Technicolor’s Over-Under Gamble

The over-under is the name of a popular kind of bet in which people wager whether, for example, a particular team will have more or fewer than (over-under) a set number of wins in a given season. Over-under is also the name of a 3D projection process that splits the film frame in half horizontally and it is the basis of Technicolor’s current gamble as it searches for ways to maximize its film legacy and brand in this increasingly digital world.

(Editor's Note: A few hours after the latest Report went online I received a call from Ahmad Ouri, Technicolor’s chief marketing officer who was not pleased with what I had written about Technicolor’s new 3D system for film projection. He wanted to clarify some facts and to set the record straight and I agreed.  You can read what he told me at the end of this column.)

Technicolor is betting that the digital rollout will take longer than many people believe it will. The gamble started to look a little riskier with the announcement that JP Morgan is finally ready to release more than half of its billion-dollar commitment to finance the DCIP transition. That means that in the very near term Regal, AMC and Cinemark can begin to upgrade the more than 15,000 screens that the three exhibitors control.

To date, information about Technicolor’s over-under system has been rather sketchy and there were no images of the system available. A Technicolor spokeswoman explained that the company has applied for several patents on the technology and is somewhat cautious about revealing too much just yet.

The initial – and somewhat hyperbolic – promotional material about the system outlined Technicolor’s idea this way:

“How, we asked, can we bring the immersive and thrilling experience of 3D to the theatre without the huge barrier of investment? Install the new Technicolor 3D lens system on your existing 35mm projector and open the door for additional 3D screens to help drive increased attendance and 3D ticket premiums. 

 By leveraging our knowledge and experience, we have created a system that offers a solution to the shortage of 3D screens in the marketplace. Until now, 3D has been reserved for the few. Now, there is no wait for a cost effective system that makes 3D films accessible to everyone, everywhere.”

Ahmad Ouri, Technicolor's chief marketing officer recently told Variety’s David S. Cohen, "We're not proposing this is going to replace digital 3D forever. We're looking at this as a solution that will address the scarcity of 3D screens out there and enable more consumer access to 3D content, which is now limited by the slowdown in the digital rollout."

The over-under process is not new, although Technicolor says its new system advances earlier efforts. In the over-under process the 35mm frame is split in half horizontally. The top is printed with the image for one eye; the bottom half is printed for the other. A special split lens – the apparent heart of Technicolor’s new system – projects the image onto a silver screen.

Ouri told Variety that Technicolor’s system features "the use of the latest and greatest materials versus what was there decades ago. The most advanced glass in the lenses, the most advanced polarizing materials, both in the lenses and in the glasses, to optimize the picture." He also told Variety that the lens costs $5,000-$7,000 but will be leased for less than that and that after a pilot program that is already underway the company hopes to have it ready for use in November and to have "a meaningful number" of installations by the end of the year.

Ouri was traveling in India last week but I was able to ask him some questions via email. His responses were rather vague and, in my mind, raised as many questions as he answered.

He said, "Technicolor will make 3D glasses available for purchase to support all the screens it deploys using Technicolor 3D technology." But that doesn't explain whether Technicolor will manufacture those glasses or use those of an existing company.

He did clarify some details of the pilot program, an effort that he suggests was well-received. "We conducted a two-week pilot with Warner Bros and AMC theatres around Final Destination 4 where moviegoers rated the 3D image quality to be the same for Technicolor 3D and digital 3D," he said. "Overall we are very pleased with the progress we are making with exhibitors and studios and hope to announce more on our deployment plans very soon."

Technicolor is holding a screening today, September 15th, in Burbank to introduce the system formally to the Hollywood film community. The system will get still more scrutiny later in the week at the 3D Entertainment Summit in Hollywood. At that time more details are likely to emerge.

For now the reaction from studios is mixed. Some, like Dreamworks Animation SKG’s Jeffrey Katzenberg have reportedly voiced cautious optimism about Technicolor’s plans.

Manufacturers are also skeptical. Rick Heineman, RealD’s vice president of corporate communications released this statement about the Technicolor announcement: “RealD believes in delivering premium 3D to moviegoers using state-of-the-art digital technology for the brightest and crispest images delivered to the largest screens for a fully immersive 3D movie experience - not taking steps backwards with decades old technology that has consistently proven inferior.  Today's 3D, RealD 3D, is helping drive the box office to new records and giving the world's best filmmakers a new cinematic tool, and audiences are responding with RealD 3D films out pacing 2D versions on average three or four to one.”

Even conceding a significant technological breakthrough, the over-under process presents as many problems as it solves.  Maintaining the rock-steady image that is necessary for a successful 3D presentation is a challenge with film projection because even under the best of circumstances film flutters as it moves through the gate. Moreover film prints stretch over time and suffer from smudges and scratches and 3D presents one more opportunity for a projectionist to make a mistake.

Just as critical is the issue of brightness. Again, Technicolor’s technology may improve this but it seems obvious that their system is aimed at exhibitors who want to save money. Fair enough, but are those cost-conscious exhibitors going to then go to the added expense of installing silver screens in their 3D theatres? Common sense suggests they won’t.

Admittedly, this is a small gamble for Technicolor. Even if sales are small, anything that can sustain the viability of 35mm film would seem to be good for their business. And there seems to be little doubt that some theatres may take advantage of the relatively low cost to enter the 3D sweepstakes. The greater gamble here is that the public will be turned off by an inferior 3D experience just as 3D is beginning to gain momentum and that could turn away moviegoers in an era when theatre attendance is flat at best.

I spoke with the head of one independent Hollywood movie studio, a person with a slate of horror movies in development, one or two of which she would like to produce in 3D. She is also a person knowledgeable about the over-under process and she was not enthusiastic about the Technicolor announcement: “It’s a better idea than anaglyph but it’s still not a very good idea.”

Technicolor Responds

In our conversation following the release of the current Report, Ouri repeated the assertion he made when he spoke with Variety’s David Cohen that Technicolor does not see its new technology as a replacement for digital 3D and he emphasized that Technicolor is already deeply involved in digital 3D through its Technicolor Digital Cinema division.

Ouri seemed most upset about what he saw as my assertion that Technicolor was somehow a backward looking film company that wants to ignore the inevitable industry transition to digital. “Technicolor was one of the first company’s in digital cinema,” he said, and Technicolor currently is a market leader in digital mastering and distribution.

The Technicolor 3D system includes a proprietary film mastering process and lens. Technicolor has applied for patents for both.

Technicolor will supply its own 3D glasses, at least in the short term. Ouri made the point that “all manufacturer’s 3D glasses are currently OEMed in India and China,” as will Technicolor’s. He also noted that Technicolor Digital Cinema is already the market leader in distributing other company’s 3D glasses to theatres.

He downplayed my assertion that the installation of a silver screen is an expense that exhibitors aren’t likely to embrace saying, “Some of the exhibitors we’ve spoken with have already installed silver screens” in anticipation of the digital rollout, which has been slower than most people expected.

And Ouri shared an executive summary of the results of the recent audience testing of Technicolor’s 3D system.

Exit polling was done at screenings of The Final Destination 3D on Friday August 28th and Saturday August 29th at the AMC Burbank 16.

The international independent research firm OTX conducted the survey. More than 300 people were surveyed, virtually half of them were men and half were women. Just over half of the people surveyed were under age 25, the rest were 25 or older.

OTX polled people who saw the movie in digital 3D and people who saw it in 35mm film using Technicolor’s 3D system. In both cases, two thirds rated the overall 3D image quality as excellent or very good. Similar results were obtained when they were asked about the 3D special effects they saw and when they were asked to compare the quality of the presentation to their last 3D experience.

Ouri said the motive behind this development was the slowness of the digital rollout and the growing fear that a large number of exhibitors won’t be able to get funding anytime soon, if ever. “Our new technology addresses the screens that are only able to show 2D film,” he said. “We’re not trying to shove this down the industry’s throat. We’re not competing with digital 3D. We’re competing with 2D film.”