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Author Topic: Major studios in deal to convert to digital movie projection
Laurie Higgins
Film Handler

Posts: 45
From: Norcross, GA, USA
Registered: Jun 2008


 - posted 10-08-2008 08:26 PM      Profile for Laurie Higgins   Author's Homepage   Email Laurie Higgins   Send New Private Message       Edit/Delete Post 
LA Times, Oct. 2, 2008

Major studios in deal to convert to digital movie projection

The agreement to help defray the cost of the $1-billion switch ends protracted squabbling with theater chains over who would pay for it.

Digital cinema took a major leap forward as five Hollywood studios pledged their support -- and their cash -- to a $1-billion plan to convert old-fashioned 35-mm film projectors to more modern technology in thousands of theaters throughout North America.

A consortium of major theater chains announced the deal Wednesday, signaling an end to the protracted squabbling over who would pay to convert 20,000 screens to digital projection. The deal announcement was timed to coincide with ShowEast, a major trade show for theater owners and the studios that opens Oct. 13 in Orlando, Fla.

"It's the first tangible, major step towards a very widespread conversion to digital projection in the United States and Canada," said Travis Reid, chief executive of Digital Cinema Implementation Partners, a joint venture owned by theater giants AMC Entertainment Inc., Cinemark Holdings Inc. and Regal Entertainment Group.

Until recently, News Corp.'s 20th Century Fox and Viacom Inc.'s Paramount Pictures had been the sole studios signed on to help finance the conversion. With Wednesday's announcement, Walt Disney Motion Pictures, Universal Studios and Lionsgate Films added their backing. People close to the situation say the two remaining major studios, Warner Bros. and Sony Pictures, are in discussions.

The five studios agreed to help defray the estimated $70,000-per-screen cost of the digital conversion by paying the theater consortium a "virtual print fee" of $800 to $1,000 per film, per screen. That amount is less than the estimated $1,100 to $2,100 it costs studios now to strike and distribute a film print.

These financial commitments -- along with the promise to supply theaters with digital "films" -- were the critical mass the consortium sought to raise $1 billion on debt markets, in a financing package led by JPMorgan Chase & Co. and to be paid over eight to 10 years. The chaos on Wall Street, however, makes uncertain how quickly the funds can be raised.

"We still hope and believe it's achievable to finalize the financing in the fourth quarter of this year," Reid said.

Julian Levin, executive vice president of digital exhibition for 20th Century Fox, acknowledged that the recent turmoil in the credit markets is cause for concern.

"I'm hopeful that the financial climate will get stabilized, [and credit] will loosen up a little so that the funds can flow and become available for the conversion," Levin said.

The studios have pushed for the change for nearly a decade. Digital projection would eventually save the industry as much as an estimated $3 billion a year on the cost of making and distributing films, a process that is little changed since the days of silent-film stars Mary Pickford and Buster Keaton.

"That's a no-brainer money savings," said Lloyd Walmsley, an analyst with Thomas Weisel Partners.

Digital projection would also hasten the deployment of 3-D in theaters.

Studio executives have embraced the technology, saying it offers a new viewing experience that's compelling enough to coax people out of their living rooms and staunch declining theater attendance. Indeed, Walt Disney Co., 20th Century Fox and DreamWorks Animation SKG each have committed to releasing upcoming animated films in 3-D.

Three-dimensional movies, such as Disney's recent "Hannah Montana & Miley Cyrus: Best of Both Worlds Concert," brought in $31.1 million its opening weekend -- and it was released only in 3-D. Theaters can also charge a premium for tickets, something they have so far been able to do only at the concession stand. Nonetheless, some dismiss the technology, first popularized with in the 1950s with the spear-in-your-eye jungle flick "Bwana Devil" as cinematic novelty.

"Simply put, it's not a gimmick," said Chuck Viane, president of domestic distribution for Walt Disney Studios. "It is truly a medium by which filmmakers can bring life to their movies and enhance the actual experience."

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Mike Blakesley
Film God

Posts: 12767
From: Forsyth, Montana
Registered: Jun 99


 - posted 10-08-2008 09:36 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
I still wish somebody would explain why a studio can't pay a "virtual print fee" for an independent theatre. Why do you have to be a gigantic chain to make that happen? It's just a matter of bookkeeping, and they are already processing individual theatres' film rentals, so what is the #$%& problem?

I obviously don't expect to get the same kind of "deal" the big guys get - but to be shut-out completely is just unfair.

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Joe Redifer
You need a beating today

Posts: 12859
From: Denver, Colorado
Registered: May 99


 - posted 10-08-2008 11:30 PM      Profile for Joe Redifer   Author's Homepage   Email Joe Redifer   Send New Private Message       Edit/Delete Post 
Sorry Mike, but everyone hates independent theaters with a passion. Your failure is the goal. You'll just have to go out of business. Bye!

I agree, it really sucks for independents. You probably won't find THIS issue brought up in a rag like Box Office.

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Mark Ogden
Jedi Master Film Handler

Posts: 943
From: Little Falls, N.J.
Registered: Jun 99


 - posted 10-09-2008 03:16 AM      Profile for Mark Ogden   Email Mark Ogden   Send New Private Message       Edit/Delete Post 
Mike: Have a look at this (pdf file) and then at this.

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Tristan Lane
Master Film Handler

Posts: 444
From: Nampa, Idaho
Registered: Feb 2002


 - posted 10-09-2008 11:53 AM      Profile for Tristan Lane   Email Tristan Lane   Send New Private Message       Edit/Delete Post 
Mike,

Why do you get the idea that you are shut out? AccessIT was happy to offer our independent 8 screen theater the deal. I would go strait to Christie/AIX and speak with someone there about conversion (if you are truly looking to)

I also thought that you were a member of CBG. Didn't they strike a deal with AccessIT as well?

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Todd McCracken
Master Film Handler

Posts: 263
From: Northridge, CA, USA
Registered: Mar 2008


 - posted 10-09-2008 01:49 PM      Profile for Todd McCracken     Send New Private Message       Edit/Delete Post 
The contact at AccessIT for this would be Diane Anselmo. Feel free to give the NOC a call at 1-888-367-2360 if you would like to be put in touch with her.

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Frank Angel
Film God

Posts: 5305
From: Brooklyn NY USA
Registered: Dec 1999


 - posted 10-09-2008 02:01 PM      Profile for Frank Angel   Author's Homepage   Email Frank Angel   Send New Private Message       Edit/Delete Post 
quote: Laurie Higgins
"Simply put, it's not a gimmick," said Chuck Viane, president of domestic distribution for Walt Disney Studios. "It is truly a medium by which filmmakers can bring life to their movies and enhance the actual experience."
Simply put, the Mouse should think before it speaks. Another one of their execs also made a pronouncement that proved to be totally wrong (Cook said that 1.3K digital was "good enough" -- clearly he knew not of what he spoke). And so is this statement. Simply put, 3D is a gimmick. As much as I love 3D, it seems that it is not a natural way people like to watch movies. And someone needs to remind Viane that 0the 3D novelty made THE HOUSE OF WAX a huge blockbuster hit in its day, much like HANNA MONTANNA and I would even bet money that pulled in a lot more total number of people than HM.

As much as those 50's 3D titles were wildly successful, that didn't turn out to be the good yardstick by which you could have predicted how much staying power 3D would have. The hard fact is that inspite of its initial popularity, 3D was dead in a matter of just a few years. Imagine how really screwed all those exhibitors must have felt after they were left looking at their silver screens and selsyn motors once it was clear that the studios and the public were finished with 3D.

Today the economic stakes are much higher with these digital installs. To say that 3D is the reason to invest in them seems foolish. Not that there would be other reasons an exhibitor should consider investing in digital, but 3D alone is questionable.

Also, let's not forget that we are in an economical situation at this moment in time where squeezing that estimated 1 BILLION dollars out of banks may be a lot harder than anyone thinks, no matter how much the studios drool over the prospect of an all digital world.

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Mike Blakesley
Film God

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From: Forsyth, Montana
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 - posted 10-10-2008 01:31 AM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
quote: Tristan Lane
Why do you get the idea that you are shut out? AccessIT was happy to offer our independent 8 screen theater the deal. I would go strait to Christie/AIX and speak with someone there about conversion (if you are truly looking to)
I'd just never heard of any indies being offered the VPF deal before. Maybe it's just because only the chains get any coverage in the media. CBG did make a deal with AccessIT but there's been scarce news as to the timeline of when things are going to happen.

There has been talk of used equipment for smaller exhibs, which I hate the thought of. The idea of buying a piece of equipment that has been operated by teenagers in a Carmike for 6 shows a day is not a pleasant thought.

I expect there'll be news after ShowEast. But if it's possible for an indie to work a deal for VPFs, I'd definitely be up for considering that. How come my friendly dealer (hint, hint Mark) hasn't been in touch about this!? [Wink]

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Monte L Fullmer
Film God

Posts: 8367
From: Nampa, Idaho, USA
Registered: Nov 2004


 - posted 10-10-2008 04:30 AM      Profile for Monte L Fullmer   Email Monte L Fullmer   Send New Private Message       Edit/Delete Post 
quote: Mike Blakesley
The idea of buying a piece of equipment that has been operated by teenagers in a Carmike for 6 shows a day is not a pleasant thought.
I wouldn't worry on that one. When it's time to do the purchase, I'd ask for two things: 1)a full history on that unit and, 2) request a full shakedown to ensure 1000% operational quality since it's gonna be the largest investment you've ever taken.

If your requests can't be made in full, then it just wasn't the time to move forward yet with this new venture.

You'll be okey in either choice since you know you have excellent service from CLACO in the past and you know that aint gonna change any.

quote:
hasn't been in touch about this!?

...just keeping neutral until someone asks...

-Monte

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Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
Registered: Jun 99


 - posted 10-10-2008 09:21 AM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
quote:
I expect there'll be news after ShowEast. But if it's possible for an indie to work a deal for VPFs, I'd definitely be up for considering that. How come my friendly dealer (hint, hint Mark) hasn't been in touch about this!?

There is no interest by the studios to do the VPF's on a per theater basis. I will reiterate... the AIX deal is not really a very good deal IF YOU READ BETWEEN THE LINES!!! Some of our indie operators are either just purchasing or leasing their own gear. Dolby is doing a direct lease for gear as well but you are required to purchase the 3-D part of it. Any single screen theater making decent numbers can certainly afford a $1200 a month lease for say 5 years... then for a small percentage of the value of the gear at that time you can purchase the gear or continue on with a new lease and get all new gear if you're nervous about obsolescence... ALso remember that Christie does sell extended warranties on their gear in 2 year additional increments up to an additional 4 years max.

There are 30 films being released in digital 3-D over the next 2 years including reissues of all the Toy Stories and many new productions! 3-D sites typically make anywhere from three to 14 times the gross of their 2-D counterparts [thumbsup] .

Mark

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Steve Guttag
We forgot the crackers Gromit!!!

Posts: 12814
From: Annapolis, MD
Registered: Dec 1999


 - posted 10-10-2008 06:19 PM      Profile for Steve Guttag   Email Steve Guttag   Send New Private Message       Edit/Delete Post 
With Access IT's dwindling stock prices...it isn't the theatres that should be worried about affording the equipment!

This is what it has been looking like...even before the current banking woes:

 -

I remain skeptical about how all of this will turn out given the current financial situations...banks don't even want to lend banks money.

While I believe that 3D is once again a fad that will come and then go...it is true that those that want to see the stuff in 3D will pass by a 2D theatre (film or digital). It makes sense, for the moment, to have a representative number of 3D screens available while the trend is upon us. It isn't like these 3D theatres can't also play normal 2D features too so the investment will be mostly paying for itself on every show.

Steve

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Frank Angel
Film God

Posts: 5305
From: Brooklyn NY USA
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 - posted 10-11-2008 02:27 PM      Profile for Frank Angel   Author's Homepage   Email Frank Angel   Send New Private Message       Edit/Delete Post 
So not only will we be stuck with 2K level digital, but with silver screens for 2D presentation.....just one compromise after another.

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Steve Guttag
We forgot the crackers Gromit!!!

Posts: 12814
From: Annapolis, MD
Registered: Dec 1999


 - posted 10-11-2008 02:47 PM      Profile for Steve Guttag   Email Steve Guttag   Send New Private Message       Edit/Delete Post 
Frank,

You can always use Dolby Digital...keep your white screen.

3D has always been about compromises....nothing new there.

Steve

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Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
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 - posted 10-11-2008 04:44 PM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
quote: Steve Guttag
3D has always been about compromises....nothing new there.
Not for much longer... the new T.I. chips are being demoed at Showeast and will be shipping in Christie ZX's by November and CP-2000's by December. That will allow a much higher light levels and resolution to hit the screen. Look for 30+ movies to be released in 3-D over the next two years.

Mark

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Steve Guttag
We forgot the crackers Gromit!!!

Posts: 12814
From: Annapolis, MD
Registered: Dec 1999


 - posted 10-12-2008 07:21 AM      Profile for Steve Guttag   Email Steve Guttag   Send New Private Message       Edit/Delete Post 
Bullshit Mark....3D remains about compromises.....it is still a fad/gimmick. It does not really add anything to movie except a novelty.

If you go with Real-D or other Silver Screen requirement, you necessarily compromise the image for both 2D and 3D as you will never have uniform illumination. If you have enough brightness for 2D, then you don't on 3D.

Of the 3D systems I've seen...Dolby has the best chance, IF, all movies are in 3D. You can get the light levels right, if they are timed that way though at the moment you are not supposed to go above 5fL. However, 3D is such a light hog (and the new 1.2" chip set won't do anything about that...it just stops DLP's contribution to the light loss). There is still going to be a nearly 10:1 difference between 2D and 3D light levels (how much extra light the 3D system needs to put out versus the 2D system) in order have each system properly balanced and no lamp can do that on the fly.

Shoot, Dolby even recommends high-gain screens (1.7ish)...so much for light uniformity. I rarely if ever go above 1.3 gain and only then with Stewart Screens (Ultramatte 130)...not many conventional theatres use (or can afford) Stewart screens. The exception for me is if I am allowed to curve the screen...then I'll use a 1.5-1.8 gain screen with the curve designed to even out the light. I recently measured a typical theatre grade screen with a 1.4 gain....HORRIBLE light distribution. Conversely...I just completed a screening room (film and digital)...screen gain was 1.0....VERY good light distribution...film or digital.

Steve

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