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ENTREPRENEUR

October 10, 2011

SAN FERNANDO VALLEY BUSINESS JOURNAL

3ality Grabs Crowd, Clients in 3D Burbank firm expands with acquisition of competitor.

PHOTO BY DAVID SPRAGUE

Camera: 3ality founder and CEO Steve Schklair with a 3D rig. 3ality equipment is being used on the sets of film productions “The Hobbit” and “The Great Gatsby.”

By MARK R. MADLER Staff Reporter

teve Schklair started his 3D software and camera rig company more than a decade ago, when it was laughable to even suggest there was a future in 3D. Now it’s Schklair’s turn to laugh. Equipment from Burbank-based 3ality Technica is being used on the set of “The Hobbit,” directed by Peter Jackson. Baz Luhrmann also is using the equipment as he aims to recreate the 1920s in “The Great Gatsby.” “I had no doubts this was the future of media,” said Schklair, whose entertainment industry career included work for special effects studio Digital Domain and roles such as creative director for title design firm R/Greenberg Associates and executive producer of The Columbus Project. While there is skepticism regarding the widespread home adoption of 3D television, 3ality is thriving. In 2010, 3ality brought in

S

3ality Technica YEAR FOUNDED: 2000 (as Cobalt Entertainment) REVENUES (2007)*: $2.1 million REVENUES (2010)*: $21.4 million EMPLOYEES 2010: 52 EMPLOYEES 2011: 100 *as 3ality Digital

revenues of $21.4 million — more than ten times the company’s 2007 revenues. 3ality also is growing its local presence in response to increased demand in the marketplace. In August, it purchased former competitor Element Technica, a Culver City manufacturer of camera rigs and accessories for an undisclosed amount. As a result of the acquisition, Schklair is preparing to add 50 employ-

ees and expand into an adjacent building, bringing its total footprint to about 35,000 square feet. Indeed, 3ality has come a long way since its early years. In the beginning, there was no interest from investors and no market for the products. Family and friends doubted the entire enterprise. The company, which started in 2000 as Cobalt Entertainment, became fraught with debt that mounted to about $1 million, Schklair said. Giving up was not an option, though, as Schklair and his team found progress in the test footage. He worked freelance feature film gigs to keep the company afloat and to pay his employees. “We were able to sustain it (the company) until there was an industry to sell to,” Schklair said. 3ality: Changing the game In 2006, the company changed its name to 3ality Digital and found its first serious

investors in the Modell family, whose patriarch Art Modell, owned the Baltimore Ravens football team. Modell, Schklair said, was an innovator in televised sports having helped start Monday Night Football. Modell’s son viewed test footage Schklair shot at a Fresno State football game and it captured his interest. “(Art and his son) thought it was amazing and it should be pursued,” Schklair said. At this same time, events occurred both inside and outside the company that set the stage for increased use of 3D. That year, 3ality also had its first breakthrough with a theatrical feature film starring Irish rock band U2. Between April 2008 and September 2010, 3eality racked up enough firsts to support Schklair’s belief that he was going in the right direction — there was the first Super Bowl game in 3D, the first 3D cable broadcast, the first fiber optic 3D broadcast, and first 3D broadcast to clubs in England and to theaters Please see page 15


SAN FERNANDO VALLEY BUSINESS JOURNAL

Continued from page 14

in India. “You can have your ideas, but luck is a big part of it,” Schklair said. “We were lucky it all came together at that point.” Marty Shindler, an Encino-based entertainment industry consultant who helped Schklair put together a business plan for 3ailty, said the company came into the 3D space at the right time. Since then, it continues to tackle the right kinds of projects, including those in sports and films, Shindler said. Sports and movies will continue to drive the adoption of 3D in the home just as they contributed to television sales in the 1950s and the popularity of color broadcasts in the 1960s, he said. Schklair said 3ality is poised for additional

October 10, 2011

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“The euro to dollar (conversion) has not been friendly to us,” Schklair said. “It’s caused us to raise our prices to cover that.” The recent deal combines the best parts of both companies and their named. It also makes it easier and less expensive to capture 3D film without sacrificing quality, Schklair said. It’s also good for the industry, as the lower cost will get 3D cameras into more hands, he said. The future But as the 3D industry has heated up, so has the competition. One of 3ality’s biggest rivals — The Cameron-Pace Group — has one of the one of the biggest names in Hollywood attached to it: director James Cameron. Cameron-Pace, also based in Burbank, combines the camera building prowess of Vince Pace and the technological vision of

PHOTO COURTESY OF 3ALITY TECHNICA

Capture: Having content is key to 3D television taking off in the U.S., Schklair said.

PHOTO COURTESY OF 3ALITY TECHNICA

Action: Live sporting events and concerts are a sweet spot for 3ality Technica.

growth opportunities now that it has acquired Element Technica. By adding Element Technica’s mechanical design and manufacturing capabilities, 3ality no longer has to outsource its camera rigs to a German company.

Cameron. The pair collaborated on the Fusion camera system used for “Avatar” and wants to bring that expertise to 3D for broadcast. Schklair welcomes the competition, saying there cannot be a 3D industry without it.

“If I have to have a competitor, I’m glad it’s Cameron-Pace,” Schklair said. “It will keep us on our toes.” Cameron may have “Avatar” and its history-making box office numbers, but some industry observers say 3ality already has proven it can hold its own in the 3D film market. For example, cinematographer John Schwartzman chose 3ality’s lightweight TS-5 rig for filming “The Amazing Spiderman” this spring. Having Jackson and Luhrmann on board also gives the company exposure. In addition, AEG Network Live, a multimedia company producing live events, has committed itself to 3D and has used 3ality equipment and crews to broadcast shows into theaters, said President John Rubey. The biggest project 3ality contributed to was the March 2010 simulcast of a Black Eyed Peas concert at the Staples Center, which was shown in 3D in movie theaters in North America. What makes 3ality enjoyable to work with

how its crews operate with the performers and their often large entourages, Rubey said. “In order to get this right you have to integrate yourself,” Rubey said. “You identify the weak spots and fill those in and back off the strong spots.” Schklair said while the feature film work is nice to have, television remains the focus of 3ality. Televisions that are designed to show 3D programming are becoming more commonplace. What’s missing is the programming. The U.S., Schklair said, lags behind England in the amount of 3D content to view at home. In 2010, the Sky network launched a channel just for programming in 3D. The day is coming when U.S. viewers will have the same option, Schklair said. But that still may be three years or so away. Meanwhile, 3ality is providing equipment for use on some episodic television shows. The equipment would not be used for original broadcast but rather for use in syndication, Schklair said.


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