Majors look to tech facilities to bring profits

No one claims post-production is a sexy business, but it seems to have found its allure, at least as far as the studios are concerned.

Several of the majors are making very public pushes into post-production. Taken together, the push represents the most aggressive move by the studios into post in recent memory.

Some are doing so out of real need, others simply covet creative control and see a chance to spend less money out of house.

Warner, Fox and Paramount are among those making big investments in various parts of the post business.

The most recent studio effort is the unveiling of Warner Bros. Motion Picture Imaging’s 4K digital intermediate (DI) facility, one of only a handful of facilities in Los Angeles that can work on films at 4K, currently the highest definition digital format.

The studios’ new interest in post can be traced in part to the development of such digital tools. Studios long ago spun off their wetlabs to independent labs, but digital intermediate not only provides far more control over picture, it brings the process into clean, comfortable spaces that fit on a studio lot.

Warner hopes to capture a significant piece of the small but growing 4K business, and along the way nudge the whole industry toward adopting 4K, which has twice the resolution of the current standard.

Meanwhile Paramount, which long preferred to outsource much of its post, is gearing up for an aggressive push into the area, especially TV post, in the wake of its corporate split from CBS.

Universal has adopted a policy of bringing as much post as it can back on lot.

Sony has some very popular sound facilities that routinely attract films from other studios, including Disney’s “National Treasure: Book of Secrets” and Paramount/ DreamWorks’ “Transformers.”

Sony also has a Technicolor owned-and-operated 4K digital intermediate facility in the midst of its sound area and a thriving visual effects business in Sony Pictures Imageworks. Chris Jenkins, senior VP of Universal Studios Sound, says the pendulum has swung over the last 25 years toward on-lot post. “In the early ’70s, all the directors wanted to get off the studio lots,” Jenkins says. “They didn’t want the studios breathing down their necks.”

“About 15 years ago, the studios got smart and started to attract the talent back, and the directors followed.”

Many independent companies remain skeptical, and some are even attracting capital investment from private equity funds. (See separate story.) Technicolor and Deluxe, strong players in the digital intermediate business, now find themselves in the uncomfortable position of facing increasing competition from the same companies that are their most important clients.

Historically, the studios have had a love-hate relationship with the post business. When they asked “why are we spending this money outside?” they decided they loved it and invested in their own post departments.

But when top directors went outside anyway to work with their favorite mixers or colorists, the studios had second thoughts. Those doubts grew when they had trouble attracting projects from other studios, who wondered whether they could trust their competitors to guard precious intellectual property and go the extra mile to ensure every film hit its release date. So, after a while, the love affair would end and they would pull back.

Many of those challenges remain. Some directors still prefer to work elsewhere and no studio, not even Warner Bros., has been able to get all its films to stay on the lot for sound, editing and color timing.

What’s more, studios often require non-disclosure agreements with the companies that do their post. So even if Warner MPI gets to do DI on a Universal or Paramount tentpole, it may not get to advertise the fact.

The perception remains that studios’ post departments are a cost center, not a revenue center. But those in charge of post facilities insist they are in business to make money — and are turning a profit.

“We wouldn’t be here unless we were contributing,” says U’s Jenkins. U runs a 2K DI facility but has been most aggressive in the area of sound.

“We are in-sourcing traditionally outsourced work,” says Jenkins. “We took a look at what we were spending and what we were doing with our third-party vendors and have decided we were going to in-source when and where it makes sense.”

For a studio looking to get into third-party post, sound is a canny starting place. When a picture comes in for scoring and mixing, it will often move its picture editorial to a nearby room, just to speed things along.

That has helped Fox attract business to its lot. Fox, too, is considering a significant post expansion.

Today it has a small but highly regarded sound department that does eight to 10 films a year. Some are tentpoles from other studios, including DreamWorks’ “Shrek the Third” and Disney’s “Pirates 3.”

With the short post schedules on some films and digital effects often arriving late, producers find it essential that picture and sound be at the same place.

In Burbank, Chuck Dages, exec VP of emerging technologies at Warner Bros. Technical Operations, says “Warners operates (MPI) on a competitive basis even for our own internal productions. There is a competitive bidding, both internal and external.”

MPI has become aggressive about pursuing studio investment, advanced technology and third-party work. It does archival work on Warner library titles and restoration for all comers, including some other studios’ crown jewels.

“We’re trying to future-proof,” Dages says, pointing at HD-DVD and Blu-Ray as evidence that 4K will eventually become the standard.

Paramount, though, is getting into the post business because the studio has excess capacity.

The lot’s stages and post facilities used to hum with Paramount TV production, says Tom Bruehl, senior VP of technical operations for Paramount.

“When the company split, a lot of the TV division split with CBS. CBS has been integrating the shows into their facilities, so we have been morphing those facilities for third-party customers.”

He says Par’s many edit rooms are booked, very few with Paramount product.

“It’s very challenging, because a lot of people don’t think of a major studio as a post facility.”

At the other end of the spectrum is Sony. The former MGM lot was all but out of the post business 20 years ago, but Sony invested heavily in building up its sound facilities during the 1990s. Today, its stages are a popular recording venue for major artists.

It also now has a Technicolor 4K DI facility on the lot and it has carved out a niche in visual effects unique among the studios. No other studio has a vfx department that compares with Sony Pictures Imageworks.

SPI’s competitors have complained SPI overpays its artists and underbids its competition, and must run at a loss. It’s more likely, though, that Sony’s business model is simply different from independent vfx shops and other studios’ post facilities.

Imageworks provides computer graphics for Sony’s tentpoles and animated films, so Sony saves money just by handing work to Imageworks. Therefore SPI helps its parent’s bottom line even if it’s not turning a profit itself.

That’s a situation any studio’s post department would love.

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