Nov. 22 (Bloomberg) -- After working on Hollywood movies and TV shows for 21 years, Jim Sanfilippo understands the power of a dramatic moment. Back in 2007, the master electrician turned studio lighting systems entrepreneur was demonstrating one of his LED fixtures to a producer for the James Bond film “Quantum of Solace,” who questioned its durability. Undaunted, Sanfilippo walked to a nearby worktable in the cavernous Buckinghamshire, U.K., film studio and started hammering the brick-shaped light onto the table as if he was trying to drive a nail through it. “I just kept pounding the light until everybody’s jaw was on the floor -- speechless,” Sanfilippo says. “The light was still on, while I was holding it, and I looked at the guy and I said, ‘I don’t know, but I don’t think it’s going to be a problem.’” He landed the $100,000 contract, the first for his nascent business.
Three years later, Sanfilippo, 42, is still pitching the light-emitting-diode fixtures and accessories that Nila, his six-employee company, designs and builds in its factory in Altadena, Calif. His sales tactics are a bit more restrained, though his message remains the same: Movie studios and TV production companies should replace their fragile old lighting systems with his newfangled models, which are rugged and energy-efficient yet capable of delivering the color range necessary to set any mood. There is a hitch, however: With prices for a single fixture starting at $1,600, Nila’s lights on average cost twice as much as the very basic tungsten halogen lighting, the standard equipment that’s been in use in movie and TV studios for more than 40 years.
To convince prospective customers to make the investment, Sanfilippo says his lights are 75 percent more energy-efficient and emit 80 percent less heat than the traditional tungsten halogen and hydrargyrum medium-arc iodide (HMI) lamps. He emphasizes they last much longer -- 20,000 hours vs. 1,000 hours. They’re also more environmentally friendly, he says, since LEDs do not contain toxic heavy metals. And he’s quick to point out that as a replacement for HMI fixtures, the standard for creating daylight conditions since the late 1960s, Nila lights cost 25 percent to 50 percent less.
So far, his pitch is working. Sanfilippo says Nila is on track to reach $1.5 million in revenue this year, up more than 300 percent from 2009, and expects to hit $7.5 million in 2011. It sells from about a dozen dealers and their subsidiaries inside and outside the U.S., primarily to equipment rental companies that cater to movie studios and TV production companies.
The sales cycle is tricky, but Sanfilippo says old-fashioned persistence pays off. For example, to make it onto the “Quantum” sets, Sanfilippo approached rental company PRG-LA, which sub-rented to Panalux London, which then rented the lights to the producers of the Bond film he had first approached in 2007. “They’re really fabulous,” Roberto Schaefer, the film’s director of photography, says of the Nila lights, which were mounted on vehicles that followed cars during chase scenes. “You can drive a car off a cliff, and it doesn’t damage them.”
With the price of LEDs expected to drop by 50 percent over the next 18 to 24 months, Michael LoCascio, senior analyst at Lux Research, which provides market forecasts for emerging technologies, says profit margins will increase for specialty companies like Nila and its handful of competitors, including Gekko Technology and Litepanels. Lux predicts the overall LED market will have a compound annual growth rate of 41 percent from 2009 to 2020, when it is expected to reach $10.3 billion in Asia, Europe, and North America. LoCascio tempers prospects for specialty LED makers: “The Nilas of the world are hitting a niche market that’s going to be profitable, but it’s still going to be a niche.”
To move Nila beyond Hollywood, Sanfilippo is pushing into Washington. This year, Nila won a total of $365,000 in contracts to install lights in Senate committee rooms in the Capitol building. Under the 10-year Green the Capitol initiative launched in 2007 by House Speaker Nancy Pelosi, the TV lights in the Capitol have to be replaced with energy-efficient lighting. Nila’s lights made the cut because their small size didn’t mean making changes to the ceilings or walls of the historic rooms, yet they’re powerful enough to light speakers standing 75 feet away. Also important was the color quality of the light, particularly in the committee rooms where lawmakers hold high-profile hearings. “The senators care very much about how they look on camera,” Sanfilippo says.
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