RealD Scores a Hat Trick in July

By J. Sperling Reich | August 4, 2016 7:26 pm PDT
RealD Scores a Hat Trick in July 2016

Should RealD ever have cause to craft a timeline of their corporate history, they will require a lot of space to document all their activity in July 2016. Last month the 3D and visual technology company announced a key acquisition, won the latest round in an ongoing patent dispute and topped it all off by closing a massive 4,000 screen deal in China.

After five years as a public company, RealD went private again last year when they were acquired by the private-equity firm Rizvi Traverse Management for USD $551 million. With their new owner onboard, and without Wall Street looking over their shoulder second guessing them, 2016 is shaping up to be a memorable year for RealD, at least in regards to business planning and strategy, if not box office.

In March RealD introduced its Ultimate Screen, a new high-gain movie screen engineered to be brighter, reflecting 91% of the light coming from the projector. The silver screen also has an anti-stick coating making it easier to clean.

RealD may be winning more industry praise these days for visual technology such as TrueImage, software which helps improve the clarity of images by removing digital defects, artifacts and noise. Looking to build up their imaging offerings, the company announced the acquisition of Tessive on July 13th. Tessive developed a motion image processing technology that corrects imperfections such as “judder”, which occur when capturing fast moving action. RealD is taking on Tessive’s proprietary software in order to launch RealD TrueMotion.

On paper this seems to be a smart move for both companies; it can be difficult for a smaller, independent technology company like Tessive to make a go of it, even with a superior offering, whereas RealD can combine the software with its existing solutions in an effort to grow into an image processing powerhouse. To that end, RealD has taken a page from the Dolby playbook by having several well-known filmmakers such as James Cameron and Peter Jackson sing its praises.

RealD has benefited from similar technology acquisitions dating all the way back to its earliest days. In fact, the RealD system was based on the technology developed by Lenny Lipton at his company StereoGraphics, which RealD acquired in 2005. Then in 2007, RealD picked up ColorLink, which offered 3D imaging components and came with a wealth of published patents.

Today, RealD holds almost 1,000 patents, at least two of which have been the cause of an infringement dispute in the United States with 3D rival MasterImage 3D. On 21 July, however, the company won the latest round in its patent proceedings when the United States International Trade Commission (USITC) ruled in its favor. The USITC decided that MasterImage’s Horizon 3D systems infringe on RealD’s patents and blocked MasterImage from importing and selling them in the United States.

Though a victory of sorts, it might be a bit half-baked. It is impractical to review the entirety of the patent dispute between RealD and MasterImage here, suffice to say it is very complicated. Earlier this year MasterImage invalidated one of RealD’s patents through the United States Patent and Trademark Office (USPTO) and continues to petition other patents. Complicating matters, we had previously reported that the patent granted to RealD in the U.S. was invalidated in Russia and China.

In short, which is hardly possible in patent cases, the USITC ruling is only for the United States and will defer to the USPTO decisions, some of which are still outstanding. Not wanting to take on the liability during the legal argument, MasterImage had long stopped selling its Horizon system in the US, a territory which accounts for only 1,000 installations out of the 9,000 screens worldwide using the company’s technology. If anything, the USITC ruling may prevent those US exhibitors with RealD contracts that are expiring from switching to MasterImage in the near-term. In the meantime, the patent office will likely need to weigh in again.

On the other hand, there is no disputing the significant win RealD had at the end of July when they made public their deal with Wanda Cinema Line to deploy its 3D systems on 4,000 additional screens throughout China. Having already installed RealD technology on 1,600 of its screens, this will bring the total number of RealD equipped screens in China to 5,600. To put that in perspective, the company is now responsible for 28,000 3D screens globally. The Wanda agreement will see RealD expand its screen count by over 14%.

The deal doesn’t really come as much of a surprise, since RealD has been supplying Wanda with 3D technology and solutions for the past six years, yet like its other announcements in July, it still is a significant chunk of business for which the company can deservedly be proud.

J. Sperling Reich