Panavision: The Best of Both Worlds
Panavision President Bob Beitcher's plan is to further advance brand leadership in film camera and lens technology while integrating digital into the company's services from capture to release.
Nearly 80 percent of all film directors and TV producers call upon one company to rent cameras, lenses, lighting, grip, and support gear, and other production essentials. That company is Panavision. Founded 49 years ago in Hollywood by visionary technician Robert Gottschalk, over the years Panavision has advanced the art and science of filmmaking with a steady stream of innovations in camera, lens, and related technology areas. Based in a 150,000 sq. ft. building headquartered in Woodland Hills CA, this rentals-only giant spends millions annually on R&D, manufactures much of its own equipment, and has affiliated branches with 24/7 service worldwide.
Owned primarily by billionaire Ronald Perelman, Panavision has recently made a series of strategic moves to position itself for the emerging age of digital cinema. Three years ago Panavision unveiled its advanced Primo Digital lenses for digital cinematography, mounting them on Sony HDW-F900 digital 24p CineAlta cameras and further "Panavising" them with additional cinema-style modifications (follow-focus, extended viewfinder, matte boxes, etc.) familiar to filmmakers. Panavision formed a new joint venture company with Sony Electronics to support this integration, and several filmmakers quickly embraced the technology, most notably George Lucas for his highly successful all-digital Star Wars Episode III: Attack of the Clones.
Panavision's strategic moves have extended into postproduction as well. In 2001 it acquired EFILM, Hollywood's original digital intermediate facility. One year later it entered into a venture with Deluxe Laboratories in which the two companies would jointly own EFILM and provide continuity in image management from capture through final release printing.
Leading Panavision into its new era in imaging is Robert ("Bob") Beitcher, a 20-year entertainment-industry veteran recently chosen by Chairman and CEO Perelman as the company's new President. With a resume that includes executive positions with Columbia Pictures, Paramount, Lucasfilm, and Jim Henson Productions, Beitcher demonstrated adroit management skills amid change after joining Los Angeles-based CFI (Consolidated Film Industries) in 1997. There he spearheaded a strategy to chart a digital course for the 75-year-old, multiple Academy Award-winning film lab. When a rapid series of acquisitions resulted in Technicolor's purchase of CFI and Thomson Multimedia's buyout of Technicolor, Beitcher emerged as President of Technicolor Creative Services (see Digital Cinema, February 2002). There he presided over a major expansion in digital content services at the Technicolor Imaging Group.
Digital Cinema Editor Brian McKernan and Contributing Editor Bob Zahn recently posed a list of questions for Beitcher, who had the following responses.
DC: Is your heavy postproduction background a factor in being chosen to lead Panavision, given the increasing role of digital post in the filmmaking process?
Beitcher: I would hope so. Clearly what I spent the last three years on at Technicolor Creative Services was thinking about and executing a strategy that was all about what's called the "digital value chain." As production slowly migrates toward digital and as postproduction really accelerates digital services, more and more of what matters around here is going to be related to that. Panavision's core competencies are in electro-mechanical and optical. Digital is the core competency of EFILM. We've got a very large investment on the front end-the capture-and on the penultimate piece-digital intermediates. What we're going to be working on in the future is how you connect those two pieces, whether it's through offering additional services in the blank space between the two or in developing color-management systems that take information captured on the front end and make it available through the value-chain process into digital intermediates and into digital distribution in all different forms.
DC: What do you believe is Panavision's greatest strength? What are Panavision's greatest challenges?
Beitcher: I think Panavision's greatest strength is in its unique business model; we design and manufacture Panavision-branded cameras, lenses, and accessories, and offer the Panavision "system" to our end customers, through a worldwide rental operation network dedicated to a very high level of customer service. By the way, that customer service includes very bespoke modifications of our equipment for demanding filmmakers, and ongoing dynamic innovation across our whole product line.
It's worth stressing the "system" part of the equation as well, because we design and manufacture our equipment-whether it's the newest camera or an older set of lenses-to work together seamlessly and flawlessly. The strength is reflected in the premium placed on our brand by our many customers. In our corporate video, there's a short interview with Ron Howard in which he says that when he walked on the set of his first film and saw Panavision cameras, he knew he had arrived. That's the way young filmmakers feel about working with us and it's shared by long-time filmmakers as well. No other company in the world comes close to offering the breadth of inventory of cameras, lenses, and accessories, the sheer volume of inventory, or the worldwide reach. With a new rental system we currently have in development, we will soon be upgrading our basic service infrastructure to create a "virtual inventory" approach-all of our facilities will have real-time, online visibility into our worldwide inventory and we will be able to move equipment around to fit customer requirements. This is a key driver to improving our business economics as well as keeping our customers happy.
Our greatest challenges are in two places: dealing with the increasing global mobility of our customers and understanding the pace of the transition from film to digital. On the former matter, we are doing everything from re-organizing and redesigning our basic management systems to enhance our current success in worldwide operations, to adding to our worldwide inventory to make certain that we match customer demand with ready-to-go Panavision systems. With regard to the film-to-digital transition, we are taking every step to understand where our customers are and where they want to be in the short- and mid-terms, investing cautiously in new technologies, and being ever vigilant to what others in the marketplace are doing.
DC: There is still much resistance to the current generation of HD24p production equipment by the Hollywood narrative filmmaking community. How and when will this change?
Beitcher: That's a great question and I wish I had the answer to it. Clearly, the narrative filmmaking community-with some exceptions (George Lucas' Star Wars II and III, Robert Rodriguez's Spy Kids 3D, Jean-Jacques Annaud's forthcoming Two Brothers) is taking a wait-and-see approach for now, and it would probably be fair to say that the F900 is not going to move them to widely embracing digital filmmaking. In the near term, it will continue to be used in hybrid situations, like Michael Mann's Ali, but not as the principal capture device. There will be one or two experimental efforts in one-hour episodics as well, but we haven't seen a significant uptake for the 2003-2004 broadcast season. Basically, the savings in film stock, developing, transfers, etc., are less critical in these situations than the perceived quality of the image-making.
Our view today is that the change will be slower than many thought a few years ago, and may well in fact be driven by the next generation-or maybe even the generation after that-of [digital] cameras, and a new generation of filmmakers more accustomed to video capture and less imbued in the film-process culture. Whether the "take-up" will occur first in one-hour episodics, independent filmmaking, or studio features, we really don't know. In our discussions with cameramen around the world, there's generally no burning desire to change. Today, the studios are pushing it only on an experimental basis-you know, let's try one a year.
In all honesty, given what I said above, we're focusing a lot of R&D effort in what we'd describe as "extend the life of film" innovations. Among these would be a three-perf "system" for features; the digital intermediate process opens up the opportunity for three-perf capture and represents a substantial savings in film stock. We have some exciting ideas along these lines that we'll be rolling out in the next six months or less.
DC: Why didn't Panavision get the contract for Star Wars III?
Beitcher: That's a very fair question. All of that precedes my coming here. I've heard different versions of this, but I've actually never spoken to George Lucas or Rick McCallum about it. I think the easiest explanation has to do with what a company is willing to do for a customer when a product is being introduced and the company is looking to fan the flames and get the market interested in that product. That's very different from what a company is willing to do when the product is more mature and it has had excellent results from its early marketing and promotion efforts.
So I'd say the split wasn't about technology as much as it was about where we thought the pricing and positioning of the camera ought to be for the third picture and where they thought it ought to be. Would we like to be doing that picture? The answer is yes. Were we willing to do it on the terms that were acceptable on their side? The answer is no.
At the moment we're in the enviable position of having roughly 120 digital cameras worldwide and essentially being maxxed-out on that camera. As we ship them out the door this week, next week, the following week for TV and other uses in Canada, Australia, and the U.K., these cameras are working. We don't have surplus digital cameras sitting around needing to go out at any price.
DC: Describe your thoughts of the importance of your company's strategic alliances with Sony, EFILM, and Deluxe.
Beitcher: The strategic relationships with Sony in what we call DHD (Digital High Definition)-a joint venture in digital cameras-and with Deluxe in EFILM have been absolutely critical in getting us out of the gate and into leadership positions in the digital camera and digital intermediate markets. They really are textbook examples of companies working together in a collaborative fashion toward a well-defined end goal.
We can't say enough good things about our friends at Sony. From their technical to their marketing and business teams, they've been true partners in supporting the kind of success we've achieved in the multi-camera market. At the same time, Sony has always been mindful of its other customers, and we've had to respect that the basic F900 camera is available to us on a non-exclusive basis.
Cyril Drabinsky, Warren Stein, and the Deluxe team have been an absolutely critical foundation to making EFILM work for its customers. EFILM's founders-Joe Matza and Bill Feightner-recognized early on that a lab relationship was imperative both on the technical and marketing sides.
On my first tour of the EFILM facility after joining Panavision, it was all "shock and awe." I couldn't believe how quickly Joe and Bill had grown the business. Their intuition on a lab partner was 150 percent correct and they made a great choice with Deluxe. The interaction between the two companies is dynamic and part of the daily fabric of EFILM's operations. Of course, EFILM works with other labs as well, depending on what its customers call for, and the goal is to set the same high level of cooperation and standards with everyone. EFILM has worked out very well for Panavision and equally well for Deluxe.
DC: Where do you see Panavision in one year-and five years?
Beitcher: I would hope to see us in an even stronger market-leadership position, with an exciting new set of tools available to our filmmaker customers. Whether these are film-based or digital, or what the mix of them is, time, technology, and-most important-our customers will tell. We want to continue with all the responsibilities market leadership brings: involvement with the ASC, BSC, CSC, ACS, etc; digital cinema initiatives; and maintaining technical and thought leadership as well as a high level of business performance. I would expect to see more Panavision-branded equipment on the set, although I can't say today what that might be. Finally, with some of our technical developments, I hope to see Panavision-branded equipment being used in some non-traditional markets. Don't ask me more about this yet!
DC: Any closing comments?
Beitcher: I would say that on behalf of my management team and my employees around the world, we are eager to meet the challenges of the market and our customers in the future. The next few years are going to be very, very interesting, for us in the world of cameras and for the whole industry in terms of digital cinema as well as digital distribution in the home. We will probably see new and unexpected competitors emerge and see some long-standing industry players either disappear or get swallowed up. The critical thing for me today is building the right management team, motivating our employees, communicating clear goals, and rewarding success-and making it all fun!