While the headlines scream about Technicolor's (soon-to-be Vantiva) spin-off of its glamorous visual effects division, a quieter, almost clandestine transformation is taking place within its legacy DVD Services arm. Could this be Technicolor's most surprising move yet – a bet on the resilience of physical media in a digital-obsessed world?

Let's rewind the tape to 2021. DVD Services, long considered a fading star, posted its first revenue increase at constant exchange rate in years, a surprising 1.6% uptick. Fast forward to the first half of 2022, and this supposed relic of the past has grown its revenue by 4.5% at current rates. While currency fluctuations play a role, the underlying narrative speaks of an unexpected resurgence.

This isn't just a case of nostalgia propping up an outdated business model. Technicolor has been strategically repositioning DVD Services, rebranding it as Vantiva Supply Chain Services, a name that reflects its evolving identity. The company is diversifying its activities, leveraging its existing infrastructure and expertise to tap into new revenue streams.

The strategy is multi-pronged. First, there's vinyl. Yes, that vinyl. Capitalizing on the resurgence of this beloved analog format, Technicolor has secured contracts with two music industry heavyweights, Universal Music Group and Sony Music. They've even launched their own commercial record pressing operation, aiming to become a recognized player in this growing niche.

Then there's microfluidics, a field with applications in medical diagnostics and life sciences. Technicolor is nearing completion of a dedicated lab in Poland, moving beyond prototyping and signaling its commitment to this cutting-edge technology.

Finally, there's the bread-and-butter of logistics: supply chain, fulfillment, and transportation. Technicolor is leveraging its existing network and infrastructure to offer these services to a broader clientele, securing new customers and driving year-over-year growth in areas like freight brokerage.

This isn't just anecdotal evidence. The numbers back up this quiet revolution. Despite a 30% year-on-year decline in disc volume in the first half of 2022, Vantiva Supply Chain Services managed a 4.5% revenue increase. This points to the significant impact of the new growth businesses, which are offsetting the expected decline in physical media.

Revenue Breakdown for Vantiva Supply Chain Services (H1 2022)

Note: This is a hypothetical breakdown based on the information provided, as the exact split is not explicitly stated in the article.

The impact on profitability is even more telling. The adjusted EBITDA margin for Vantiva Supply Chain Services rose to 5.2% in the first half of 2022, up from 3.6% in the same period last year. This margin expansion is directly attributable to footprint optimization, headcount reductions, and, crucially, the higher-margin nature of the new non-disc activities.

While Technicolor is projecting a modest decline in disc volume for 2022, the company is simultaneously emphasizing its commitment to "significantly expanding non-disc activities." This suggests a strategic shift in focus, with the legacy disc business providing a stable base for these higher-growth, higher-margin ventures to flourish.

Hypothetical Growth Scenario: Vantiva Supply Chain Services

Could Technicolor be aiming for a future where Vantiva Supply Chain Services generates the majority of its revenue from non-disc activities? Let's consider a potential scenario:

Note: This projection assumes a conservative 20% year-on-year growth in non-disc revenue for Vantiva Supply Chain Services. Actual results may vary.

If current growth trends continue, and assuming a conservative 20% year-on-year growth in non-disc revenue for the next three years, Vantiva Supply Chain Services could be on track to generate over €300 million in revenue from these new activities by 2025. This would represent a significant portion of the division's projected revenue, potentially even surpassing the revenue generated by the declining disc business.

Of course, this is just one scenario. The future is never certain. But the early signs are incredibly promising. Technicolor, under the radar, is quietly building a diversified, high-growth business within the seemingly fading husk of its DVD Services division. This bold move could pay off handsomely, positioning Vantiva Supply Chain Services as a leader in the rapidly evolving landscape of manufacturing and logistics.

While the spotlight shines on the spin-off, keep a close eye on this unassuming division. It might just be the real story of Technicolor's future.

"Fun Fact: The resurgence of vinyl isn't just a hipster fad. In 2022, vinyl record sales in the US surpassed CD sales for the first time since 1987, proving that the tangible experience of music still holds immense appeal."