreement from Technicolor to Deluxe in North America
· Subcontracting agreement from Deluxe to Technicolor in Thailand
· Subcontracting agreement from Deluxe to Technicolor for negative development in the UK
Subcontracting agreement from Deluxe to Technicolor for the distribution of photochemical film prints in the US
Technicolor will continue to service its clients, and Technicolor and Deluxe remain competitors in all markets where they operate. Technicolor maintains its front end activities in North America and remains the key provider of 65/70mm film printing worldwide.
Following the rapid shift to digital cinema since 2010, the Group launched phase I of its photochemical film optimization in the fourth quarter of 2010, with the closure of its North Hollywood facility and rationalization across European operations. Phase II subcontracting agreements lead the Group to cease its release printing manufacturing operations in Mirabel (Canada), employing 178 people, with immediate effect.
This enables the Group to have a more flexible cost structure with the share of variable costs moving from 60 to 85% in North America. In addition, the cash restructuring costs linked to the implementation of this phase II are expected to be offset by savings on photochemical maintenance capex and by the favorable impact of incremental distribution volumes.
The phase II will ensure that the Group focuses its investments in digital services where it already benefits from market leading positions, while continuing to serve its customers through the tail of film processing.