Technicolor shifts to digital production, online distribution: change of strategy due to competition, decline in DVD replication.

TECHNICOLOR Inc., the iconic Hollywood company with the color film process that dominated the industry from the 1920s to the 1950s, is sharpening its digital focus.

The shift comes after much scaling back of the company's DVD replication operations--a lucrative niche the company developed over the past decade as its film operations declined--for cost-saving purposes. In January, Thomson-owned Technicolor eliminated 630 positions at its Camarillo manufacturing and distribution plant, a move that followed 245 layoffs last year, and plant closures and significant job cuts in U.S. and overseas operations. Company executives said the cuts were made under pressure from movie studios to lower costs for retail DVDs.

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While operations may have been downsized, company representatives said the actual number of DVDs turned out by Technicolor increased from 1.7 million last year to 1.8 million this year.

The company, which dates back to 1915. became known for its groundbreaking representation of color, used in film musicals including "The Wizard of Oz" and "Singin' in the Rain," hundreds of costume pictures and animated films including "Snow White and the Seven Dwarfs" and "Fantasia."

The development of competing film processes and the emergence of digital cameras cut significantly into the company's market share over the past decade, however.

The company said it is focusing on its new digital production and online distribution services in response to consumers' increasing demand for access to digital content. Technicolor's clients are looking for ways to manage, store, and deliver digital content through Web, broadband and mobile distribution channels.

Technicolor recently acquired SyncCast, an Anaheim -based online distributor of rich media content. SyncCast is an outsourced application delivery network and digital media services provider that provides services to a wide range of customers, including Microsoft Corp.'s Xbox LIVE Video Marketplace, the Motion Picture Association of America and National Geographic. The company also manages and prepares content for CBS, MTV, HBO and Lions Gate Entertainment Corp.