OBERHAUSEN, Germany-Visual effects house Digital Domain, Venice, Calif., has joined with Los Angeles-based film/ TV producer Kushner-Locke Co., independent feature production/distribution company Capitol Films, London, and a pair of Israeli businesses-banking firm DLIN, Ltd., and post/ effects shop Gravity, Tel Aviv-to acquire from the local German government a controlling interest in High Definition Oberhausen (HDO), a digital production/ visual effects facility located in the city of Oberhausen, just on the outskirts of Dusseldorf.
Digital Domain, Kushner-Locke, Capitol, DLIN and Gravity each hold what’s believed to be an equal minority stake in HDO. Those minority interests collectively amount to approximately 95% ownership of HDO which encompasses a 100,000-square-foot facility completed in 1997-replete with digital workstations, stages and assorted effects/post resources-and another 180,000 square feet of surrounding land, which may also be developed for expansion.
Financial terms of the deal were not disclosed. Digital Domain COO Steven J. Fredericks noted that the company has an option to increase its ownership stake in HDO. He declined to comment on a prevalent rumor that Digital Domain did not have to shell out any money in return for its HDO investment and was instead invited by German governmental authorities to become part of the consortium for free, based on Digital Domain’s effects prowess, reputation and talent.
Originally, the governments of Oberhausen and North Rhine-Westphalia-the state in which HDO is located-felt that by funding the development of a state-of-the-art visual effects studio, production business would follow. Fredericks explained, however, that the "build-it-and-they-will-come philosophy" fell far short of expectations. German officials then realized they needed world-class effects talent and other industry expertise to attract feature, TV, commercial and interactive media projects. This realization eventually led to the forming of the consortium.
Beyond the facility itself, subsidies offered to feature producers by North Rhine-Westphalia also attracted companies to the consortium. According to Fredericks, the minimum subsidies guaranteed by the North Rhine-Westphalia government are significant enough to enable Digital Domain to offer "fairly deeply discounted bids on effects work" at HDO. "We’re now able to get involved in the most aggressive bidding available in the marketplace today," claimed Fredericks, who wasn’t at liberty to discuss publicly the exact amount of those minimum subsidies but added they could be increased several fold by North Rhine-Westphalia and national authorities.
Spot Implications
Fredericks noted that Digital Domain is coming off its best year ever in commercials and that spot business and plans for the company call for future growth. "At the same time, we’re hitting up to capacity here [the Venice studio] with what we’re doing in commercials, features, music videos and interactive media," he said. "By being able to divert some of that workload to Europe, Digital Domain is better positioned to serve its commercial clients here [in the U.S.]."
Ed Ulbrich, Digital Domain senior VP of production/commercials exec. producer, agreed that capacity would be freed up for more spots in the U.S. He added that the acquisition of HDO comes as more European directors are getting involved in American commercials and more frequently asking Digital Domain to participate in European advertising. Digital Domain is currently in the midst of a Nestl assignment for Publicis, Paris, according to Ulbrich.
Ulbrich said he and Digital Domain exec. director Mitch Kanner talked with key players at London ad agencies to get feedback on a possible company venture in Europe. "They felt that there was a need for a Digital Domain presence on the continent," said Ulbrich.
"Just think of a facility in Europe that is of the size and firepower that Digital Domain has in L.A.," continued Ulbrich. "From a technology point of view, the two studios are highly compatible. And our intent is to have connectivity between them-sending 3-D models back and forth transparently, and sharing rendering firepower."
At press time, Enrique Santos and Mark Lohff-Digital Domain’s director of technology and director of digital operations, respectively-were in Oberhausen to lay the groundwork for connectivity as well as to assess the infrastructure and employees currently in place at HDO.
Ulbrich related that Digital Domain plans to send key people over to Oberhausen on "professional sabbatical" to train artisans in effects and other disciplines such as production management and "our ways of operating and doing business." He conjectured that Digital Domain’s European operation at HDO would be a mix of new European hires, U.S. artists permanently transferred to Europe and others who will go back and forth between the two facilities.
He added that HDO should prove a magnet for top talent from all over the world. As chronicled in SHOOT, American visual effects companies have had to recruit heavily overseas to find qualified artisans. And although the number of applicable visas granted for entry into the U.S. has recently been raised (SHOOT, 10/23/98, p. 1), there’s still a steadfast limit on the number of immigrants who can be brought stateside for staff slots. Ulbrich reasoned that by establishing a substantial foothold in Europe, Digital Domain could better attract and keep more highly coveted artists from the global pool.
Euro-Timing
The HDO deal comes as the long-planned and much-awaited conversion of European currencies to the euro begins. On the first of the year, the euro became a live currency for electronic transactions. Eleven of the 15 nations in the European Union, a group formed to cooperate in free trade, have joined the European Monetary Union with a common euro currency. Those participating countries are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Three other EU members-Britain, Denmark and Sweden-will decide later whether to join the monetary union. Greece hopes to qualify for the monetary union early in the next decade.
"With the grand consolidation of European economies well under way, we envision HDO becoming a center of visual effects production for all of Europe," observed Digital Domain CEO Scott Ross.
Kushner-Locke co-chairman Donald Kushner said, "We’re excited by the opportunity HDO presents to continue our diversification and the possibilities of European co-ventures."
Capitol Films co-founder Sharon Harel stated, "We are delighted Digital Domain has joined our consortium. HDO offers the state-of-the-art facilities necessary to place Europe in the forefront of European film production."
Thus far, Fredericks noted, Digital Domain’s work in European features has been limited, its most notable job being The Fifth Element, directed by Luc Besson, which last year won a British Academy Award for best visual effects. (Besson is represented for spots stateside by bicoastal A Band Apart.35mm.) Fredericks said HDO should help Digital Domain procure more European feature assignments.
Ligad Rotlevy, CEO of DLIN, and Gravity CEO Effi Wizen both cited the combined strength of HDO consortium members. Wizen said HDO was poised "to become a major player in the ever-growing global market for computer graphics animation and digital effects in film and television."
Gravity also maintains partnerships with companies based in Cologne, Germany, London and New York; the latter being Multi Video Group, parent company of New York-based post/ effects shop Rhinoceros. The recently struck relationship between Multi Video Group and Gravity also brought Gravity special effects designer Vico Sharabani to Rhinoceros (SHOOT, 10/16/98, p. 8).
