This article is from WeChat public account:Sanwen Entertainment (ID:hi3wyu), author: Dkphhh, cover: the movie” The Avengers “
Recently, British film and television special effects company DNEG announced plans to list on the London Stock Exchange. Now, the company has submitted an application to the relevant department and started the roadshow. If nothing else, DNEG is expected to be officially launched in November this year.
Founded in 1998, DNEG is a well-known visual effects company in the film and television industry. It mainly produces special effects for movies, TV and commercials, as well as animation production.
According to the prospectus, DNEG plans to raise 150 million pounds, or about 194 million US dollars, 1.373 billion yuan. The amount of financing will be used primarily to help the company grow further while repaying debt.
The popular movies we’ve seen in recent years are all behind DNEG’s special effects support, such as “The Avengers: The Final Battle”, “Alita: Battle Angels”, “Poison”, “Where are the Magical Animals 2” and “Inception”.
The “venom” in “Poison” is made by DNEG
The DNEG won the Academy Award for Best Visual Effects five times from 2010 to 2018 for its excellent special effects production capabilities.
This achievement has also made DNEG one of the most well-known independent film and television effects companies in Hollywood. From the list of items disclosed in the prospectus, DNEG’s current main customers are Hollywood’s top five film and television companies, plus Netflix and Amazon, which are not bad money streaming platforms.
DNEG divides the special effects services it offers into four categories:
Super-realistic image generation (Photoreal Image Generation), which looks like a real shot but not a real shot Pictures, such as explosions, currents, and grand backgrounds.
The background of this scene is special effects
Animation service, which is to make CG animation. DNEG’s animation department was founded in 2014, and Tom Jacomb, who is in charge of the animation department, is the producer of the former DreamWorks.
Because of the shallow qualifications in the field of animation, most of the animation projects that DNEG is involved in are animation series that are broadcast on streaming media or on TV, and the threshold is relatively low. British animation studio Locksmith Animation is the main customer of the DNEG animation department, and the two sides jointly produced a lot of animations.
2D to 3D, the original 2D movie will be converted into a 3D movie by technical means. Now, DNEG is the world’s largest 2D to 3D service provider.
AR/VR and offline experience services, the former is making AR/VR content; the latter is providing customized visual services for offline entertainment facilities. In the prospectus, they mentioned that the indoor roller coaster of Universal Studios “escaped from the Gringotts” and used the 3D projection technology they provided.
Escape from Gringotts
From the service classification provided by DNEG, they are trying to expand their business scope through their existing technology accumulation, and do not want to stick to the traditional special effects production.
However, according to the items disclosed in the prospectus, DNEG’s current main income is still from film and television special effects and animation production. In the past few years, DNEG’s top 10 annual revenues have come from these areas, which account for 50% to 60% of annual revenue.
The annual revenue exceeds 300 million US dollars, the profit rate is less than 7%, and the labor cost accounts for 65% of the income
In the prospectus, DNEG disclosed their bidding process.
Usually, they will first evaluate the script, choose which special effects they will make, and then calculate the production cost based on the manpower and time required for the work, and then submit the bid application to the customer.
However, even if they win the bid, the customers will not hand over the lenses they choose, but they will select a few more, because other special effects companies that bid at the same time may offer more favorable conditions.
And, in some cases, work on concept maps, tests, and previews can be provided free of charge as part of the sales process at no additional charge.
“Blade Runner 2049”
This bidding process can reflect the current status of the special effects industry: Because of the high dependence on orders from the producers, the film and television special effects industry is actually at the end of the entire film and television industry chain, and there is no strong bargaining power, income. Basically belongs to the nature of “piece piece wages”.
This is reflected in the financial data, which is the high cost of labor. Because of this, in the past, there were few companies that specialize in special effects production.
In 2018, DNEG’s annual revenue of $301 million (about RMB 2.131 billion), net profit of $20.669 million (about RMB 146 million).
In the first quarter of 2019, DNEG’s operating income was $79.06 million,He earned (mainly government subsidies) $1.234 million, with total revenue of approximately $80.74 million, an increase of 2.99% over the same period last year.
But the labor cost reached 52.83 million US dollars, accounting for 65.43% of the income, the net profit was only 4.939 million US dollars, and the profit rate was 6.12%.
Moreover, from 2016-2018 and the first half of 2019, the company’s labor cost accounted for an overall increase in total revenue.
The increase in labor costs is basically the same as the increase in total income. Because the more orders, the more special effects people are required.
DNGE’s profit margin has remained at around 5% for the past few years. Only the 2016 fiscal year and the first quarter of 2018 have changed dramatically.
The overall profit margin for FY2016 was only 0.19%, mainly due to the inclusion of a deferred income tax liability.
The first quarter of 2018 achieved a profit margin of 14.12%, mainly due to the inclusion of a deferred income tax asset.
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As a will