Deluxe, Technicolor Begin Orderly Retreat From Film Services

After a century of motion picture film business, companies ink unprecedented subcontracting agreements.

Deluxe Entertainment Services Group and Technicolor have inked three-year subcontracting agreements that effectively reduce the global footprint of film services.

Per the agreement, Technicolor will subcontract its 35mm bulk release printing business to Deluxe in North America, while Deluxe will subcontract its 35mm print distribution business in the US to Technicolor. Additionally, Deluxe will subcontract its 35mm/16mm color negative processing business to Technicolor in London. Financial details were not disclosed.

For many who receive Monday’s news, it will underscore the approaching end of the era where film dominated the theatrical motion picture industry. For nearly a century, Deluxe and Technicolor have been pillars in film services. Technicolor’s film development business dates back to 1914, while Deluxe has been processing film since 1915. Today, the bulk of these competing businesses represent a growing range of digital entertainment services including Blu-Ray authoring, digital postproduction and digital cinema distribution.

"Today’s agreement with Technicolor is the result of significant changes in our industry enabled by new digital technologies causing the rapid transition from film to digital," said Cyril Drabinsky, president and CEO of Deluxe. "This agreement will help maintain a high consistency of service for our customers through the remaining life of film."

With these changes, Technicolor will place its 35mm release print orders with Deluxe’s film laboratories in Hollywood and Toronto on behalf of its customers. In doing so, the planned closure of Technicolor’s North Hollywood lab is expected to be completed this week, while its 65 and 70mm print business will move to Technicolor’s Glendale facility. Technicolor’s film lab in Mirabel, Canada -- just outside Montreal -- will close, representing a loss of 178 jobs.

Technicolor will begin servicing Deluxe’s US 35mm release print distribution in September, and Deluxe’s UK 35mm/16mm color negative processing at Technicolor’s Pinewood facility within the week.

Deluxe will cease 35mm/16mm negative processing services at both of its facilities in the London area, one in the Soho district and the other in Denham.Deluxe will provide 35mm bulk release printing at its Denham and other European facilities.

As part of the agreement, Deluxe -- which has no lab in Thailand -- will also subcontract its film printing to Technicolor in Thailand.

Drabinsky told The Hollywood Reporter that while difficult to truly forecast, he believes that for at least another five years there will be release print business in North America, and even longer in the European market.

Deluxe, a wholly-owned subsidiary of MacAndrews & Forbes Holdings, estimates that of 41,597 screens in North America, more than 19,000 -- nearly half -- have been converted to digital cinema. Drabinsky estimates that the European digital cinema transition is closer to 20-25% penetration. Digital cinematography, he suggested, now represents about 50% of features worldwide and roughly 80% of the TV market in North America and Europe. Feature archiving at the studios remains an area that continues to rely on film.