RealD

Market position

RealD has been characterized as a leading global licensor of 3D and other visual technologies and the world's most widely used 3D technology, operating the largest 3D cinema platform with over 27,000 screens worldwide at the time of the 2015 acquisition announcement [3][4][6]. Its market capitalization approached $2 billion shortly after its 2010 IPO, but revenue and earnings declined in subsequent years [7].

Technology

RealD's technology covers 3D cinema projection and viewing systems and an intellectual property portfolio applied to premium viewing experiences in theaters, the home and elsewhere [4][5]. Presentation quality depends on brightness and stereo contrast, which are affected by silver screen and port-window condition and projection-system cleanliness; the company distributes test DCPs and instructions for depolarization checks, system cleaning and overall 3D presentation verification [1].

Go-to-market

RealD sells and supports its cinema systems through direct relationships with theater exhibitors, offering dedicated cinema sales and technical support, EMEA support, theatrical customer service for 3D glasses, and downloadable quality-assurance test materials and instructions for optimizing 3D presentations [0][1].

Cinema exhibitors and theater operators deploying 3D projection systems and 3D eyewear, served across the United States, EMEA and Asia [0][1][4].

Geography

At the time of the 2016 merger, RealD was headquartered in Beverly Hills, California, with offices in Boulder, London, Moscow, Shanghai, Hong Kong and Tokyo [4][5]. Company contact listings show offices in Louisville, Colorado (U.S.); Hemel Hempstead, United Kingdom (RealD Europe); Shanghai; Beijing; and Hong Kong, with separate support lines for U.S. and EMEA cinema customers [0]. Its 3D screen platform has been described as spanning 72 countries [3].

History

Michael V. Lewis co-founded RealD in 2003 after earlier roles at InterMedia/Film Equities and as co-founder and CEO of L-Squared Entertainment [3]. Disney's Chicken Little (2005) was the first film to use RealD 3D technology [3]. The company went public on the NYSE under the symbol RLD in 2010, following the success of 3D releases including Avatar, and its market capitalization approached $2 billion shortly thereafter [3][7]. In 2014 RealD rejected a $12-per-share takeover bid from Starboard Value, which held about a 10 percent stake [6][7]. After announcing a review of strategic alternatives, RealD agreed on 2015-11-08 to be acquired by an affiliate of Rizvi Traverse Management for $11.00 per share, an all-cash transaction valued at roughly $551 million including net debt [4][6]. Stockholders approved the deal on 2016-02-24, and the merger completed on 2016-03-22, when RealD stock ceased trading on the NYSE and was delisted [4][5][7].

Risks & controversies

RealD reported quarterly net losses in the period preceding its sale, including a loss of $7.9 million in its fiscal second quarter of 2015 versus $751,000 a year earlier, on revenue that fell to $38.5 million from $47.8 million [6]. An analyst noted difficulty in expanding into new growth areas under quarterly public-market pressure and said the company's Luxe 3D theater division had not gained support from major U.S. exhibitors [7]. RealD rejected a $12-per-share offer from Starboard Value in 2014 and ultimately sold at $11 per share, a 4.1 percent premium to its pre-announcement share price [6][7]. The company was also involved in patent litigation, prevailing over MasterImage in a patent infringement action reported in December 2015 [3].