Can German engineering go digital? The Arri Alexa camera, a Hollywood test case

What's to become of Europe? As Spain's straits become newly dire and the whole euro zone convulses over its debt crisis, the common prayer is that Germany will rise up, reject outside help and protect the European household.

But Germany's looking not so mighty itself: Industrial production in the once-indomitable economy is down. In April alone, it dropped by a stomach-churning 2.2 percent. "The German economy's immunity against the euro zone sovereign debt crisis is clearly fading away," Carsten Brzeski, an economist at ING in Brussels, warned recently.

Germany seems to have missed the memo that kicked off the digital economy decades ago. While economies from North America to Asia have--when manufacturing digital devices from cars to phones--embraced the principles of open platforms and beta-testing, Germany has stuck with its commitment to protectionism, nationalism and craftsmanship.

Surprise: It turns out that what worked in the heyday of Black Forest cuckoo clocks doesn't suit our era.

Recent case in point: the German Arri Alexa camera. The Munich-based company Arri, which was founded in 1917, is the world's largest manufacturer of professional movie cameras. From their first American use in the 1940s—for the 1947 Bogart-Bacall picture “Dark Passage” —Arri's cameras fast became the industry standard for big-budget films from Hollywood to Bollywood to French art houses.

But then came digital. And Arri faltered. Rather than embrace what Wired calls “ the good-enough revolution”—which posits that consumers in the digital age will “sacrifice lots of quality for a cheap, convenient device”—Arri dug in to old-world perfectionism. Instead of just spinning out a bunch of B-grade digital-video cameras tricked out with happy gimmickry until the fundamental technology improved, Arri grew nostalgic for its semi-monopoly over film, tinkered miserably, and lost market share.

At the same time, a fleet-footed California company called Red Digital, founded in 1999, pulled together the best digital camera it could in 2007. Red Digital had filmmaker Peter Jackson ostentatiously promote it and teased the public with groovy-looking digital video cameras before they were perfect—or even available.

Filmmakers with limited budgets—all filmmakers, then—took notice of Red Digital. Louis CK's FX show “Louie” is shot on a Red One. Red Digital cameras were used to shoot “The Girl with the Dragon Tattoo.” “Pirates of the Caribbean: On Stranger Tides,” “Margin Call,” “Our Idiot Brother,” “The Muppets” and Steven Soderbergh's “Haywire” are all Red Digital films. Cool, visible projects like these are a supreme vote of confidence for a young company.

As Red Digital claimed auteur hearts and minds, and as the European economy slipped into a landslide, Arri was hard at work refining digital video so it would meet its high standards.

Aiming for greatness or nothing: Maybe not the best use of time. Especially as digital manufacturing (consider the Flip camera) was all about being good enough.

At last, two years ago, the Arri Alexa was sprung on the world. Touted as Arri's first major foray into digital cinematography, it was quickly endorsed by Roger Deakins, the exacting cinematographer for people like the Coen brothers and Sam Mendes. "This camera has brought us to a point where digital is simply better,” Deakins said after trying it in 2010.

Nothing wrong with that. Someone has to be the crème de la crème. It looked like Arri was back on top, and would once again be the go-to camera for marquee filmfolk.

But Red Digital attracted loyalists while Arri dithered, and it now has a better camera that rivals the Arri Alexa. And copy-masters Canon, Sony and especially Panasonic quickly reproduced Arri's labor-intensive engineering, and made cheaper, friendlier cameras. These Japanese cameras are being used to make big Hollywood films (“The Darkest Hour,” “Act of Valor,” “Ted”). The dominion of the German Arri seems to be on the wane.

Sound familiar? It's worth reiterating. Digitization demands evolution—among individuals, in industries, in cultures and in economies. I know Europe's got a lot on its mind right now, but maybe someone can pass this on to Angela Merkel at the next Davos.

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