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How Irish technology built Hollywood


In December, Tipperary man John Ryan's Macrovision acquired Gemstar-TV Guide in a cashand-
stock deal worth about $2.8bn

In December, Tipperary man John Ryan's Macrovision acquired Gemstar-TV Guide in a cashand- stock deal worth about $2.8bn

In December, Tipperary man John Ryan's Macrovision acquired Gemstar-TV Guide in a cashand- stock deal worth about $2.8bn

Meet the former RTÉ technician who has shaped the global video entertainment industry as we know it

In 1983, big Hollywood studios like Universal and Disney were terrified that the arrival of the video cassette recorder (VCR) would kill the movie business.

In 2000, the global music industry experienced a similar scare when a college student invented a way to share and swap music files over the internet.

Understandably, the onset of digital media is seen more as a threat than an opportunity in Hollywood.

It will come as a surprise to many that the main way for the entertainment industry to protect products from DVDs to music bought on iTunes, digital rights management (DRM), is the invention of Tipperary man, John Ryan.

Ryan is a man whose technologies have helped Hollywood, and indeed the global video entertainment industry, grow and prosper.

It began in 1983 when Ryan invented a technology that has become the worldwide standard for copy protection of video programmes and this technology features in nearly every DVD player and set-top box around the world.

Ryan’s Silicon Valley-based company Macrovision, of which he was CEO until 2001 and has since been chairman, is behind the secure distribution technologies for electronically delivered creative works including film, music, text, images, software and video games.

Its customers include most major movie studios, record labels, software firms and the majority of Fortune 500 companies. In December, Macrovision agreed to buy Gemstar-TV Guide in a cash-and-stock deal worth about $2.8bn.

Ryan, who attended NUI Galway to study physics and maths, developed an early love of electronics and worked in television engineering with RTÉ and Yorkshire Television before heading off to Silicon Valley, “to do electronics seriously.”

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Ryan first went to work for International Video Corporation and later Ampex, in charge of TV camera technology R&D.

“I had a bit of a reputation as an inventor,” Ryan says, pointing out that he has almost 70 patents to his name.

“I was approached by a local businessman in California, Victor Farrow, who proposed that together we start a company with him providing the seed capital and me the technology ideas. We had no real idea where it would lead, but I was ready to head out on my own at the time so we shook hands on a deal.”

In the early Eighties VCRs were getting very popular with consumers but the studios were concenrned about their potential for piracy. Universal and Disney sued Sony claiming VCRs were contributing to infringements of their intellectual property.

The Supreme Court found in favour of Sony on grounds that VCRs had legitimate non-infringing applications, such as time-shifting TV programmes.

The Court’s decision opened up the need for a technical solution to the problem of illicit copying. Ryan’s idea was to embed an electronic signal in films to make illegally recorded versions unwatchable on TVs. The first film to feature the Macrovision technology was The Cotton Club, directed by Francis Ford Coppola.

“No one has since come up with a better solution in the years that followed, so we were able to leverage that unique position to build a profitable business. Patents played a key role in this effort. In this business, if you don’t have good patents you won’t get paid, period,” Ryan adds.

In fact, some of Ryan’s copy protection patents are listed on the back or underneath all DVD players.

“We were profitable within three years of starting the business and we’ve been profitable ever since,” says Ryan of Macrovision, which in its recent quarter recorded $70m in revenue.

The introduction of the DVD was a major milestone in Macrovision’s history. The studios needed assurances that DVDs could not be easily copyied by VCRs and after exhaustive testing, Macrovision was chosen.

“It was a huge coup for the company. Every consumer electronics manufacturer that wanted to make DVD players needed to incorporate our technology,” explains Ryan.

Ryan floated Macrovision on the Nasdaq in 1997. “Our valuation on that day was $18m. Within a few weeks it was $1.5bn. At the peak of the tech boom the valuation reached up to $4bn.

Macrovision’s acquisition of Gemstar, a company twice its size, hasn’t been favourably received by the markets and the company’s stock has fallen 35pc. Ryan is nonchalant. “The analysts took one look at it and said: ‘Are those guys crazy?’ But we’ll get there.”

Ryan vacated the CEO position in 2001 but has remained on as chairman of the board. “I decided I wanted to do more with life. I’ve been taking it easy but I’m still very interested in technology.”

He’s still a regular visitor to Ireland, at least four times a year, and owns a home in Kerry. He is also committed to philanthropic pursuits here, sponsoring an arts centre in Tipperary town and scholarships in three local secondary schools. He has also donated to the €1.7m Tipperary Technology Park.

“I am the beneficiary of a good and free Irish education system. It was payback time. I figure it is the right thing to do.”

Ryan’s example of providing technologies which enabled an entire generation of digital entertainment is one being emulated by at least a dozen companies in Ireland, including firms like Shenick, which provides security for set-top boxes and Emuse Technologies, which enables digital distribution of content.

“Exports of Irish digital media technologies and

services grew from €70m in 2006 to €80m in 2007,” explains Ray Walsh, a senior advisor at Enterprise Ireland.

“When Irish people think Hollywood, they think actors and movies. But there’s an exciting group of companies like Cork-based Digisoft, Dublin-based Wildwave, Jam Media and Inflight Entertainment which are all making future content distribution and services possible.”

Stephen McCormack of Wildwave says Irish technology firms are becoming regular fixtures at events like Sundance and the Oscars.

“The Irish Film Board does a trade mission to the Oscars every year and the diversity of local companies that provide digital media technology, not just content, is impressive.”

Ryan admits being impressed by the calibre of young Irish executives he encounters in California. “The young Irish people I meet over here are as driven and as gung-ho as the typical Silicon Valley entrepreneur.

“I’ve been very impressed with the quality of their determination,” he concludes.

Irish firm goes to Hollywood, wreaks Havok at Emmys

There is a famous scene in the cult classic movie The Matrix Reloaded where the protagonist, Neo, engages in hand-to-hand combat with an evil Agent Smith who has cloned 100 copies of himself.

That scene was made possible by technology created here in Ireland by Havok, a company founded by a group of computer scientists at Trinity College Dublin and acquired last year by Intel for $110m.

Havok’s physics technology sits on every top-selling video game in the world.

But few realise that Hollywood has now got hold of Havok to create realistic special FX for popular movies such as Troy, Poseidon, Kingdom of Heaven and Charlie and the Chocolate Factory.

Last month, Havok received an Emmy for its work. “It’s only in the past few years that we developed our business model to the point that Sony and other big movie studios were prepared to buy from us,” explains Havok chief executive, David O’Meara.

“Movie studios used to have to use pyrotechnics to simulate explosions. Now they just do the explosion using Havok software.”

© Silicon Republic Ltd 2008

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