Media localization and distribution company Deluxe has acquired Sony Electronics’ New Media Solutions (NMS) division. The terms of the deal, which closed on March 31, 2021, remain undisclosed.
Sony NMS provides digital media supply chain capabilities, while Deluxe is an end-to-end solutions provider, which covers cinema, distribution, and localization services including subtitling and dubbing.
Deluxe is a major name in media and entertainment. As a product of M&A, the company is no stranger to dealmaking. Deluxe, as it is today, was created in a carve-up of the company formerly known as Deluxe Entertainment, which spun off its distribution business in a sale to private equity firm Platinum Equity.
Under new ownership, Deluxe saw a return of several of the company’s former execs, including Cyril Drabinsky as CEO, Mike Gunter as CFO, and Warren Stein as COO.
Slator contacted Deluxe COO Warren Stein, who said that the main rationale behind the NMS acquisition was to “strengthen Deluxe technology breadth and workflows and enable NMS customers with full access to our end-to-end supply chain services.”
According to Stein, the combined organization has some 3,900 employees; about 160 from NMS and 3,700 from Deluxe.
With many of Deluxe’s rivals involved in M&A or investment activities over the past 18 months, the landscape of media localization suppliers is seeing unprecedented levels of dealmaking.
However, while many of the deals occurring in media localization have tended to focus on consolidating the market (e.g., Iyuno-SDI Group) or bolting on in-territory recording studios (e.g., TransPerfect and VSI), Deluxe has most recently prioritized technology-related M&A. In 2021, the company also acquired Sundog Media Toolkit, a cloud-based mastering and versioning platform.
Slator also contacted Yota Georgakopoulou, Audiovisual Localization Consultant with Athena Consultancy, who offered her take on the Deluxe-NMS deal and on “rampant” M&A in media localization.
According to Georgakopoulou, “Bigger clients need to be serviced by bigger vendors! As a result, M&A activities in the media space are rampant and are likely to continue this way. Deluxe’s strategy seems to focus on technology. The company always prided itself on being an end-to-end solution for its customers, and the recent acquisition of Sony NMS is strengthening Deluxe’s distribution and fulfillment service offering.”
Meanwhile, Deluxe COO Stein explained how the NMS deal will also support Deluxe’s localization offering. “Sony has no in-house localization capability. As a result, all Sony localization was outsourced to third parties. Sony will now have the option of utilizing the Deluxe end-to-end workflow including localization services. This will improve turnaround times and eliminate the need to manage separate workflows,” he said.
Acquiring a division from an existing customer may seem like a somewhat atypical move, but the deal apparently brings benefits for Sony. Carrie Ferman, SVP of M&A and Corporate Development at Sony Pictures Entertainment, was quoted by Deadline.com as saying, “This is an important opportunity for Sony Pictures to extend our partnership and work even closer with a key supplier.”
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Stein also discussed how business fared for Deluxe in 2020, pointing out, “We have observed strong growth in the Localization business since the middle of 2020 and going into Q1 2021. This growth has been driven by the launch of new international OTT platforms such as Disney+ and HBOMax.”
Asked what measures Deluxe put in place in 2020 in response to Covid-19 lockdowns, Stein replied, “Deluxe successfully transitioned to a remote dubbing model using its One Dub platform following the onset of the pandemic in early 2020.”
The COO also outlined Deluxe’s approach to new and frontier technologies, saying they “constantly review new technologies that can potentially automate the localization process. A critical element of our evaluation is to ensure that any new automation tools do not compromise the quality of our customers’ content.”
As Covid-19 lockdowns begin to ease in parts of the world, Stein shared his view of the current state of affairs in media production: “We are seeing encouraging signs of a recovery in new production as well as the completion of post-production of titles, which were delayed by the pandemic.”
Deluxe is forecasting revenues in excess of USD 400m in 2021, which “represents strong growth over 2020,” Stein told Slator.