Barco, a Belgian company unknown to cinema 14 years ago, is today considered one of the very top digital cinema projector manufacturers. Strategically, Barco seeks to branch into other segments of cinema, a smart concept that should serve to leverage its well-earned presence in the world cinema market. But if scores were kept, it doesn’t appear to be doing very well at this.
In March 2011, Barco acquired the digital assets of fellow Belgium-based XDC (since renamed Dcinex). XDC’s digital assets included its digital cinema server and its TMS, once a strategic piece in its VPF program. The deal had the appearance of meeting Barco CEO Eric Van Zele’s desire of moving the company deeper into the business of software licensing.
XDC, however, never developed a media block of its own, employing instead that of Germany-based Mikrom. The Mikrom media block was not part of the deal. Barco’s acquired digital assets amounted to the software required to operate a server based on Mikrom’s media block, and, of course, the TMS. Oddly, Barco did not negotiate a deal to license back to XDC its TMS software, even though XDC was intent on carrying on with its digital cinema rollout. Instead, XDC negotiated a deal with Norway-based Unique Digital to deploy its TMS in new installations. Without a media block that could be transformed into a Barco IMB for its projectors, and without a customer for its TMS software, one had to wonder what prompted Barco to pursue this deal. Two and a half years later, no product has emerged from this acquisition.
Barco followed its XDC deal with an exclusive license for the cinema market with another Belgian-based company, Auro Technologies. Unlike the XDC digital asset acquisition, Barco gained a partnership with the energetic and driven Auro CEO, Wilfried Van Baelen, who is determined to make his mark in the sound format world. But for Barco, the acquisition does not hold up to scrutiny. Other than the fact that Barco was originally founded as a radio manufacturer, it has no expertise in sound systems to leverage. Further, it would be a stretch to say that the licensing of audio technology fits the mold of software licensing, its purported direction.
A successful company in sound needs brand, content, and product. THX, for example, had brand as well as branded content. It also had its own product in the form of a loudspeaker crossover that was required fare in its cinemas. Dolby unquestionably not only has brand, but also content mixed to its guidance and specifications, and is the manufacturer of several generations of cinema sound processors. Considering other manufacturers that ventured into cinema, Iosono had a weak brand in cinema, no cinema content, but is the manufacturer of its sound processor and mixing platform. Notably, Iosono ceased its pursuit of the cinema market. Imm Sound had a weak brand, some content, but was also the manufacturer of its sound processor and mixing platform. Wisely, Imm Sound sold out to Dolby. In stark contrast, Barco scored a deal for Auro-3D in which it has no control over either brand or content, and is not the manufacturer of its product.
In terms of brand, Auro Technologies is the company whose name is associated with Barco’s system. Interestingly, Auro is also targeting its brand and technology for other markets such as game platforms and high-end automobiles, markets that Barco does not participate in. When it comes to content, it is Auro, not Barco, that negotiates motion picture deals. Which makes sense when considering that Auro would like its movie mixes to be available outside of the cinema. Barco isn’t manufacturing its cinema sound processor, either. Instead, it sub-licenses Auro’s technology to Datasat and media block manufacturers, where the technology is enabled through a Barco-managed license.
Barco’s lack of control over its destiny in cinema sound is worrisome. If Auro was a strong and proven player in the business, the strategy might make sense. But Auro is a fledgling player in sound, yet to be proven. It is also apparently in need of capital. Word is now circulating in the financial community that Auro is seeking further investment to continue its efforts. The one area where Barco could have exercised control is in the manufacture of its own cinema sound processor. But even this Barco has relinquished, placing a severe damper on its flexibility.
Consider this scenario: Presumably, Dolby will give away enough of its Atmos technology, keeping certain secret sauce to itself, to allow 2nd tier manufacturers to compete in reproducing Dolby Atmos tracks in a limited fashion. Operating as a 2nd tier manufacturer to Dolby would be a good Plan B for Barco, allowing it save face with its Auro-3D customers, and giving it an ability to retain presence in a market it has significantly invested in. But without direct control of its product, Barco has limited its options for a Plan B. For example, if Barco is relying upon Doremi to incorporate Auro-3D in its media block under license, then what would keep Doremi from incorporating its own version of a 2nd tier Dolby Atmos implementation, cutting Barco completely out of the loop? It appears that Barco’s entire strategy is based on the rather risky assumption that fellow Belgian company Auro Technologies will score numerous movie mixes, over Dolby.
With no brand of its own in the game, no control over the availability of Auro content in the cinema, no benefit from Auro content in other markets, and no manufacturing by which to retain leverage over its future in cinema sound, Barco’s strategy in cinema sound is surprisingly weak. Or maybe not surprising, given its precedent with XDC.
