Barco has an interesting relationship with Cinedigm in the US, and with GDC in Hong Kong. With Cinedigm, Barco arranged for financing of systems, which guarantees the sale of their projectors. Typically, Barco pulls along GDC as its server partner in these deals.
There is an interesting dynamic to the sales process that Barco plays well. Projector manufacturers, selling the big ticket item, tend to call the shots in a sale. In a VPF deal, a ceiling is specified for how much can be spent on the purchase of projector and server. In the typical sale, the projector company closes the deal, brings in the deployment entity, takes their share of the available funds, and tells the server company what’s left. It may take a few offers before a server company is found that will work within the parameters given. What’s interesting is that GDC has filled that slot for Barco’s sales through Cinedigm in the US. The partnership has other benefits for Barco, as well, as shown in the recent closing of a 400 screen deal with China Film Group Corporation, where GDC and Barco again teamed up.
Adding a twist in its relationship with GDC, Barco recently purchased the server and TMS engineering group from XDC. Relatively speaking, Barco and XDC are neighbors, both stationed in Belgium. From XDC’s point-of-view, its server was no longer competitive (they were selling Doremi instead), and they only needed to retain the core software capabilities that will allow their NOC to operate by monitoring the equipment in the field, managing keys, and pulling logs. XDC did not design its own media block, instead using 3rd party media block maker Mikrom in nearby Germany for its supplier. This month Barco announced the introduction of its own TMS, quickly adapted from the newly acquired version from XDC.
It is unlikely that Barco will stop with the TMS. The XDC group is said to be working on a back office solution as well, which would add a nice touch to Barco’s software offering. To date, no server or SMS (server software) plans have been announced, and a slight hiccup in the XDC server design is apparent. Mikrom’s media block, used by XDC, is based on the Intopix JPEG2000 FPGA, while Barco would prefer to use the Barco-Silex implementation. Even so, there are no indicators that Barco intends to make its own media block, although it is expected to introduce its SMS to be used with 3rd party in-projector media blocks.
It also seems likely that Barco will be flexible in its sales. It may very well offer its own SMS with a Mikrom media block in some sales, and continue to partner with GDC, for example, in others. This would be an advantageous strategy in China.
Where Barco has gone astray is in its Auro3D sound group. Auro3D is a clever idea, but its business model is based on audio compression, which is a non-starter. Anyone can implement the 11.1 channels of Auro3D in the standard DCI 16-channel distribution format, without compression, and without paying Barco. It was brave of Barco head into new territory, but it should have asked some questions first.
Barco has taken smart steps forward in establishing relationships with its sales partners, and at the same time took steps to secure its future in software. It’s playing both fields today. One day it may have to choose.
Christie was the exclusive supplier of projectors in the first 4000 Cinedigm screens, giving it a lead on all other DLP manufacturers. Since then, Cinedigm’s preference for projector partners appears to have shifted to Barco and NEC. With the major sales in the US now managed by deployment entity DCIP and in the hands of Sony and Barco, Christie’s sales presence has focused elsewhere in the world. It has built an extensive NOC facility near its Southern California office, through which it continues to monitor many installations in the US and elsewhere in the world.
In 2007, Christie acquired Vista Controls Systems, maker of sophisticated video processors for signage and displays. Vista has the know-how to develop its own media block and the accompanying software for server and TMS. While the company has made no announcements concerning its direction, stay tuned for something completely different from Christie.
Ushio, a major manufacturer of xenon bulbs for digital cinema projectors, owns Christie. Ushio makes bulbs for all digital cinema projectors, including Sony. It’s a clever move for Ushio, as it benefits from consumable sales for the cinema, as well as participates in the upfront capital expenditures through Christie. With 47,000 digital projectors now in operation, Christie’s owner should be a happy one.
NEC, in a nutshell, has the resources to do whatever it wants. It has the software and hardware resources to build its own server. It’s demonstrated an in-projector media block of its own design. However, like Sony, NEC Digital Cinema suffers from big company-itis. The resources available to it are shared with other projects. The company supports the digital cinema effort, but there isn’t the intensity of focus that its competition has.
The effect is summarized by one look at NEC Digital Cinema’s web site, which spends more time explaining how packets get lost on a network than it does on which projectors are available for sale. As happens in big companies, it has a divided sales team worldwide. This means that each sales team has to work hard to remain educated on the issues back in Hollywood, and the lack of intercourse with communication groups such as ISDCF may not make the team appear as sharp as it could be. Anyone who has requested an RFQ of an NEC office outside the US can attest to this.
As capable as NEC is, it appears to be content to be number 3, behind fellow DLP licensees Barco and Christie.
Sony is the company that tries hard. It’s sales force tried hard in the 90’s with SDDS, right up until the company pulled the rug out from under the program. That same event is unlikely to happen today, as Sony is in the midst of a very respectable rollout. But there’s no guarantee that it won’t happen tomorrow, and that’s a cloud that hangs over Sony’s cinema program.
In terms of sales, Sony announced this month that it has 8,800 installations, with commitments for up to 13,000. Some 11,000 of those commitments are from AMC and Regal in the US. Sony has also scored significant sales in the UK, claiming 1/3 of the screens there. That leaves a little over 1000 screen commitments elsewhere in the world. It’s an unbalanced sales position, and is only one of many items to ponder.
If there was a company that suffers from bigness, it’s Sony. It has all of the signs: fragmented sales effort around the world, technology development that’s out of touch with the market, lack of focus on why the company is in the cinema business, as no one leader is driving it. To Gary John’s credit, who leads the US sales effort, a smart effort has been made to better integrate international sales so as to benefit from the smarts of Gary’s US team.
But leadership such as Gary John’s can only go so far in Sony. To meet customer demand from the likes of Regal and AMC, the engineering effort had to be ramped up to develop a capable TMS, and to provide the digital cinema features needed by exhibitors. Having now developed a capable product offering, Sony is now finding that it’s vertical activities expose it to the weakest link in the structure. For Sony, it’s weakest link is its 4K imaging array. With one mighty demonstration of 60 fps 3-D, Jim Cameron blew Sony out of the game at CinemaCon. Sony’s technology can display 4K, but it cannot display high frame rates. Sony tried to squash stories of its inadequacy at CineEurope, but failed to produce a press release that committed it to a higher technology path. Sony’s 4K engine got it in trouble only a month ago, when a US newspaper elevated in the public eye that Sony projectors produce inadequate light for 3-D presentations.
With a capable sales team, financing package, TMS software, integrated media block, altogether which provide a compelling and complete, integrated solution for exhibitors, one would wonder why Sony engineers feel it important to burden its cinema line with an inadequate imaging array? If Sony were to put a 4K DLP chip in its projector, it would be taking over this business.
But that’s not the Sony way. Or perhaps, that’s not the Sony way under current management. As Sony solves the much bigger problem that it has in maintaining profitability, it may well be that management takes a closer look at the cinema division. If so, it’s likely that changes will be made. But it’s equally unlikely that the company will replace its inadequate home-grown imaging array with something not made by Sony, such as a DLP chip. It would not be the Sony way.