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Dublin software firm wreaks Havok in the arena of special effects
Conor Brophy



EXPLOSIONS, shoot-outs and frantic car chases are a part of everyday life at the offices of Dublin software company Havok.

Thankfully the pyrotechnics are confined to desktop terminals, where Havok's team of software engineers and developers put together special effects for blockbuster films including The Matrix and X-Men: The Last Stand and best-selling video games such as Halo 2.

Havok's products, which are used by studios and games publishers to animate computer-generated characters and objects, are enjoying especially high visibility at present. The newly-released film Poseidon makes use of its software, as does Cars, the video game spin-off from the animated film that currently tops the US box office charts.

Havok's technology performs several vital functions for developers and special effects artists. When the production team on historical epic Troy needed to animate hundreds of computer-generated soldiers for a pivotal battle scene, for example, it was Havok's software that simulated the hundreds of collisions and clashes between the virtual Trojan and Greek hordes. The technology makes it possible to put hundreds of people, or objects, on the screen at a time instead of having animators go through the tortuous process of creating each character from scratch.

Between the film work and a slew of games titles for the X Box 360 and the soon-to-belaunched Sony PS3 games console, Havok is having a busy year.

Busy and successful, according to Havok chief executive David O'Meara.

The company is profitable, . . ."significantly cash-flow positive and growing at 60% per annum", he said. O'Meara will not provide up to date revenue or profit figures "for competitive reasons". The company's most recently filed set of accounts, for 2004, show it made a modest pretax profit of 139,000 on turnover of 4m, compared to a 1.9m loss on 2.5m turnover the previous year.

That loss preceded a 4m fundraising, led by long-time Havok backers Trinity Venture Capital and Bank Of Scotland (Ireland), bringing the total invested in Havok to date to 17m. The "highpotential start-up" singled out by Enterprise Ireland was starting to run out of steam.

O'Meara, who came on board as chief executive at that time, said there were "financial challenges" but that the company is now firmly in the black and has "no need to raise funds".

The root of the problem at the time was the delay in breaking through barriers in the US market. Games publishers, the company's core customers, were impressed with Havok's technology but were often uneasy about bringing the company on board for major development projects. Computer games can cost up to 30m to produce. O'Meara said publishers, many of which are based in the US, feared that a small Irish company would either be unable to serve their needs properly from Dublin or would go bust in the middle of development.

"We made big decisions.

We moved over half of the company to California within two months, " he said. Havok now employs more staff at its San Francisco office than at its headquarters in Dublin.

That had an immediate impact.

O'Meara said the company also stuck to a somewhat counterintuitive strategy of turning down potential sales.

"If we believe the game is not going to show Havok products properly, we won't be part of that game, " he said.

The goal was to free up maximum resources to devote to high-profile projects, such as Halo 2, with what O'Meara calls "the triple A developers". Havok's best interests would not be served, he said, by becoming involved in games that lacked lustre or failed to show off its capabilities in the best light.

O'Meara said the hard work, and the gambles in the US and Canada, have paid off. "Every publisher in North America uses us. Every single publisher."

Moreover, Havok claims that no single publisher accounts for more than 9% of its annual revenue. That represents a healthy spread of eggs and baskets in an industry dominated by big players such as Electronic Arts, which alone accounts for 30% of worldwide video game sales.

Havok has begun to benefit from the overlap between the video game and film industries. Its technology has been used by renowned special effects companies such as Industrial Light and Magic and Moving Picture Company. The move into films came about almost by accident.

Hollywood has cottoned on to the massive revenue potential of computer game spinoffs from popular films, some of which bring in more money for the studios than the films themselves. Special effectsladen blockbusters such as X Men III (another Havok customer) are increasingly made in tandem with their video game counterparts, often using the same digital characters and effects deployed in the films and produced by the same effects companies.

The overlap between the two industries is playing into Havok's hands, according to O'Meara. He is keen to extend the company's reach into the film industry further.

"Everything is digital now.

The movie is digital, the game is digital. In fact they are often being made side by side. Our brand and our products and the understanding of our products is increasing among users in both industries, " he said.

Havok has been expanding its suite of products and services to exploit opportunities in both industries.

Three years ago Havok was a one-product company. Inhouse research and development and a small acquisition of a software company in the US have enabled it to add three other products, all in the area of animation and computer-generated effects.

It has also started to generate business from outside North America. Following the establishment of an office in Tokyo, Havok has sealed a deal with Sony through which its software is pre-installed on the PS3 console.

"It's probably the biggest software deal signed by an Irish company in Japan, " he said, though he refuses to say how big, again citing "competitive reasons".

What he is clear on, however, is that Havok is now maximising the potential it has shown in the past and will deliver a return on the significant sum invested so far.

"It's way beyond a 100m company. I won't say exactly what but it's definitely worth way more than 100m, " he said.




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