Southland’s Become a Driving Force in Manufacturing DVDs
Southern California has emerged as an international hub of a multibillion-dollar business that didn’t even exist five years ago: the production of digital videodiscs, or DVDs.
With a handful of major manufacturers clustered around Hollywood studios, the region has more production capacity than anywhere in the United States, if not the world. One in five of the 730 million DVDs sold last year were made in California, according to London consulting firm Understanding & Solutions.
This burgeoning industry of translating movies, interactive games and other content into digital format, and the manufacturing of the five-inch plastic discs on which the material is stamped, is creating thousands of new local jobs for everyone from factory workers to graphic artists to computer programmers and film preservationists. It’s also helping to moderate the effects of the economic slowdown that has enveloped other parts of the country and ravaged some high-tech industries.
The challenge now facing local manufacturers is keeping up with demand, which is forecast to double this year. And with the holiday season around the corner, Hollywood has begun inundating DVD makers with orders to be ready by Christmas.
Inside the spotless Commerce plant of DVD maker WEA Inc. recently, robotic arms and conveyor belts shuffled discs through a largely automated assembly line on a recent day. One machine stamped the discs, and another layered them with a translucent gold film. More machines buzzed and whirred nearby.
“We’re running at capacity,” said Pierre E. Loubet, vice president of sales for WEA.
WEA, a subsidiary of AOL Time Warner Inc., is capable of producing 135,000 discs a day at its Commerce operation, but sometimes that’s not enough.
So, in a collaborative spirit rare in most industries, WEA and other DVD manufacturers routinely channel overflow to competitors when they find themselves with too much work. “Because it’s not a matter of if, it’s a matter of when you’ll need help,” Loubet said.
About 800 are employed at WEA’s Southern California plants and distribution center, Loubet said. And WEA, like other DVD manufacturers throughout the region, is growing.
And it’s no surprise why.
Americans bought 182 million DVDs in 2000 and are on pace to buy twice as many this year, making the DVD the most quickly adopted consumer electronic product, according to the DVD Entertainment Group, an industry trade association. A quarter of American households are projected to own DVD players by the end of the year.
Movie buffs love DVDs because they reproduce films in high resolution but also because they hold about 8.5 billion bytes of memory, allowing for added cinematic features.
For example, the DVD for “13 Days,” a film set in the Kennedy White House during the Cuban missile crisis, offers subtitles with scene-specific historical facts and trivia. And the DVD for Hitchcock’s classic “The Birds” includes footage from star Tippi Hedren’s original screen test.
But it’s the spikes in demand following the DVD releases of box-office hits such as “The Matrix” and “Gladiator” that are pushing the limits of production capacity.
But before any machine starts churning out plastic discs of recent blockbusters or anything else, a host of technical and creative endeavors must be employed to shape and assemble the content.
Growth in Industry Has Kept Low Profile
It’s this multifaceted nature of DVD technology that has generated a variety of technical jobs. Some workers convert films into the digital format. Others create the menus that enable viewers to jump from one scene to the next. Film preservationists are used to meticulously restore faded classics, such as those used for the re-release of “The Lost World,” the 1925 grandfather of dinosaur-genre films.
Whole camera crews are devoted to capturing footage for those “the making of” documentaries that are now standard programming on any blockbuster title.
A DVD can handle that extra material because--although it is the same size as its prototype, the compact disc, it can hold 14 times more information.
A DVD may appear smooth to the naked eye, but it hides a giant string of binary code, written in a 15-mile-long spiral of 20 billion microscopic pits, each one-tenth the depth of a fingerprint and one-fourth the width of a red blood cell.
Though most consumers associate DVDs with movie videos, the technology also suits a variety of other content. DVDs already are used for computer software and video games. And DVD proponents foresee the discs providing a range of additional material, from mail-order catalogs to instructional seminars.
DVD production capacity has expanded to keep pace with the technology’s popularity. Technicolor, a leading DVD producer headquartered in Camarillo, doubled capacity last year and enabled itself to handle 60% more this year. And Technicolor still operates at full bore much of the time.
The growth of DVD manufacturers, or replicators, as they’re known in the business, is a recent phenomenon. Since 1997, the year DVDs were introduced to American consumers, DVD sales in the U.S. have grown from $130 million to $3.6 billion in 2000.
Despite such impressive growth, the local DVD industry has remained below the radar of many of the region’s economists.
“It’s the kind of phenomenon that typically gets lost in the employment figures we work with,” said Tom Lieser, senior economist with UCLA’s Anderson Business Forecast. Government statistics, for example, might lump a camera operator and a computer programmer into separate categories, even if they’re both involved in the creation of DVDs.
Nonetheless, Lieser said, “it’s a growth area, and you’d have to say that it’s offsetting weakness elsewhere” in the region’s economy.
The industry’s top priority now is the upcoming Christmas crunch, when manufacturers will rush to fill a deluge of orders from Hollywood.
Universal Studios’ Digital Video Compression Center, a division that converts films into the digital format through processes known as authoring and compression, plans to add 25 employees to its staff of 50 in the next six months. As Christmas approaches, the division will work “at capacity and beyond,” said Orly Kroh-Triffman, executive director of operations.
Bob Pfannkuch, president of Torrance-based replicator Panasonic Disc Services Corp., offered a similar prediction: “We expect to be sold out this year.”
Although Panasonic has its own authoring and compression department, the company sometimes taps outside sources for that work, he said.
Such outsourcing is a boon to freelancers such as Van Ling, an independent DVD producer who has as much work as he can handle. Ling’s craft encompasses a range of skills, from computer programming to detective work: He designs graphics and menus and even digs through studio archives in search of deleted scenes and other vintage footage that studios add to the DVDs of popular classics.
The movie studios, he said, “find people who really love the movie and who are willing to go the extra mile.”
Southland Losing Some Business to Outsiders
With such competition for a relatively small pool of talent, some small DVD clients are having trouble playing in the same arena as the big shots from Hollywood.
Joe Kane, whose small company, Joe Kane Productions Inc., specializes in instructional videos, said when he recently looked for a producer to convert his latest project into a DVD, local talent was unavailable.
“The studios are providing so much work here, that if I want to get anything done, I can’t find any competent people in Los Angeles,” Kane said.
Taiwanese companies, in particular, are picking up the slack.
Ritek Global Corp., which owns a large DVD plant in Taiwan, recently opened a plant in Ontario and an authoring and compression division in Glendale to serve the robust Southland market.
But not all the business that Ritek finds in the region will stay there. “During peak periods, we will access the Taiwanese capacity as needed,” said Richard Marquardt Jr., chief executive of Ritek’s Los Angeles-based Ritek Global Media unit.
Infodisc Technology Co., another Taiwanese DVD replicator, recently built a plant in El Paso after acquiring Mediacopy, a major videocassette duplicator located there.
“Just as Taiwan has become a global powerhouse in [computer] chips,” said Michael Gold, an analyst with SRI Business Consulting Intelligence, “I expect them to become a critical link in the global DVD supply chain.”
California also has lost DVD business to other states.
Tom O’Reilly, a former editor at TapeDisc Business magazine and now the marketing director for Optical Experts Manufacturing, a DVD manufacturer in Charlotte, N.C., said some disc manufacturers have turned their backs on California because of the state’s tough business climate. He cited the high costs of utilities, strict environmental regulations and the recently enacted overtime wage law.
“If you add up all those factors, it has made things very difficult for the replicators in that region,” O’Reilly said.
Still, the allure of Southern California is undeniable, he said. “If you’re looking to service the Hollywood community, the best place to be is in their backyard,” he said.
