Thanks to drastic cost reduction for special effects, Pixelux is hitting home runs
Pixelux Entertainment SA (“Pixelux”) is a Swiss Company based in Geneva with a branch in California that has developed a revolutionary new 3D technology called Digital Molecular Matter (DMM) which dramatically reduces the cost of creating highly realistic 3D animation for movies and games. Built on a proprietary, high-performance implementation of the well-established Finite Element Method (FEM), DMM contains tools and middleware that allow the creation of simulation-driven animation in real-time environments like games or in off-line production for Visual Effects (VFX).From virtual jelly to 3D diamonds
Animations produced with DMM not only look good, they move and react to external forces as if they were real. Any material from jelly to diamonds can be modeled realistically with DMM allowing the creation of animated objects ranging from gently swaying plants to fracturing brick walls and even cracking and splintering wood. Because DMM simulates the stress of materials, sound can also be derived to add additional audio realism to these animations.
In the Visual Effects Arena, Simulation-driven effects produced with DMM far exceed the quality of hand-created animations for a fraction of the cost, enabling visual effects studios to produce highly in-demand destruction effects previously impossible to achieve because of cost and talent requirements. DMM was used for the destruction effects in the highest grossing film of all time – James Cameron’s “Avatar”, a film that pushed the boundaries of what was possible to achieve with visual effects.
For Video Games, DMM provides real-time, environmental interaction and destruction – both highly coveted features among game players. DMM was used in the best-selling Star Wars Game of all time: “Star Wars: The Force Unleashed” and is also in the upcoming “Star Wars: The Force Unleashed 2” to provide the exciting environmental destruction that Vanity Fair Magazine described as “A technological breakthrough, nearly as revolutionary as the introduction of sound in film.” Pixelux is set to dramatically capitalize on the DMM technology by producing exciting new Games that are the first to leverage its technological benefits while continuing to improve and advance it. Pixelux will also continue licensing DMM to the VFX industry as well as to the gaming industry.
Avatar Film makers and game designers use Pixelux technology particularly for destruction effects.
A business model built on four legs
Pixelux has four main sources of revenues stemming from the following products. First, DMM Game Middleware for the video games market are sold on a royalty basis. Pixelux’ first customer, LucasArts has used DMM on “Star Wars: The Force Unleashed” (TFU) which was released September 16th, 2008 and brought revenue based on Royalties. TFU II came out this October 2010 and Pixelux has already received a prepayment on royalties. There are currently other publishers evaluating DMM for use in their games. And we expect more with the introduction of DMM2 later this year.
Secondly, there is DMM Production Tools for the VFX and Video Game Production markets. Pixelux sells a USD 599 plug-in for Maya and Max online and also licenses a DMM library suite for high end special effects for a yearly fee of USD 100,000. The plug-in has been sold online and now a major deal is being finalized with Autodesk to have a light version of the plug-in embedded in their software by default. The final users will have access to DMM and may purchase the full version of the plug-in through Pixelux. This deal will grant the group a 100% market coverage.
DMM Libraries are sold to big VFX studios in order to better integrate DMM in their production pipeline. The first deal was signed with The Moving Picture Company (MPC) and more are to follow shortly. Pixar, WETA, LipSync and others are undergoing evaluations at the moment. Finally, a part of the group’s new strategy is also to sell DMM-based products directly to consumers. Pixelux has partnered with AMD to ship a light version of the DMM2 Game Middleware with AMD’s future platforms. Included with this will be a mini DMM2-driven game to illustrate the power of AMD’s new chips. The distribution of this will span 10 million laptops and will occur in the first quarter of 2011. Pixelux has also developed its own Entertainment App for the Apple iPhone/iPad (DMM Touch) which has been released in December 2010. DMM Touch allows anyone with an iPhone 4 or an iPad to experience the fun of playing with DMM Objects in real-time as well as sharing their interactions with friends through the built-in video export feature. Additional content for DMM Touch will be sold by Pixelux through the App store.
Pixelux will also act as both a publisher and a distributor for DMM-based games. This activity will involve partnering with outside studios as well as building up internal teams.Going for growth
The market for Pixelux’ products is very large. For video-game software, the market is around USD 37.5B worldwide. For Military Visual Simulation, it is around USD 25B.
Pixelux has setup different channels of distribution for its line of products which are: The Apple Store, Autodesk, AMD, Game Publishers, VFX Studios, and its own website. The company has embraced a multifaceted strategy to distribute products built around its technology. This strategy consists of utilizing channels such as the Apple Store for its iPhone/iPad apps, Autodesk for its plug-in products, AMD for its PC-based game products. In addition, the company will license DMM technology to other game companies on a royalty-based approach. The next generation of DMM technology is also nearly completed – DMM2. We expect DMM2 will make the creation of new games easier as well as providing an even better simulation-driven entertainment experience.
Pixelux is currently raising $5 million in an investment round to drive its growth plans. It is expected that strategic investors as well as new ones will participate in this round. The goals for the money will be built around marketing the company’s products as well as developing new ones. The unfair advantages the company has through its many years of technology development will be fully maximized this coming year as its new products begin rolling out to the market.