Special effects giant Technicolor on the verge of bankruptcy

Technicolor, which employs some 10,000 people worldwide, is going through a serious financial crisis to the point that it will probably have to cease some of its activities in the United States, it announced to its American employees on Friday, February 21. Animation and special effects companies The Mill and Mikros Animation are in turmoil. "Despite considerable efforts - including restructuring initiatives, discussions with potential investors and exploring acquisition opportunities - we have not been able to find a viable path forward," wrote the group's CEO, Caroline Parot, in a leaked internal email.

The group's French entities, based in Paris, are also under threat. A receivership procedure has been initiated in the commercial court, allowing the company to continue its activity, but in a worrying context. The animation giant announced on Monday that it had entered into bankruptcy proceedings in the United Kingdom, where the 440 employees of its branch were laid off. "We are aware that this is an incredibly difficult time and we are here to support you in every way possible," writes Caroline Parot, explaining in particular that order books were thinning given the Covid epidemic , then the long strike by screenwriters and actors in Hollywood . These difficulties may seem all the more surprising since MPC, a subsidiary of The Mill based in London, has been signing contracts for major films such as Top Gun: Maverick , Napoleon, Mufasa: The Lion King, Dune… But it is the entire architecture of the group with activities spread between the United States, Canada, the United Kingdom, France and India that is faltering today.

This is a new chapter in an industrial history marked by disappointments, massive losses and social plans. A long story since it began in 2001 with the decision of the man who would become European Commissioner, Thierry Breton , at the time CEO of the French electronics group Thomson Multimedia, to acquire Technicolor, then the decision of the group, plagued by an abysmal debt, to abandon its name in favor of that of its subsidiary Technicolor, in 2010. Once again on the verge of bankruptcy, the group split in two in 2022 between Vantiva (dedicated to broadband strategies) and postproduction (cinema, series and advertising), still under the name Technicolor.

The animation and special effects sector, in addition to the issues of weakened margins due to contracts that do not always take into account the number of employees and hours devoted to production and in a highly competitive universe, will be hit hard by innovations in artificial intelligence that should quickly make obsolete certain tasks still carried out by dozens of individuals bent over their computers full time. Technicolor's difficulties are also part of this major upheaval to come in the sector.