The Deluxe Entertainment Services Group’s decision to close its UK restoration department has been met with surprise and sadness among rival firms and the wider facilities industry.

Deluxe interim president Kelli Fairbrother emailed staff last week to inform them of the decision to “deprioritise services that have less demand from the local market”.

The result will be the closure of the restoration department in London, with the potential loss of 12 jobs.

The division’s vast range of equipment will be dispersed across the group, sold off or donated to charities and various industry bodies.

Deluxe Media EMEA managing director Neil Ballantine said the changes were “necessary” in order for the company “to drive innovation in the technology and digital services areas that our local clients need most, and reflect our continued focus on running our operations more efficiently.

“As with all strategic business decisions we make, a number of avenues were pursued before deciding to close the restoration operation in the UK, including the sale of the business.”

Restoration retreat

Deluxe’s move is the latest in a string of changes within the restoration market that include BBC Studios and Post Production (now BBC Studioworks) closing its Digital Media Services division in October 2015.

That followed Technicolor’s decision to shut its Pinewood Studios-based fi lm lab in 2013.

Despite this market upheaval, several restoration service providers and interested parties have told Broadcast that they were shocked by Deluxe’s plan.

Jo Griffin, chief operating officer at archive and restoration company R3store Studios, and a former head of content services and restoration at Prime Focus, said: “I was surprised. They were the number one restoration company in the UK.

“Okay, it’s not the biggest part of the industry money-wise, but it’s buoyant. People are approaching us every day with potential projects. Perhaps with the big companies, restoration services are simply not making the money.”

Colourist Kevin Shaw, who was technology and restoration lead at BBC Studios and Post Production when its Digital Media Services department was axed, was similarly taken aback.

“The restoration market is probably stronger than it was five years ago,” he said.

“There is more demand than ever, especially with the UHD market kicking in. Deluxe was very aggressive on pricing and not only priced the BBC out of the market but possibly themselves.”

While demand is said to be high, it is clear that production company and library clients often only have small budgets available for content restoration, making it difficult for service providers to make a profit.

Restrictive budgets

Adrian Bull, managing director and joint owner of Cinelab, one of the country’s few remaining film labs, said Deluxe’s move is “symptomatic” of this, with “clients trying to push prices down when, actually, the prices need to go up for these businesses to be sustainable.

“People who keep pushing the prices down will eventually end up with less choice.”

David Yeo, a company director at boutique encoding and transfer facility TK One, also pointed to small budgets.

He said: “No one has any money to spend on transferring fi lm. I am surprised [Deluxe] lasted this long. Even we find it hard to make a living.”

While some rival firms may benefit from the extra work that will now be available, others are concerned that this latest closure will further diminish the skills base in this part of the facilities market.

Simon Marbrook, managing director of boutique colour grading and restoration facility Final Frame, said: “It is unfortunate for the film industry that an experienced and well-regarded company like Deluxe has decided to close down its restoration services in London.

“The team there have a unique set of skills that are priceless to the film industry. I am sad they took this decision.”

He added: “We see a lot of possibilities within restoration and fi lm to integrate into modern workflows. 4K and HDR are going to generate even more business for us all.”

Deluxe’s restoration division was formed in 2011, following its acquisition of Ascent Media.

The department will be wound down over the coming weeks, before closing on 31 March. Deluxe said it would maintain its restoration facilities in Madrid and Los Angeles.

Recent projects worked on by Deluxe’s London restoration team include nine surviving Alfred Hitchcock silent films for the BFI, cult sci-fi fi lm The Man Who Fell To Earth and Highlander.

Deluxe said that although the 12 employees are facing redundancy, the company is “working very hard and closely with each of them in looking at other internal and external opportunities”.