RealD introduces new image technology with ‘Desolation of Smaug’

In a move to expand beyond 3-D cinema, Beverly Hills-based RealD Inc. is touting a new technology that it says will sharply improve the image quality on movies, whether they are shown in theaters or in the home.

The technology, called RealD TrueImage, eliminates blemishes and artifacts (often called noise) when film and TV images are processed, creating a sharper and more detailed picture that is closer to what the filmmaker intended.

The proprietary process already has the backing of one notable director, Peter Jackson, who used it for the recent release, “The Hobbit: The Desolation of Smaug,” both in 2-D and 3-D formats.

PHOTOS: 60 images from ‘The Hobbit’

“This technology eliminated digital noise and other artifacts,” Jackson said in a statement. “Very noisy low-light shots we had been struggling with in the grade were suddenly completely clean, and I extended the process into as many ‘Hobbit’ shots as I could.”

“By cleaning up noise we were suddenly free to really push the dynamic range and get extraordinary detail,” Jackson continued. “The clean image makes for a much more comfortable 3-D experience because your left and right eyes are not being asked to process separate levels of artifacts.”

Beyond cinema, RealD also plans to market the technology to other consumer applications, improving the quality of images and reducing file sizes for content delivered on mobile devices and video streaming services.

“This is a pretty significant technical milestone for us,” RealD Chief Executive Michael Lewis said in an interview. “We’ve been working for a number of years to perfect the quality of visual images and go beyond what were known for, which is 3-D.”

ON LOCATION: Where the cameras roll

Investors, however, responded coolly to the news. RealD Shares dropped 33 cents, or 4.1%, to $7.78 on Thursday. The shares have tumbled 26% in the last year.

Founded in 2003, RealD has expanded rapidly around the world but has been buffeted by a declining consumer interest in the 3-D format in U.S., where the pace of 3-D installations has slowed.

In November, the company reported that it lost $4.6 million in its second fiscal quarter ended in September and said it was laying off 20% of its staff to reduce operating costs. The layoffs affected about 35 jobs at RealD’s offices in Beverly Hills and Boulder, Colo.

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