It used to be that Max Penner, co-founder of a production company in Van Nuys, felt lucky if Paradise FX Corp. got a big job on one movie a year. But business lately has soared. Last year, his team shot and edited two films. Next year it could do as many as eight.
For the surge in activity, Penner can thank a phenomenon that is sweeping through Hollywood: 3-D films.
Major studios such as Walt Disney Co. and Dreamworks SKG have rolled out an increasing number of 3-D movies in recent years, and more will hit theaters soon. The most anticipated of them is “Avatar,” a James Cameron epic that will be released Dec. 18.
The surge in 3-D films has led to bigger profits at theaters – they can charge more for tickets to the specialty releases. But it has also led to a windfall for small and midsize postproduction houses scattered across Los Angeles County that specialize in 3-D and do much of the grunt work on films, whether that’s supplying cameras, editing 3-D imagery or touching up a final cut.
Paradise FX is one of those businesses. Before the 3-D boom, the company’s 10 employees did 3-D work mostly for theme park rides and trade show promos for corporations. One of its most conspicuous projects was the “Honey, I Shrunk the Audience!” show at Disney parks.
Then movie studios started knocking on Paradise’s door. Among them was Lions Gate Entertainment Corp., which wanted to use Paradise’s equipment for the slasher film “My Bloody Valentine 3-D,” which went on to gross more than $100 million. Now, Penner estimated that his company could triple its annual revenue to as much as $9 million.
“We’ve been sitting around and waiting for 10 years for this to happen,” Penner said, referring to the resurgence in 3-D filmmaking. “We usually bring in around $2 million to $3 million a year, and that’s going to vastly expand.”
Paradise FX is not alone. Anthony Coogan, executive producer at Stereomedia 3D in Studio City, said his company is in talks with three studios that are interested in renting its 3-D cameras and tapping its production expertise.
“I just got off the phone with one producer who said they were all ready to shoot in 2-D, and the backers said, ‘Hey, let’s talk about doing it in 3-D,’” Coogan said. “For many years 3-D was looked at as a gimmick, but it’s going to be absolutely gigantic.”
Try, try again
Hollywood has tried to popularize 3-D films in the past. But the technology wasn’t very sophisticated, so watching the movies required wearing boxy 3-D glasses with blue and red lenses, and they often left audiences with a headache.
The newest generation of 3-D projectors produces cleaner images that proponents claim won’t cause the same problems. Viewers still have to wear special eyewear provided at the theaters. But the glasses are more like standard sunglasses than the cardboard models of the past.
As technology improved, Hollywood studios decided to plunge back in the 3-D waters. Since 2005, about 16 wide-release 3-D films have hit theaters in North America. In the next three years, industry watchers believe the studios plan to release as many as 45.
Local companies have found numerous ways to profit from the surge in demand for 3-D films. For instance, RealD of Beverly Hills builds and installs equipment that turns digital projectors into 3-D projectors. The company owns more than 90 percent of the 3-D projector market share in the United States. The demand for 3-D films has helped grow RealD’s business by more than 100 percent year-over-year since 2005.
Outfitting a theater with 3-D technology is an expensive proposition because 3-D can only be installed on a digital projector, which easily costs a theater owner more than $50,000 per unit. The hefty price tag helps explain why there are only about 3,800 screens equipped with 3-D technology in North America to date, out of a total of 43,000 screens.
But the gap is closing. RealD executives said the company will have equipped more than 4,500 theaters worldwide with 3-D projection capability by the time “Avatar” is released. To allow theater owners to make the change, RealD leases its equipment rather than selling it. The company adds to its income by taking a portion of ticket sales.
“We’ve come a very long way in a relatively short amount of time,” said Michael V. Lewis, RealD’s chief executive.
In-Three Inc. is another company capitalizing on the 3-D rush. The Woodland Hills-based business turns 2-D footage into 3-D using proprietary software and its team of 90 digital effects specialists.
Most recently, the company did the conversion work on “G-Force,” a Disney film about talking hamsters. In-Three is currently working on another wide-release movie and is in talks to do several more, said Damian Wader, the company’s vice president of business development.
In-Three’s service allows directors who shoot a film the traditional way to turn it into 3-D afterwards, sparing them the hassle of working with bulky 3-D cameras.
In-Three had originally planned to use its technology to make 3-D versions of classic hits such as “The Matrix” or “Star Wars.” But the wave is bringing demand for its services on current films.
“We thought our business model would be mostly dealing with legacy films,” Wader said. “But now we’re been asked to look at movies that have already been shot and they’re now trying to figure out how to turn them into 3-D.”
Studio executives hope that 3-D films will help bring audiences back to the theaters: Attendance has fallen by about 13 percent over the past decade, according to box office tracker Media by Numbers.
There’s another motivation for studios to produce 3-D films: Theaters charge more for tickets. A ticket for a 3-D movie usually costs about $3 more for the same film in standard format. Piper Jaffray Co. of Minneapolis estimated that the premium price for 3-D tickets could increase box office returns more than 20 percent by 2011.
But while 3-D films appear to be going mainstream, there are still doubts as to whether they will be as popular five or 10 years from now. Once the novelty of the experience wears off, audiences may decide 3-D isn’t necessary to enjoy watching movies, said Howard Suber, a professor emeritus at the UCLA School of Theater, Film and Television.
“The first time you see it, you might say wow, and maybe you’ll still have the same reaction after the second or third time,” Suber said. “But after a while, you recognize it’s a gimmick and it just becomes annoying.”
But Penner of Paradise FX hopes the skeptics are wrong. Standing in a brownstone warehouse in Van Nuys, Penner fiddled with a 3-D camera in his company’s main workspace. The 90-pound device weighs twice as much as a standard camera. It’s a tangle of wires and machinery with a wide lens.
Filmmakers used this particular camera recently in London to shoot the new teen flick “StreetDance 3-D.” Next, it could be sent to on any one of eight 3-D shoots on Paradise FX’s schedule.
Penner believes the packed work slate bodes well for his company’s future.
“I’d like to stay busy,” he said. “I’m 60 years old, and I want to retire someday.”
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