Thomson Positions for a Digital Cinema Future
by Michael Karagosian
©2001 MKPE Consulting All rights reserved worldwide
Written for Digital Cinema Magazine, Jan 2001
Technicolor has a long history in the movie business. Philips
Broadcast is a well-recognized name among digital postproduction
professionals. Thomson Multimedia SA recently acquired both of these
companies, and that alone should be enough to pique the interest of
digital cinema professionals. Add in alliances with Carlton
Communications, Qualcomm, and Alcatel, however, and you've got a
powerful group of companies whose technologies--if combined in the right
ways--could have a potentially major impact on the
future of digital cinema on several fronts.
On December 11, 2000, Thomson Multimedia SA announced a preliminary
agreement with Carlton Communications plc to form a strategic
partnership. At the core of the deal is the sharing and reallocation of resources
related to digital television, interactive TV, and media
services. All well and good, but the digital cinema world took special
note that part of this "reallocation" of resources was Thomson's
acquisition of Technicolor from Carlton. This was all the more notable
considering that the previous week Thomson announced a preliminary
agreement to acquire Philips Broadcast. And earlier in the year, Thomson
entered into a joint venture with Alcatel to form Nextream--dedicated to
the high-growth interactive video networks market, an area not
dissimilar to the kind of networking needed for wide-bandwidth digital
cinema distribution to theatres. Let's look closer,
starting with Philips.
Philips Broadcast is comprised of several businesses, including
those engaged in cameras, digital telecine, signal processing, media
networking and control, and systems. This group is a leader
in the high-end digital postproduction world, the developer of such
technologies as the Spirit DataCine, the VooDoo D-6 uncompressed media
recorder, and the recently introduced LDK 7000 digital cinematography
camera. Many of the top digital post facilities currently favor the
Spirit DataCine as the ne plus ultra in converting film-based
images to digital data. Likewise, the VooDoo Media Recorder, with its
compressionless recording and 12 discrete channels of digital audio, is
a popular choice for digital cinema mastering. And the LDK 7000 HD
camera, introduced last year at IBC, applies Philips' custom
CCD-designing expertise to the quest for film-like acquisition in
digital cinematography. These are plum technologies at a time when
filmmakers and studios are getting into the business of generating,
processing, and distributing movies as beautifully crafted bitstreams.
High-end digital cinema gear aside, Philips Broadcast also
manufactures broadcast cameras, switchers, routers, that compete with
similar products from Thomson Multimedia. This would seem a
redundancy until one observes what seems to be a more profound strategy
at work here. Over the past 15 years, Thomson Multimedia has been on a
steady growth path. Once known as a maker of television sets--which
include the familiar U.S. market brands of RCA, GE, and Proscan--Thomson
is now the world's fourth largest producer of consumer products. In
their effort to expand their reach in the professional market, Thomson
last year announced a new business unit, Digital Multimedia Solutions,
focused on providing business-to-business digital content solutions for
broadcasters, content providers, network operators, and advertisers.
Philips Broadcast is expected to become a major holding in Thomson's
Digital Multimedia Solutions (DMS) division.
"The idea is to build an aggressive and formidable presence,"
comments Jeff Rosica, VP and GM of Philips' North American Sales Operation.
"This will allow us to combine the strengths of both companies into a
formidable group. We'll take our technology, R&D, and product development
and put it together. We'll have very aggressive offerings for digital
Up until recently, Thomson's entire portfolio has been
built around product manufacturing. Their recent deal with Carlton that
gives them Technicolor might seem like an unusual move for their DMS
division. After all, Technicolor is a world leader in processing and
distributing motion picture film, and they are the largest independent
manufacturer and distributor of pre-recorded DVDs, CDs, and
videocassettes. But consider what happened decades ago to the
railroads; they lost out to air travel when they failed to realize that
they really weren't in the train business, but the
transportation business. Thomson, on the other
hand, appears to understand that Technicolor is in the
content packaging business. It's worth noting where Thomson chose
to partner rather than to buy outright. Carlton, a content producer with
satellite capabilities is a strategic partnership. So are Nextream with
Alcatel. Philips retained its Digital Networks division.
Then there's Qualcomm, and its Technicolor Digital
Cinema division, a joint venture with Technicolor. This venture is
committed to producing an end-to-end solution for digital cinema
exhibition. Qualcomm, which is best known for their CDMA cellular
telephone technology, is a newcomer to the entertainment industry.
Having developed their ABSDCT compression scheme for government use in
the early 1990's, they are now engaged in a focused effort to market it
to the professional entertainment world.
As the core of that effort, Qualcomm is about to introduce a chip
capable of both decryption and decompression, two very important
functions for digital cinema exhibition. Placing these functions on a
single chip is a brilliant step toward ensuring the security of the
content. But Qualcomm's plans could be upset by the MPEG Digital Cinema
Group, should they choose a compression algorithm other than ABSDCT.
This will remain a challenge for both Qualcomm and Thomson.
As an ISO 9000-qualified company, Qualcomm brings considerable manufacturing
know-how to the partnership. But neither Qualcomm nor Technicolor have
needed experience in cinema product marketing. Fortunately this is a role that
Thomson, along with newly acquired Philips Broadcast, can quite capably fill.
As for the distribution side of digital cinema, Thomson again wins. Both it and
Philips have expertise in routing and digital transmission. Securely
managing and packaging first-release content will also be a service in
demand, and Technicolor is well positioned to be a leader in that
What could still be missing in the bundle, though, is the expertise in digital
rights management (DRM) and key management required for the electronic
distribution of movies. Given that first-run content will be strongly
encrypted, moving encrypted files about while maintaining the security
of the content is a no-brainer. The crux, however, of maintaining secure
distribution in a business-to-business environment is the management of
the encryption keys. They who hold the valid keys have access to the
content, and managing those keys securely is probably the most important
service to be provided in the electronic distribution of digital cinema.
How will Thomson handle this if their new holdings can't deliver? If their recent activity is any sign,
expect another acquisition or partnership soon in DRM.
Whatever happens, Thomson Multimedia and its allies are worth
watching as an emerging player in
digital cinema. They have the technology "puzzle pieces" for a
digital cinema future in which one group could dominate the tools to
produce, post, distribute, and exhibit content (sans projection). But
can they integrate those "puzzle pieces" so that they make a pretty