March 05, 2010, 6:13 PM EST

(Updates share prices in 15th paragraph.)

By Ryan Flinn

March 5 (Bloomberg) — No matter which film gets the Oscar for best visual effects at the Academy Awards this weekend, it’s a guaranteed win for Autodesk Inc. and Nvidia Corp.

The San Francisco Bay area companies provided the technology for all three of the category’s nominees: “Avatar,” “District 9” and “Star Trek.” As movies rely more on digital effects, Hollywood is looking north to Silicon Valley to enhance scenery, bring characters to life and even render whole worlds from scratch.

“Avatar,” the highest-grossing film of all time, was also the most technologically demanding. Creating the effects required 35,000 computer processing cores and gobbled up as much storage as the three “Lord of the Rings” movies combined. The goal: make it look so real that viewers wouldn’t think about the technology involved.

“Traditional filmmaking started in Hollywood, but digital filmmaking started in the Bay area,” said Richard Kerris, chief technology officer of San Francisco’s Lucasfilm Ltd., the production company behind the “Star Wars” and “Indiana Jones” movies. “It kind of makes a whole lot of sense for people when you look at the hotbed of companies going on here.”

Autodesk’s software allowed “Avatar” filmmakers to see how actors would appear in digital environments right away. It was as if the computer displayed a live video game of each scene, giving directors the ability to make corrections immediately.

‘Real-World Experiences’

“We provide technology that allows people to essentially create real-world experiences digitally, which are accurate and as photo-realistic as possible, and in some cases, more than photo-realistic,” said Maurice Patel, an executive at the San Rafael, California-based company, the world’s biggest maker of engineering-design programs.

Weta Digital, the New Zealand visual-effects company that worked on “Avatar,” ran all of its computer processors simultaneously to create lifelike scenes in 3-D. Nvidia’s graphics processors helped cut down on the time it took Weta to make the sequences.

“The scenes that were created for that movie were far more complex than anything Weta Digital had ever done before,” Danny Shapiro, a director of marketing at Nvidia, said in an interview. “They just did not have the time to have that level of complexity and quality to make the release deadline.”

Tools to Innovate

The Santa Clara, California-based company worked with Weta to develop a new computing engine, called PantaRay, that could create complex scenes quicker, while using fewer processors.

“It’s all about creating tools that allow studios to innovate,” Shapiro said.

NetApp Inc., based in Sunnyvale, California, helps filmmakers store and manage all the terabytes of data generated. When “Avatar” filmmakers needed to focus on a certain element of the scene, such as the blue faces of the Na’vi people, it threatened to create an information bottleneck. That meant a scene could require hours or days to process.

Without NetApp’s technology, “Avatar” would have taken years longer to produce and been much more expensive, said Patrick Rogers, a vice president at the company. The film wasn’t cheap as it was: It cost about $237 million to make, according to the Internet Movie Database.

Years Longer?

“The outcome would be either the movie would take four years to render, would double the cost of the movie, or you wouldn’t have had the lifelike images,” Rogers said.

Chips from Santa Clara’s Intel Corp. and Sunnyvale-based Advanced Micro Devices Inc., meanwhile, help handle much of the underlying work. Their processors run the servers used in filmmakers’ so-called render farms. When Lucasfilm opened its new campus in San Francisco’s Presidio in 2005, it included an AMD-based render farm that can operate 24 hours a day.

Shares of Autodesk, NetApp and Nvidia have more than doubled in value over the past year. Autodesk rose 38 cents to $28.85 at 4 p.m. New York time in Nasdaq Stock Market trading. NetApp climbed 69 cents to $32.05, and Nvidia gained 51 cents to $17.17.

The Academy Awards started the visual-effects category in 1963, though it was called “special effects” at the time. That year’s winner was “Cleopatra,” starring Elizabeth Taylor, which beat out Alfred Hitchcock’s “The Birds.” In 2009, the Oscar went to “The Curious Case of Benjamin Button.”

Sci-Fi Reigns

All three of this year’s nominees are science-fiction films and box-office hits. Sony Corp.’s “District 9” cost about $30 million to produce and took in more than $200 million at the box office, according to IMDB’s Box Office Mojo site. Viacom Inc.’s “Star Trek” had a production budget of about $140 million and made almost $400 million in ticket revenue, IMDB says. News Corp.’s “Avatar,” directed by James Cameron, has grossed more than $2.5 billion worldwide.

Effects technology isn’t relegated to big-budget epics, science-fiction films and animated features. Independent films are increasingly relying on computer graphics.

“If you take some of the Sundance films today, they’ll have more frames digitally treated than visual-effects award winners 10 years ago,” Patel said. “Digital effects are becoming much more pervasive in every kind of production, from low-budget independent films to big spectacular blockbusters.”

–Editors: Nick Turner, Jeffrey Taylor

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

To contact the editor responsible for this story: Jonathan Thaw at jthaw@bloomberg.net

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