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Thursday, Jun 8, 2023

Technicolor Expands Video Game Unit

As the video game industry gears up to launch its next generation of game consoles, Camarillo-based entertainment powerhouse Technicolor has announced plans to extend its reach into the gaming world beyond the replication services that it had previously been primarily known for in industry circles. In this recent entr & #233;e to video game publishers, Technicolor is now offering help with game design, high-end art production, prototyping, cinematics, in-game art assets and postproduction. The company said that in order to service the expected demand, it will hire between 100 and 150 new employees at Technicolor’s Entertainment Services division headquarters in Burbank. “We see games as a natural extension of our current business. The gaming industry is expanding wildly with mobile and handheld consoles, not to mention the next generation platforms are making the cost of developing games go through the roof,” Michael Gollom, Technicolor’s senior director of interactive services, said. “The resources needed to make a game are growing quickly and developers are looking for outside resources to help out. We saw a huge potential in the market.” Gollom is certainly correct about the added cost of making games for the next generation of video game consoles. The two next generation game consoles that are attracting the most buzz are Microsoft’s Xbox 360, slated for release during this year’s holiday season; and Sony’s Playstation 3, scheduled for a Spring 2006 release. Analysts expect the costs of these next-generation games to be between 15 and 50 percent higher. “Publishers will look for any way to shave costs and make more money, so it wouldn’t surprise me if they would turn to partners like Technicolor,” Anita Frazier, an entertainment industry analyst for the Washington-based NPD Group said. “And I imagine that Technicolor would want to expand their offerings towards new fields within the industry, the profits in replicating discs are minimal.” The executives at Technicolor expressed their optimism that the venerable brand name of Technicolor would help them to gain a leg up on the mostly smaller boutique-type firms who they will be competing against. Frazier agreed with this assumption. “They do have a big name and they are well known from the DVD and movie side of the business, as well as for disc replication in the game industry. They’re known for being pretty reliable,” Frazier said. Technicolor executives believe that their operations of scale will also give them an advantage over their competitors, many of whom specialize in just one facet of video game production. Technicolor envisions itself as becoming a vast one stop shop for video game publishers and developers seeking assistance. “We do have relationships with most of the publishers already, even though we’re still relatively new with the end-to-end services model,” Gollom said. “There are lots people who can do just sound, or just do localization, but we can offer all compelling services under the Technicolor roof.” The company has already gotten its feet wet in this sector of the video game industry, providing a range of services for Sony Computer Entertainment America Inc.’s “God of War,” game, including multi-channel backgrounds, creature vocalizations, cinematic sound design, mixing, and Korean translations. Technicolor has also worked on major video game titles such as “Spiderman 2,” “Jade Empire,” and the “Ratchet & Clank” series. A part of the service division of Thomson, a Paris-based corporation focused on the media and entertainment industry, the decision to expand Technicolor’s operations fits into its parent company’s growth mode. With 2004 revenues of 9.55 billion Euros, Thomson has vowed to increase that figure by two billion Euros by the end of 2006. Undoubtedly, another factor potentially playing into Thomson’s insistence upon increasing revenues is the company’s tepid stock price. As late as the end of 2000, the company’s stock traded upwards of $70 per share. As of the close of the markets on July 12, Thomson’s stock sold for $24.10 per share. Additionally, many analysts are bearish on the stocks’ prospect. Just this month, ValuEngine Inc. rated Thomson a “hold,” stating that “Thomson Multimedia SA has the probability to roughly match average market performance for the next year. The company exhibits attractive earnings per share growth and company size, but unattractive risk and five-year annualized return.” Furthermore, stock market analyst firm Validea gave Thomson a “D” rating, in its most recent July analysis of the firm and its value.

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