By Lucas Shaw | Bloomberg
When the rock band Phish began their 2004 track A Song I Heard the Ocean Sing at the Sphere in April, more than 18,000 fans stared, mouths agape, as the quartet from Vermont seemingly jammed in the middle of a coral reef.
Fish — not to be confused with Phish — swam from one side of the stage to the other amid giant, pulsating jellyfish as the whole dome transformed into a trippy underwater experience. Human bodies bobbed up and down in the water amid radiant flashes of red and green. Tall plants shot up from the sea floor. The scene was just one of dozens of visuals displayed inside and on the exterior of the glowing $2.3 billion dome in Las Vegas — the most talked-about concert venue in the world.
Conceived by James Dolan, who also owns the New York Knicks basketball team, the Sphere has attempted to reinvent the concert experience, placing a live musical act in front of a 160,000 square foot surface with the highest LED resolution possible. It demands a multi-million-dollar investment in graphics.
None of the arresting visuals would be possible without Disguise, a London-based technology firm that makes a box and complementary software that serve as the brains of the live show. Founded more than 20 years ago, Disguise sells its technology to many of the most prominent musicians in the world, including Taylor Swift and Justin Timberlake, as well as festivals like Coachella.
Disguise has positioned itself at the heart of an exploding market for visual graphics at concerts, on film sets and even in churches. Demand for virtual production is expected to soar to $7.13 billion by the end of 2029 from $1.99 billion in 2022, according to the company.
After cornering the market for live music, Disguise is branching out into live news and sports, as well as Hollywood productions. It’s working with NBC News on election coverage and Netflix Inc. on shows such as Sweet Tooth. It has also collaborated with the Portland Trailblazers to inject augmented reality into its basketball broadcasts.
All this has helped Disguise eclipse $100 million in sales. To get to $200 million, it needs to hire more people. To that end, it’s working with the investment bank Raine Group to help raise money to expand.
“I need more investment to grow again,” Disguise Chief Executive Officer Fernando Kufer said over dinner at Mother Wolf in Las Vegas, moments before the Phish show. “We created a category. We’re running it. Why not take advantage?” he asked.
Disguise started out as an art project. Matthew Clark, Chris Bird and Ashraf Nehru formed the multidisciplinary studio United Visual Artists in the early 2000s, which integrated new technologies with traditional media in sculpture, performance and installations. Its debut project was producing the visuals for the British electronic group Massive Attack for their 100th Window tour in 2003, which led to a decades-long collaboration. They later developed software to facilitate visuals at live events, known as d3 technologies. The group has created pieces for musicians including U2 and the Rolling Stones, Broadway shows like Harry Potter and museums such as the Victoria & Albert.Kufer came on board in 2015 after years of working for brands such as Gillette and the Body Shop. He saw a business with huge untapped potential. At the time, the company had 17 employees and generated about $3 million in sales. The founders were torn between being an art studio and a tech company. But Kufer saw clearly where it should go.
“This is a tech business and we need to run it like a tech business,” Kufer told his partners. He focused the company on hardware (the box) and software (technology for creating 3D visuals), renamed it Disguise and started to strike deals with more partners.
Disguise doesn’t actually make the visuals — that’s done by companies like Walt Disney Co.’s Industrial Light and Magic. Concert venues rely on Disguise to process and pull in the different graphics, placing them in order. Clients pay anywhere from hundreds of thousands to millions of dollars to use Disguise’s servers, and additional fees for access to different software tools. While the server is the foundation, Disguise sees far more potential in the software business — especially as it pertains to virtual production and live broadcasting.
CJ ENM, a South Korean entertainment company, uses Disguise technology for its in-house virtual production studio, the VP Stage, for 2D image and video mapping, and virtual and augmented reality. The company aims to use the VP Stage to film a wide range of visual content for all kinds of entertainment from film to TV series, unscripted shows and commercials.
“Disguise has so far unrivaled solutions utilizing 2D video and image,” a spokesperson for CJ ENM said in a statement. “For a company like CJ ENM whose content library spans a wide spectrum of genres and formats, Disguise’s solutions have been highly suitable.”
Financial Support
In 2017, Disguise started looking for financial support. Kufer executed a management buyout with support from Livingbridge, a mid-sized private equity firm based in London. Over the next couple of years, Kufer increased Disguise’s sales to about $40 million and opened offices in New York, Atlanta and Los Angeles.
Disguise was on the verge of closing a major investment from the Carlyle Group, one of the world’s largest private equity firms, when Covid-19 shut down live music and productions and reshaped live broadcasting. Disguise lost all of its projects overnight, and there were moments when Kufer thought the company would have to be shut down, he said.
The pandemic turns out to have had a silver lining for Disguise, in that it boosted demand for virtual production technology — and gaming. Disguise had already been working with Epic Games Inc., best known for the video game Fortnite. But Epic’s most significant invention is actually the Unreal Engine, 3D graphics software that allows people to develop video games, produce or animate films and visualize spaces and products.
Epic saw the potential in Disguise’s technology and acquired a 5% minority stake, giving it the capital it needed to survive the pandemic and enticing Carlyle back to the table. Carlyle took a majority stake in Disguise in 2021.
Everything is becoming a cinematic experience, said John McConnell the graphics producer for the Portland Trailblazers, one of only five teams in the NBA that produce all their live broadcasts in-house. Working with the team, Disguise created a temperature tracker that would indicate whether the players was shooting well or not. If the players were on fire, or playing well, the temperature would shoot up. If the team was playing poorly, the bar would dip and virtual icicles would hang off the thermometer.
“Innovations like these are needed when we are competing for eyeballs,” McConnell said. “Our ownership group was really focused on making the in-game broadcast as good as it can be.”
The biggest opportunity ahead for Disguise may be in Hollywood, where Kufer is now moving after 23 years in London. In California, Disguise has deals with virtual effects studios for work on dozens of different sound stages, including many that work with Netflix.
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