CONTENT WITH VISION

Since setting up its Media & Entertainment Division at the beginning of Y2000 Barco has been steadily embarking on a policy of selective acquisition in its quest to become the consummate ‘vision’ company.

The purchase of Sacramento-based image processing giants, Folsom Research in January 2004 certainly raised eyebrows and may have had Group-wide implications, but this summer’s strike for High End Systems was a first milestone in expanding its Entertainment portfolio and position in the Event Staging sector.
Given the two companies’ traditional heartlands it doesn’t take a genius to figure that such progressive clustering is designed to leave the Belgian company firmly in pole position in the convergence market - or ‘content lighting’, to give the new genre a more elegant soubriquet.

Under the stewardship of Divisional President, Stephan Paridaen, who joined the company back in 1993, the Media & Entertainment Division last year contributed €278m of the Group’s €747m turnover (2007 Company Results) - and the astute Mr. Paridaen senses that for all the difficulties that have beset the Texas-based High End Systems since the start of the new millennium, their patent portfolio and product roadmap point the way to an illustrious future.

It is no coincidence, he believes, that the setting up of his Division coincided with the start of the LED revolution, while romantics may wallow in the fact that it was around the same time that Barco became the first adopter of the pioneering Catalyst head - launched in 2001 and coincidentally licensed to High End Systems.
This would set in train an evolution of media servers and pixel mappers designed to turn LED-clad walls into moving landscapes. Again, HES have remained at the forefront of this revolution with their advanced DL1, DL2 and DL3 engines - but then so has Barco, with its own DML-1200 video projector/moving light hybrid.
Since our interview took place at Barco’s Kortrijk HQ, right in the heart of Flanders, it would be timely to remember that the balance of power has been steadily shifting not merely from the US to Europe, but to Northern Europe and the Benelux lowlands.
Two years ago Eindhoven-based Royal Philips acquired the mighty Color Kinetics - furthering their advancement into solid state lighting and energy saving - while two days before this year’s InfoComm Show in Las Vegas, Barco were also able to say they had found the perfect match.

“Some people were not surprised by the acquisition because there were a lot of rumours that High End were for sale - but no-one knew it would be sold to Barco,” Stephan Paridaen explained. “We were not the only party interested but there was a clear preference for us because of our willingness to invest - and therefore this was judged to be the best bid.”

But given the impact of the DML-1200 - and Barco’s general predominance in the projector and LED display fields - they could possibly have achieved the same goal in house. Certainly they were intent on taking a completely holistic approach to converging kinetic lighting with content delivery - either through their own R&D initiatives or in partnership arrangements. So what was the road leading up to both the Folsom and HES acquisitions - as well as the key integration of locally-based mechanical/staging fabricators, System Technologies in 2005?

In 2001 the company decided to create an overview of the instruments that their customers required to make their tasks easier - and the four areas continually highlighted were LED, digital projectors, image processing and automated lighting.

“As a visualisation company we were looking at the configuration management of what people needed for live concerts and/or corporate events - no-one was bringing it together,” said Mr. Paridaen. Likening this to Lego Mindstorms - a kind of digital building block - seemed perfectly apposite when, in September 2003, Barco introduced its own modular pixel-blocks (MiPIX) using the Lego principle. Creative Technology became an early adopter of the revolutionary block, creating the stupendous members’ club Kabaret’s Prophecy in London’s Soho.

Running on UVA’s control platform the installation pushed LED capability into a new area of application by providing a backdrop to the club based on a sculptured, moving image wall constructed from the modular intelligent blocks. Upon this electronic canvas, graphics and animations, triggered from a real time generator or MIDI keyboard, were superimposed to create an ever changing, and curvaceous mood tableau.

Significantly, this application of LED technology was the first of its kind anywhere in a world which would never be quite the same again.

Meanwhile, over in Germany, CT’s Georg Rössler and XL Video had already given further exposure to MiPIX on a grand stage - at the 2003 Frankfurt Motor Show - further establishing the new concept for creative LED.

But today the pixel block is referred to in more metaphorical terms, as Stephan Paridaen rationalises that “if we could put all the blocks together at Barco we could build nicer castles.”

If Kabaret’s was the first creative install, it wasn’t long before the concert touring world caught on; locally Jeroen Jongenelen at JVR in Holland and designers like Philip Pelgrom were doing some amazing things (with DLite and MiPIX) while on a much larger scale world-leading designers Mark Fisher (with Japanese band the B’z) and Willie Williams (notably with U2’s Vertigo and ZOO-TV and George Michael’s ’25 Live tour) were showing the full extent to which Barco MiSTRIPS could be used.

And since we are talking about epochal moments in Barco’s illustrious history we may as well turn the clock back to 1993, when Depeche Mode used what was considered to be the first stable LCD projector on tour, the Barco 5000. Rental company PSL discovered that it travelled easily, converged automatically, and could be flown upside down or from any angle. It may have only output 2,000 lumens - but with it the concept of touring projection video was born.

OK, nostalgia over, and we fast forward back to the present tense, where gradually the pieces of the jigsaw were coming together. “We bought Folsom on January 1st 2004 - but we also needed an organisation to put it all together mechanically,” said the Barco executive.

Enter System Technologies, which was run by highly-respected engineer, Frederic Opsomer. Renaming the company Innovative Designs, Barco were now able to undertake the mechanical and stage work of large sets, taking them a step nearer to becoming complete solution providers.

“Traditionally we have designed and manufactured equipment for rental companies to buy - and most of it they have integrated themselves; but for high end tours and shows with mechanical complexity our internal resource can now develop this for the rental company, who in turn can sell it on to the production company.” (In fact Frederic Opsomer had been responsible for U2’s first ZOO-TV tour - with BarcoVision 700 CRT’s built into cubes made by the company Frederic was working for at the time).

The MiSTRIPS for the B’z for instance were on 50-60 sq metres of flexible carbon fibre - also bearing Opsomer’s fingerprints. “It was like a flying carpet, being wobbled by the motors - Mark Fisher designed it and we realised it.”

Although Barco were dominating the market in creative LED in 2003 there was a growing sense that one of the Lego blocks was still missing - and that was the convergence of lighting and video.
This would be the final chapter in the evolution of Barco towards becoming a video/lighting company. “We could see the trend in projection was moving strongly towards LED but at first it was not obvious.

“We didn’t really understand the lighting market, so rather than try and do everything ourselves we asked which companies might be in the market, and which might be complementary in the areas of convergence.”

The dilemma Barco faced was defining the new world order - and the new design hierarchy. Who had supremacy? Was the LD now starting to specify the video or were the set designer and vision director specifying everything? And was it different in the television domain than it was in concert touring?

“We could see that video rental companies were starting to buy LED strips while lighting companies such as Procon, PRG and AED Rent were also starting to buy video,” he notes. In other words the two factions were slowly morphing into each other.

“So will it be lighting designers or video designers who will rule the world?” Stephan Paridaen asks rhetorically, realising that the emergence of the gamer generation probably renders this statement obsolete.

As Barco went prospecting in the market the usual premier league names came under their gaze. “We took a long hard look and spoke to each of these companies to see if they were interested … and clearly there were several options.

“We did a complete market scan but the intensive talking took place over a period of 12 to 18 months - from the beginning of 2007.”

The criteria (and eventual choice) was based on the party Barco believed would provide the best fit in terms of addressing the market’s top end. “Firstly, High End matched well with Barco; secondly they were the most advanced in terms of digital lighting development - thanks to the DL1, DL2 and DL3. And finally they were active in convergence, straddling both the LED and projection worlds.

“They may not produce the most high-volume products but certainly they are the most differentiated products. The engineering prowess was a determining factor and in my opinion they are the most talented, adept R&D organisation of all. We wanted a company with the potential to be big.”

The undercurrent to this statement must be that when Barco commenced Due Diligence they would have unlocked a Pandora’s Box. The Austin company’s patent portfolio is well documented but a look at the roadmap (commencing with the release of SHOWGUN and Showpix) mark the start of a new generation.

And the timing couldn’t have been better. Launched last year SHOWGUN, a large and powerful automated luminaire can project images, change and mix dichroic colours, and switch from hard-edge to soft-edge all within a compact system. A year on and Showpix - an LED washlight on a moving yoke with an 18in diameter head incorporating a circular array of 127 x 3W LED’s - was ready to preview at this year’s InfoComm, just hours after the acquisition announcement had been made to the Belgian Stock Exchange (Barco is listed on NYSE Euronext Brussels: BAR)
Meanwhile, other points on the roadmap were getting the Barco team equally excited - the perfect match was indeed being consummated and Stephan Paridaen credited HES’ febrile genius, Richard Belliveau, as being the midwife in this latest delivery. “[He] has an exceptional engineering team which is more than 35 strong, and he has a vision which is very distinctive.”

Cynics would argue that the craziness of Austin - which Paridaen himself describes as a “sanctuary of liberalism in conservative Texas” - is the cultural nemesis of Belgium and that Richard Belliveau, with his infamous ‘skunk works’ on West Braker - is about the least likely person you would expect to find in a corporate straitjacket (and certainly not a place he would have expected to find himself when he co-founded Blackstone Audio Visual 25 or so years ago). In fact at the end of 1998 he left the company entirely, only to return as Chief Technology Officer in 2004 and deliver some of his finest work.

But that High End Systems were vulnerable there is no doubt. Generation Partners had been HES’s investment company this past seven or eight years, and with the technology company’s fortunes suddenly changing, would have seen this upturn as the optimum time to cash in their chips. Today HES is a $55m turnover company and that is also the sum Barco paid for it.

It is no secret that between 2001 and 2005 the company had endured what Stephan Paridaen describes as “a very rough patch”, with multiple rounds of layoff, management and ownership changes, the closure of subsidiaries and reduced participation in shows. “But they turned the corner at the end of 2006. and that’s largely because the general economic condition in 2006-7 was good.” Compare that to the climate in the entertainment industry back in 2001, after 9/11.

HES’ return to profitability clearly coincided with Richard Belliveau’s return to the company. “He is one of the key reasons why HES will be successful,” believes Paridaen.

One area of concern may be the Wholehog lighting control platform which has lost ground to rivals like the quickly-establishing GrandMA and consolidated Avolites series - but this is now being addressed in the mid-market sector.

Post-acquisition, it will be business as usual down on West Braker Lane.

“We will take the first three to six months to watch and learn and get to know what’s going on.” But there will be no threat to the intrinsic company value he insists.

There will be personnel changes of course - out goes Frank Gordon (as part of the takeover agreement) while Barco’s Chris Colpaert, formerly director of product management for all Barco video products, will take over the helm as MD.

“High End have six or seven people only now in Europe - the challenge is to transfer the product know-how and training. We will fold [High End personnel] into our own offices and hire people to expand that presence. “

The High End base in Austin will now provide Barco’s Media & Entertainment divison with another ‘Competence Centre’ - joining those in Sacramento - described as “the centre of the world in image processing” - Barco HQ in Kortrijk and their production plant in Beijing. They now have the facility to grow demographically, geographically and technologically.

Of course, Barco want to turn HES into a much larger company, based on the Folsom model.

“Since we acquired Folsom we have more than trebled their turnover. We may not be able to do the same with High End but what it does do is give us more penetration with the rock and roll LDs.”

And of course we will grow the product lines - in particularly building on HES’ successful DL series, their own DML-1200 and the latest pixel based developments, while pursuing an active integration programme. “The future of a lighting control desk and video control desk people increasingly believe will merge - some of the lighting consoles today already trigger the connection,” says Paridaen.

“Furthermore, the image servers and our experience in image processing gives us the opportunity to bring [these worlds] together. One of the objectives is that we want to be a driver in what standard emerges in terms of both our technology and commercial relationships. It will take industry leaders such as us to bring this together and create new convergence standards.”

Finally, he says, one of the challenges put forward to the team is that there must still be ways of differentiation - and this includes analogue. “The SHOWGUN represented the traditional approach to lighting - so we will not be walking away from that segment,” he confirms.

But will the current global economic pandemic be able to support such high-end investment programmes? Stephan Paridaen knows that in the short term the credit crunch and economic crisis will be a determining factor - and he certainly doesn’t underestimate the relentless sweep of Chinese LED exporters (there are presently 100 factories in China producing LED/video, he notes).

“I believe the market for the rental companies is still there but people are saying instead of taking a 50 sq metre wall, now it will be 35 sq metres - and asking ‘Can I make do with a 12K lumens projector rather than a 20K?’

“But rental companies have high capex, and in the mid-term (from 2009 onwards) I strongly believe that the event market will start reinventing itself again. People have always been looking for the next thing and I believe that will continue to be the case. In the creative world no-one can predict where we’ll be ten years from now but there will be a new window of opportunity.”

And so, with the Yamaha/NEXO pact going through the same month as Barco/HES could these mergers mark the end of a vigorous period of corporate takeover? Stephan Paridaen certainly anticipates a global slowdown now that the age of prosperity is at an end.

This month’s PLASA Show in London, where the two companies will share a joint booth occupying 115 sq. metres of space, will provide ample opportunity for industry spectators to make up their own minds.

Demonstrating just how in tune with the market Barco are, Stephan Paridaen concluded our interview by debunking one of the old marketing adages. “The [tutorials] teach you to listen to your customers - but I don’t agree as they will just tell you what they want you to hear.

“Instead you should listen to the undetected needs of the market - and Richard Belliveau is extremely good at doing that.”