Archive link: See also: https://variety.com/2025/artisans/global/technicolor-collapse-shockwaves-vfx-1236326607/ From the article: This is strange business story that I'd like to have more details...
There are few companies as closely identified with Hollywood’s moviemaking magic as Technicolor. Its stylized name introduced storied films such as Gone With the Wind and Gentlemen Prefer Blondes, as well as the Saturday morning antics of Bugs Bunny and friends. When Gene Kelly, newly in love and singing in the rain, swings from a lamppost, he pops off the screen thanks to Technicolor’s novel three-strip colorizing process. When Dorothy steps out of her grayscale Kansas and into the vibrant land of Oz, she sees the world for the first time not just in color—but in Technicolor.
Once as important to the marketing of a picture as Imax is to today’s blockbusters, Technicolor had its hands in 110 years of filmmaking, from the Golden Age of Hollywood to the streaming era of today. During that time, the company—formally the Technicolor Group—transformed itself beyond color into a sprawling international visual and postproduction effects business, complete with motion graphics and animation. As recently as this summer, two of its films, Lilo & Stitch and Mission: Impossible—The Final Reckoning, helped drive Memorial Day moviegoing to a box-office record. But, in a saga worthy of the dramas it lavishly processed for decades, they would be its final two pictures to make it to the big screen: By the time they were released, Technicolor Group had already collapsed and been liquidated to little fanfare earlier this year.
This is strange business story that I'd like to have more details on, and I think there are some filmmaking insiders who comment here. To my understanding, Technicolor had a near-monopoly on high quality visuals and post processing effects. Its huge technological lead was reinforced with strategic acquisitions.
It sounds like the main precipitating factors were that money in/money out was unbalanced by COVID-19 and the screenwriting strike, and bad strategic decisions (poorly planned reorganizations and financing) with respect to the speed of growth. Perhaps there was no perception of risk around a seemingly permanent cornerstone of the entertainment industrial complex. From reading the article, I also don't understand anything about French corporate law, how much information was supposed to be disclosed to investors, and whether business is happening as usual at the subsidiaries which were sold off intact.
Technicolor's demise is not analogous to the Kodak failure, where Kodak had a massive blindspot for an onslaught of disruptive technologies. It wasn't a private equity hollowing out by cost-cutting for value extraction. The Variety article does mention a film industry that's constantly seeking cheaper, faster work through global outsourcing, and the looming threat of AI displacement for skilled VFX work.
I don't know what will be lost to film-making with the death of this behemoth, but I can only hope that smaller units and competitors will be able to bring fresh vision.
The relevant bit seems to be: Technicolor's strategy did not account for the possibility of the global movie industry taking the hits it did with COVID, and it did not account for the overall...
The relevant bit seems to be:
During the 2000s and 2010s, under the ownership of French conglomerate Thomson Multimedia SA, the company had a growth strategy that hinged on big acquisitions, including the 2004 purchase of MPC—a visual effects company in London—for about $100 million and a 2015 deal for the Mill, a VFX studio in London mainly serving the advertising industry, valued at nearly $300 million. (In 2010, parent company Thomson changed its name to Technicolor SA to match that of its big subsidiary.) As the company grew, its debt load ballooned, but for a long time its revenue grew faster. “There was a virtuous circle to being bigger,” Jurow says, “until it reached an upper bound.”
Technicolor's strategy did not account for the possibility of the global movie industry taking the hits it did with COVID, and it did not account for the overall financial shock that occurred simultaneously. This strikes me as a pretty reasonable blindside by an outside context problem. There is an opportunity cost in business if you bother to hedge against a dinosaur-killer event, since 1) that may never happen and 2) if it does, the "necessary" amount of prep is arbitrary and potentially impossible. In this case it's quite possible that "merely reasonable" preparation for lean times would not have changed the outcome much, since many other movie-adjacent entities did the same and went under anyway.
I think it's hard to fault them for never addressing the question of what to do if the entire distribution market changed drastically and profits dropped industry-wide. If I'm seeking an analogy it might be the megafauna of the late Pleistocene; despite being well-adapted and dominant in their niche, they were unable to account for the factor of some upstart ape creatures thinking they looked tasty, and vanished despite all the advantages they had accrued. Sometimes one wildcard is all it takes.
Archive link:
See also: https://variety.com/2025/artisans/global/technicolor-collapse-shockwaves-vfx-1236326607/
From the article:
This is strange business story that I'd like to have more details on, and I think there are some filmmaking insiders who comment here. To my understanding, Technicolor had a near-monopoly on high quality visuals and post processing effects. Its huge technological lead was reinforced with strategic acquisitions.
It sounds like the main precipitating factors were that money in/money out was unbalanced by COVID-19 and the screenwriting strike, and bad strategic decisions (poorly planned reorganizations and financing) with respect to the speed of growth. Perhaps there was no perception of risk around a seemingly permanent cornerstone of the entertainment industrial complex. From reading the article, I also don't understand anything about French corporate law, how much information was supposed to be disclosed to investors, and whether business is happening as usual at the subsidiaries which were sold off intact.
Technicolor's demise is not analogous to the Kodak failure, where Kodak had a massive blindspot for an onslaught of disruptive technologies. It wasn't a private equity hollowing out by cost-cutting for value extraction. The Variety article does mention a film industry that's constantly seeking cheaper, faster work through global outsourcing, and the looming threat of AI displacement for skilled VFX work.
I don't know what will be lost to film-making with the death of this behemoth, but I can only hope that smaller units and competitors will be able to bring fresh vision.
The relevant bit seems to be:
Technicolor's strategy did not account for the possibility of the global movie industry taking the hits it did with COVID, and it did not account for the overall financial shock that occurred simultaneously. This strikes me as a pretty reasonable blindside by an outside context problem. There is an opportunity cost in business if you bother to hedge against a dinosaur-killer event, since 1) that may never happen and 2) if it does, the "necessary" amount of prep is arbitrary and potentially impossible. In this case it's quite possible that "merely reasonable" preparation for lean times would not have changed the outcome much, since many other movie-adjacent entities did the same and went under anyway.
I think it's hard to fault them for never addressing the question of what to do if the entire distribution market changed drastically and profits dropped industry-wide. If I'm seeking an analogy it might be the megafauna of the late Pleistocene; despite being well-adapted and dominant in their niche, they were unable to account for the factor of some upstart ape creatures thinking they looked tasty, and vanished despite all the advantages they had accrued. Sometimes one wildcard is all it takes.