Deluxe: In Living Color

Way back in the distant past, before the Hollywood sign came into being, just after filmmakers started making their historic exodus from the East Coast to Los Angeles, William Fox spotted a 13-acre lot south of Sunset Boulevard, spreading across both sides of Western Avenue.

It was there that he established a new home for his film laboratory, and it is there that it has remained since its 1919 creation.

Today, it is no longer part of Fox. But the renamed Deluxe Entertainment Services Group is still very much part of Hollywood history -- and its present, as Deluxe has expanded into a global operation and leading provider of film and digital services in production, postproduction, distribution and archiving.

On Monday, Deluxe will host a ribbon-cutting ceremony for a modern new building and extension to the original Hollywood complex, which will house three screening theaters as well as additional film and administrative services.

The location where the lab came into being now holds some of the latest technical advancements, including a robotic arm that handles film in part of the lab process that was once manual. The new building will be named in memory of Burton "Bud" Stone, the former president of Deluxe who died last year.

"Bud has always been and continues to be a major part of the culture," says Cyril Drabinsky, Deluxe's president and CEO, noting that the American Society of Cinematographers dedicated its 2009 Heritage Award to him.

Stone and Drabinsky have been critical components of a company that has grown from a local operation to an international one, with labs in places as far-flung as Auckland, Barcelona, London, Madrid, Melbourne, New York, Rome, Sydney, Toronto and Vancouver. Deluxe Hollywood provides release prints for clients including Disney, Lionsgate, New Line/Warner Bros., MGM, Miramax, Paramount, Sony and Summit.

It also provides prints for Fox, though the studio no longer owns any part of it. Deluxe was part of Fox until it was purchased by the Rank Group in the U.K. in 1989. In 2006, MacAndrews and Forbes Holdings, led by businessman Ron Perelman, acquired it for an estimated $750 million. With that move, Deluxe also became sister company to camera giant Panavision.

Today, Deluxe's global footprint is more extensive than many realize. It includes the EFILM digital intermediate and related services facilities; CIS visual effects arm; and all Deluxe Digital Media, including mastering, editing, archiving and sound. Deluxe Digital Media is also the umbrella for Deluxe Digital Cinema that creates Digital Cinema Packages for theatrical distribution; and Deluxe Media Management, which handles such marketing and fulfillment as trailers and EPKs. Deluxe Film Services handles shipping and logistics. Deluxe Digital Studios addresses evolving home entertainment needs, which includes DVD and Blu-ray production.

"I see Deluxe as a company that services major studios every way along the production, postproduction and distribution pipeline, in the film or digital space," Drabinsky says. "With regard to our digital platform at EFILM, Deluxe Digital Services and Deluxe Digital Media, we have spent in excess of $50 million building up those platforms, and we continue to spend heavily in those areas. We also continue to spend heavily in our traditional analog platforms. There is still a lot of business in the analog film world, and we can't fall behind. It is a capital-intensive business."

He adds, "Film is an incredible technology -- from an archival point of view, from a resolution point of view. Film will continue to be strong as a capture medium, especially on the feature side. It continues to grow as a business for us. At some point, we will see it decline in the theaters, but over the next few years we are going to see a very active business. And there will always be a place for film in the future."

On the digital side, Drabinsky says: "Digital asset management -- including the ability to store, access and retrieve assets -- is going to be a big business in the future, and we are looking at that in a serious way right now. Dealing with digital cinematography and that workflow is also something that we are looking at."

Drabinsky believes he has the right personnel in place to help him do so.

Over the years, Deluxe employees have earned numerous SciTech Awards from the Academy of Motion Picture Arts and Sciences, including for a system of compressing and decompressing CinemaScope pictures for convention aspect ratios, and most recently for EFILM's process of creating archival separations from digital image data.

EFILM bases are in Hollywood, New York, Northern California, Sydney, Toronto and on the Fox lot. The business offers digital intermediate, home and cinema deliverables, dailies and tools such as on-set remote services.

"It's a facility that loves the art and supports the filmmakers," says director Julie Taymor ("Frida"). "(President) Joe Matza is just about the most supportive guy to work with."

EFILM was one of the earliest to step in the DI space, which exploded earlier in the decade and became a key part of feature postproduction.

A ribbon-cutting party Monday for the new Deluxe building, right, will honor its 90 years in Hollywood.
It started with 2K, the most commonly used resolution for digital postproduction, mastering and delivery.

EFILM is additionally offering 4K -- four times the picture information as 2K. Matza points out that Sony's 4K digital projector is making inroads in exhibition with recent high-profile deals with Regal and AMC. Meanwhile, Texas Instruments -- which makes the 2K DLP Cinema chip used in most digital theaters installations -- announced that it plans to develop 4K technology.

"I think everything is going to end up going 4K," Matza predicts, adding that EFILM has already completed more than 25 4K DIs. This year, that included Sony's "Angels & Demons" and Fox's "X-Men Origins: Wolverine."

With an eye to the future, the company also started to offer 3D DI, most recently for Fox/Blue Sky's latest "Ice Age: Dawn of the Dinosaurs." Says Matza of 3D: "I think we are seeing just the beginning of it. In the next few years I'm sure it will grow and then we will see if it sticks."

No area reflects rapid industry change more that home entertainment, which helps content owners to get its product to consumers in formats from DVD to Blu-ray, iTunes to Hulu, or digital downloads. "From one master we create any flavor of product," says Peter Staddon, senior vp worldwide sales and marketing at Deluxe Digital Studios.

Staddon recalls that in 1990, the business was primarily made up of VHS, primarily rentals, often for family titles. He adds that the 1997 launch of DVD "flipped the market on its head. There was huge demand. That's when digital assets became a mainstream product. Studios were selling hundreds of millions of discs each year, and they needed authoring compression, advance menus.

"That market grew hugely until about two years ago," Staddon notes, adding that Blu-ray Disc was just coming out of the format war with HD DVD. Meanwhile, it was beginning to compete in a market where the digital download business was becoming significant. "Now we have a more diversified product offering," he notes. "The customer has changed."

For example, this past year, Deluxe began hosting servers that supply additional content that can be accessed through the Internet, via BD Live. Staddon reports that last month the servers reached 25 million hits in slightly more than nine months since it began offering the service.

"That is showing that consumers are starting to recognize and be aware of BD Live as a technology," he says. "The challenge is to develop richer and more rewarding experiences using the technology. That's what we will start to see."

1915: William G. Fox founds Fox Film Corp. in Fort Lee, N.J. The fledgling studio includes a film and camera department that is later named Deluxe.

1919: Having purchased 13 acres in Hollywood just south of Sunset Boulevard and both east and west of Western Avenue, Fox establishes a film lab on the south side of the lot, at Fernwood and Serrano.

1927: Fox/Deluxe acquires a patent for the sound-on-film process. One of the first films to use the Fox Movietone process, "Sunrise: A Song of Two Humans," opens the same year. Fox begins producing the weekly Fox Movietone News, which runs in theaters until 1963.

1935: Fox Film Corp. and 20th Century Pictures merge to form 20th Century Fox.

1953: Fox/Deluxe develops the widescreen format CinemaScope. Early Cinescope titles include "There's No Business Like Show Business" (1954) and "The Seven Year Itch" (1955).

1972: Deluxe enters the home video arena, beginning to offer large volume videocassette manufacturing.

1989: The Rank Group acquires Deluxe.

1996: Deluxe duplicates its 1 billionth video cassette.

2000: Deluxe enters the DVD market.

2006: Rank sells Deluxe Film Group to MacAndrews & Forbes Holdings, which subsequently renames the company Deluxe Entertainment Services Group, reflecting the inclusion of digital businesses.
-Nielsen Business Media