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16 June 2022

Variety of Technicolor products immune to vacuous Vantiva rebrand

From the close of Q3 2022, the treasured Technicolor brand will be phased out, but not forgotten – or so the announcement of a major company rebrand this week would have you believe.

On first read, it feels as if the unsettled French video technology pioneer is approaching something of a climax in its long-running yearning to streamline an overtoiled organization. Yet our sneaking suspicion that the press release was concealing the full picture has since been substantiated.

Technicolor’s VP of Marketing for Connected Home, Carole Bernard, said in an emailed statement to Faultline, “The Technicolor designation will still be used on a variety of products and services and will also continue to be used on portions of the business.”

So, this is not “au revoir” Technicolor, after all. Avoiding the expense of expanding the rebrand right through to products and services makes a lot of sense for a company desperate to save cash where it can. But this is a tentative “bonjour” to Vantiva – a name we will have to gradually get used to as it percolates different areas of the business.

Vantiva will eventually become the official new corporate name before the end of this year, once the rebranding to Vantiva has initially been bedded in by the Technicolor Creative Studios (TCS) spin-off for the next two quarters. TCS comprises the Connected Home and DVD Services divisions – for which the switch to Vantiva is effective immediately.

The high-growth Android TV market has been highlighted as a focal point for the Connected Home division under Vantiva, as the planet’s top supplier of Android TV set tops. The announcement also underscores what it calls the Ultra-Broadband market – presumably earning the title of “ultra” based on Technicolor being the number one worldwide supplier of broadband home gateways.

Connected Home also provides technologies for fiber, DOCSIS 3.1, DSL, WiFi extenders, and RDK-B – a portfolio Vantiva is looking to expand by allocating funds to move into markets adjacent to the connected home business. We know Technicolor Connected Home has been expanding into 5G Fixed Wireless Access, with its Cobra 5G CPE launched earlier this year. Could an expansion into IoT verticals be on the cards, perhaps? Or possibly a gradual transition into the software services management side of things?

As per Bernard’s statement to Faultline, we expect the products and services within the Connected Home division to retain the globally recognizable Technicolor brand for a long time yet, with Vantiva positioned us an umbrella of sorts. We’ll revisit this towards the end of this year to grasp how the rebrand has taken shape – something that will hopefully be on display come IBC.

Technicolor’s DVD unit will become Vantiva Supply Chain Services – where other low-margin segments of the organization are likely to be folded into with reduced funding and natural cuts.

This is all part of Technicolor’s sizable debt structure overhaul, with investors piling on the pressure for Technicolor to deleverage and divest operations over a period of several years. It has worked too, with Technicolor – as of Q1 this year – reporting itself already €287 million ($318 million) of the way towards its three-year run rate cost savings target of €325 million ($360 million) by the end of 2022. The group is on track to smash that target.

The TCS spin-off itself was primarily driven by the explosive demand for VFX, which the group projects to grow significantly throughout 2022 – winning multiple new projects including at MPC Film (behind VFX for blockbuster movies including The Lion King and Spiderman: No Way Home) and Mikros Animation (The SpongeBob Movie, Paw Patrol: The Movie).

In revenue terms, TCS still pales in comparison to Connected Home, which recorded revenues totaling €1.54 billion ($1.7 billion) for the full year 2021, but this segment is being squeezed, with revenues down 10% year on year. Technicolor continues to point to sales volumes being severely impacted by the worldwide semiconductor crisis and other supply chain disruptions.

When the TCS spin-off was announced in Q1 this year, it was stated that Technicolor (described at the time as Ex-TCS, preempting a rebrand) would hold 35% ownership in the standalone business. The rebrand is therefore a little confusing as, eventually, Vantiva will own 35% of Vantiva (the TCS spin-off part).

Independence allows the standalone company to grow on its own terms, independent of Technicolor’s numerous other revenue channels including its VFX operations and the licensing business.

It’s worth remembering that Technicolor sold the lion’s share of its patent licensing operations – including its HEVC portfolio – to mobile R&D outfit InterDigital in 2018, although we understand Technicolor retained a handful of HDMI patents and other video compression patents operated by patent pool MPEGA LA. The Technicolor HDR protocol looked dead in the water maybe 18 months or so ago, but has experienced something of a resurgence.

The latest division to be divested is the Trademark Licensing business, a deal which closed in May 2022 for a €100 million ($111 million) cash sum to an unnamed buyer. The trademark unit creates business opportunities for brand licensing partners for recognized consumer electronics brands including Thomson, RCA, SABA, Victrola, Ferguson, NordMende, Victor (the iconic dog and phonograph logo), and Proscan.

Funds from this sale have provided a fresh cash injection to support the separation and rebrand. Don’t rule out more sales.

On a closing side note, spare a thought for a small New York-based website design firm called Vantiva Internet Solutions, which won’t be best pleased at being usurped by a group that generated revenues of €2.9 billion ($3 billion) in 2021, with EBITDA of €268 million ($279 million) for the full-year.