James Cameron, Hollywood's 3-D entrepreneur

Sun Apr 1, 2012 2:28pm EDT

* Cameron Pace Group 2011 revenue roughly $58 mln

* Company rents out 3-D equipment, certifies 3-D quality

* "Titanic" in 3-D launches on Wednesday

By Ronald Grover

LOS ANGELES, April 1 (Reuters) - As Hollywood directors increasingly make their films in 3-D, the biggest financial winner is turning out to be one of their own: director James Cameron.

Cameron has emerged as one of Hollywood's hottest entrepreneurs by cashing in on the 3-D technology he created for "Avatar", which ranks as the highest-grossing film with a worldwide box office take of $2.8 billion.

Cameron also directed the second-highest grossing film of all time, the nautical disaster-romance starring Leonardo DiCaprio and Kate Winslet, "Titanic", which is set to return to theaters in 3-D on Wednesday.

As George Lucas set the standard for special effects with "Star Wars", Cameron, 57, is setting the bar for 3-D technology with cameras he created and making millions for himself in the process by renting them to other film and TV directors.

The Cameron Pace Group, which the director formed 12 years ago with camera guru Vince Pace, last year generated revenue "in the ballpark of" $58 million, said its Chief Operating Officer O.D. Welch.

That is a fraction of what Lucas' ILM special-effects house generates, but as 3-D productions grow Cameron Pace is expected to as well. So far, it has rented cameras and other gear to more than two dozen movies, nine concert films and 140 sports broadcasts.

Hollywood's 3-D conversion movement may help Cameron erase his past failed efforts at being an inventor-entrepreneur. The eccentric and sometimes combative director, along with late special-effects maven Stan Winston, started Digital Domain in 1993 to compete with Lucas' ILM special-effects house.

Cameron left the company in 1998 after clashing with investors that included IBM and Cox Communications over the strategic direction, according to Rebecca Keegan's Cameron biography "The Futurist."

As a result, Digital Domain never held its planned initial public offering.

"I had begun to dislike the dynamic," Cameron told Keegan. "When it was clear that the very controls I needed fell mostly in the conflict-of-interest category, it obviated the upside for me."

Cameron was not available for a comment. On March 25, he journeyed to the bottom of the ocean, taking 3-D cameras with him seven miles beneath the Pacific.

The failure of Digital Domain has not dimmed Cameron's star among Hollywood moguls, said Dreamworks Animation SKG Inc CEO Jeffrey Katzenberg.

"Entrepreneurs are judged by their successes not their failures," Katzenberg said. "What he's done is build an incredible business out of the 3-D technology he developed."

Housed in three non-descript buildings near the Burbank airport, Cameron Pace collects money every step in the 3-D movie-making process. It rents its Fusion 3-D rig and other equipment to film producers such as Michael Bay, who used it for "Transformers: Dark of the Moon", for up to $3 million a film.

TV productions, such as CBS's coverage of the U.S. Open tennis championship, pay less than $100,000 apiece for the seven or eight cameras it typically can use to shoot an event, said CBS head of operations Ken Aagaard.

Cameron is so serious about the production quality of his 3-D cameras that his company bestows a seal of approval, as it did with Martin Scorsese's film "Hugo".

That certification allows a studio to promote the quality of its films to investors and potential distributors, said Lyndsay Harding, chief financial officer of Evergreen Films, the first studio to be CPG certified.

Evergreen will negotiate with Cameron Pace on how it will be paid, she said. Evergreen used Cameron Pace equipment to produce "Walking with Dinosaurs" that News Corp's Fox is distributing next year.

Another as yet untapped revenue stream could be harvested by certifying 3-D TV sets and other electronic products, said Welch. Cameron Pace may also consider licensing its eight patents, or the dozen more that are pending.

In addition to his 3-D camera business, Cameron is helping design a new Avatar-themed area of Walt Disney Co's Animal Kingdom park in Orlando. For his work with Disney's Imagineering unit and consulting on its construction, Cameron will share in the royalties from the merchandise, rides or anything else they create.

The majority of the royalties will go to Fox, which distributed the film. Disney hopes the area proves to be successful enough to expand to its other parks.

What draws a customer to Cameron's company continues to be his uncontrollable lust for all things 3-D. Michael Lewis, chief executive of RealD, a company that licenses 3-D projectors and glasses to theaters, was stunned when Cameron, a RealD board member, nearly became a production assistant during filming of the movie "Cirque du Soleil Worlds Away".

"I look up," Lewis recalled, "and there's James Cameron hanging 80 feet above the ground."