The Third Floor screenshot
Image: The Third Floor

Game engines are changing Hollywood’s power structure

Protocol Entertainment

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Thursday, we’re exploring how real-time production technologies are changing who does what in Hollywood, and why Roku’s latest hire suggests that the company is serious about making its own TVs. Also: On Zoom, everyone can be a cat lawyer!

How real-time technology is changing the animation industry

Game engines aren’t just changing how movies and shows are being made: Real-time technology is also starting to affect who’s doing what in Hollywood. A great example of this is The Third Floor, a company best known for helping the industry visualize stories early in the production process. This week, the company announced that it will expand its role and use its real-time pipeline to produce animated feature films and TV shows.

The Third Floor was founded almost two decades ago by a handful of alumni who wanted to keep the band together after their work on “Star Wars: Episode III” concluded.

“We were working on the third floor of Skywalker Ranch,” said co-founder and CCO Joshua Wassung. “We were there all hours of the day and night, and had a great time working on that movie for about two years. Then, we decided to stick together.”

The company’s bread and butter has long been visualization, which is basically a way of producing a rough first draft of live-action films. “It's taking storyboards, and then animating them into what looks like a video-game version of the movie before they shoot it,” Wassung said.

  • Now with roughly 500 employees, the company is working on 30 projects simultaneously at any given time, to the tune of 100 projects a year. Some of its recent high-profile projects include “Loki,” “The Witcher” and “Shang-Chi and the Legend of the Ten Rings.”
  • For its visualization work, The Third Floor initially relied on Maya, the industry’s preferred animation software, and its viewport tool for a kind of semi-real time approach to animation.
  • Over time, the company expanded its portfolio to also work with LED walls, which is how it began incorporating game engines into its pipeline.
  • With technology improving every year, those rough early visualizations of movies started to look better and better. “We figured [that] with some of these new tools, we [could] push that fidelity to a level where it could be shared with the world,” Wassung said.

Game engines have been hailed as a way to democratize production both in Hollywood and interactive media, but that’s not really why The Third Floor is embracing this kind of technology. “I’m not sure that your grandma is going to hire us,” Wassung quipped.

  • That’s because saving money isn’t really the main point for embracing real time in animation. “You can always go to some faraway place and find somebody who will work for cheap,” he said.
  • The technology instead makes it possible to iterate more quickly and, for instance, change the lighting or color of a scene instantaneously. “It allows you to see real-time results,” Wassung said.
  • In other words: Using game engines for animation may not necessarily allow everyone to produce a Pixar movie, but it will allow studios to produce better-looking films even if they don’t have Pixar-sized budgets.

The technology also has the potential to change Hollywood’s power structures. The film industry has long relied on a vast network of external vendors, which is why blockbuster films have long credits, listing countless effects studios. With game engines allowing companies like The Third Floor to take on new lines of work, those relationships are increasingly up for grabs.

  • “I think it's mixing up the entire industry,” Wassung said. “We're just seeing the beginning of it.”
  • At the same time, it doesn’t look like anyone is going to be out of their job anytime soon, thanks in part to the rise of content-hungry global streaming services like Netflix and Disney+.
  • “It's a growing industry. It’s not zero sum,” he said. “There's more than enough animation work to go around.”

The Third Floor is currently in conversation with some of its existing clients, and Wassung said that it hopes to start working on animated shows and feature films in the coming months. For now, the company is showing off its chops with a short film released this week. The film was produced with Unreal Engine, but the goal wasn’t to make it a demo for real-time tech.

“We didn't want it to be good for [being made with] a game engine,” Wassung said. “We wanted to produce a high-quality project that happened to be done in a game engine.”

— Janko Roettgers

Making moves

Roku has hired TCL’s Chris Larson. Rumors that Roku is going to start selling TVs under its own brand became a lot more credible this week after Larson revealed that he took a job as Roku’s new VP of Retail Strategy. As TCL’s North America SVP, Larson was able to turn a brand that was virtually unknown to U.S. consumers into a household name, regularly outselling top TV-makers like Samsung and LG. Key to that success was the hardware-maker’s partnership with Roku, which would make Roku now building its own TVs very awkward. Still, TCL doesn’t have to be too worried: The company began diversifying its lineup with the introduction of Android-powered smart TVs in 2020, and may even end up manufacturing some of the panels Roku is now looking to sell under its own name.

Amazon taps Hulu veteran Julie DeTraglia. Here’s another proof point that Amazon is quite serious about sports streaming: The company just hired Hulu’s former head of Research, Julie DeTraglia, as its new head of Strategy and Research at Amazon Sports. DeTraglia was most recently with Disney, where she led research, insights and analytics for the company’s streaming businesses, and previously held senior research positions at NBCUniversal. Now, she can help Amazon figure out how to turn its Thursday Night Football deal with the NFL into a money-maker.

— Janko Roettgers


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In other news

Google lets Spotify experiment with third-party billing. Google said yesterday that it wants to allow developers to integrate alternative billing methods in addition to its own Play Store billing. Spotify gets to try this out first, and the two companies will launch a test later this year.

Netflix will double its subscriber base by 2025. But the company has little room to grow in the U.S., where it will only add 6.6 million new subscribers over the next three years, according to a new MoffettNathanson forecast.

YouTube grows its ad-supported TV show catalog. The streaming service now offers 4,000 TV show episodes for free, with plans to add 100 new titles every week.

Snap acquires a brain-computer interface startup. NextMind’s technology could help Snap build future versions of its Spectacles AR glasses.

Roku gets personalized content recommendations. As part of an OS update, Roku TVs and streaming players get a new “What to watch” menu item with recommendations for shows from apps people interact with frequently. Is this a baby step toward a content-forward home screen?

Fortnite’s Ukraine relief fund hits a major milestone. Epic Games has been donating proceeds from Fortnite to humanitarian relief in Ukraine, and on Tuesday the number crossed $50 million.

The new Witcher game will be a departure in more ways than one. The newest installment in CD Projekt Red’s fantasy series will feature not only a new game engine, but also a new director with Gwent lead Jason Slama taking the reins. As to the team’s stance on crunch: “Never on my watch,” Slama said.

Amazon and Microsoft go head-to-head on cloud gaming. The two titans each announced cloud-based tools for building video games at the Game Developers Conference yesterday, further extending their rivalry in the cloud computing sector.

Sonos is working on a Home Theater OS. In recent job listings, the smart speaker-maker has been looking for people with smart TV experience.

One more thing

It’s been a little over a year since a video of a Texas court hearing went viral that featured an attorney telling the judge that he was, despite what his webcam’s filter made it look like, “not a cat.” The original clip has been viewed more than 10 million times, with reposts gaining millions of additional views. The timing may be a pure coincidence, but I’d like to think that Zoom was paying homage to that lawyer when it rolled out its new avatars feature this week that allows anyone to swap out their face in favor of Memoji-like animated characters. I, for one, cannot wait to be a cat the next time I do a presentation on Zoom. Meow!

— Janko Roettgers


"Trying to make every deal as big as possible often adds complexity and extends sales cycles. To accelerate growth, sellers should focus on landing faster, and then expanding, and expanding again. Getting customers into your solution sooner helps you solve their initial problems, then later, you can grow together." - Michael Megerian, Chief Revenue Officer at Yello

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