Cheers
Christian
When you think of 3-D digital animation, you might think of the wind-swept trees in the blockbuster "Pirates of the Caribbean: Dead Man's Chest," not of catheters and heart valves.
But the animators behind Elara Systems Inc. are bypassing the biggest sector of this growing market -- animation for games and movies -- and are tapping into a niche that uses 3-D animation as a marketing and training tool, primarily for cardiac electrophysiologists and other medical professionals.
They produced a 30-second spot for St. Jude Medical designed to get physicians excited about the latest device for pacemaker calibration and another to generate interest in a catheter that can "turn a corner like nobody else's."(intersting marketing pitch)
Elara Systems' five-person multimedia production company replaces traditional marketing tools, such as photography, videotape and brochures, with digital animation. "We change the way companies do business in their marketing departments," president Cameron Grant said.
Elara may be small, but the company already has landed big clients such as Baxter Medical and Boston Scientific. Annual sales revenue has hit the high six figures, said Grant, who forecasts seven figures by the end of this fiscal year.
Jon Peddie, president of Jon Peddie Research, a consultancy firm in Tiburon specializing in 3-D graphics and multimedia, called revenue of high six figures "perfectly reasonable" for a company of Elara's size to be making in its fifth year.
"It's very good, but it's not spectacular," he said. "Whether or not they can turn that into $10 million or not, that's a big if."
Early on, Grant said, Elara won contracts by offering a low price. Now, he said, the company offers a fair price and wins contracts based on the quality of work.
Through Aug. 15 of this year, gross revenue shot up 286 percent over the same period last year, Grant said. In the same time period, net profit rose 367 percent, he said.
The company has focused primarily on biomedicine and bioscience but can work with any kind of business with a product or process that's not easily explained, he said.
For example, Gallo Glass of Modesto, which makes Gallo wine bottles, wanted other wineries to understand what they do and know they're open for business. So Elara created a digital video clip.
"It isn't all catheters and heart valves," Grant said.
"We deal in images," added Carol Jo Grant, who makes cold calls to get her son appointments with companies. "It doesn't make a difference what it is."
Out of the garage in a flash
Grant started the company in 2001 with Robert Dyce, a college buddy at the Academy of Art University, San Francisco. As new graduates, they tried to sell CD business cards but eventually transitioned into an interactive multimedia production company.
"When you're a startup, cash-based business in a recession, you get real creative," Cameron Grant said.
Early on, they watched other production companies go bust. Kathleen Maher, a senior analyst at Jon Peddie Research, said it's a field that "broke a lot of hearts" during the Internet bust.
The market might not have been ready for it, she said, and slower computers meant images took too long to download.
"I think one of the most significant things that has changed the market is the merger of Adobe and Macromedia (last year) to make Flash even more ubiquitous," she said.
Just-in-time marketing
The key to survival, Cameron Grant said, was to put money into equipment and employees as revenue came in. He said the company has no debt.
Elara recently moved from the Grants' El Dorado Hills home -- where more than a dozen computers triggered a blown fuse when the microwave was turned on -- to an office in Rancho Cordova.
Besides helping companies show off cutting-edge devices, Grant said Elara helps customers move to a "just in time" marketing practice. Because 3-D images are easier to manipulate than regular video or printed brochures, companies can move ahead with marketing initiatives even at the risk of last-minute changes to product prototypes.
"Sales and marketing can parallel the design," Dyce said.
In fact, there was a last-minute design change to a product Elara worked with St. Jude Medical to market at a trade show. The images were quickly altered, and the show went off without a hitch. St. Jude subsequently asked Elara to do more teasers for two other products.
"Five years ago if you'd have said we'd be doing cardiac instructional animation with Boston Scientific and St. Jude Medical, I would have thought you were crazy," Grant said.
While Elara's medical niche is growing, Grant wants to see the company use its technology in other areas, such as product and architectural visualization.
Analyst Maher said the medical market is a growing niche in 3-D animation.
"It will be one of the larger markets for this type of work," she said. In general, demand for 3-D animation will grow, and many companies will contract out for it because "it's really difficult to do," she said. As a whole, the 3-D software market amounted to $269.4 million in 2005, she said.
Friday, August 25, 2006
Sacramento Business Journal - by Melanie Turner Staff Writer
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