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Author Topic: Small theaters struggle as Hollywood goes digital
Monte L Fullmer
Film God

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

 - posted 09-06-2012 02:51 AM      Profile for Monte L Fullmer   Email Monte L Fullmer   Send New Private Message       Edit/Delete Post 
The Results of "The Digital Realm" ... in story below:

News Link

CRETE, Neb. (AP) — The Isis Theatre hasn't changed much since it opened 86 years ago in southeast Nebraska, a stone's throw from the grain elevator and railroad tracks that cut through town.

But in the past few years, the movie industry has changed dramatically, and unless the Isis' owner comes up with $85,000 soon to pay for new digital equipment, residents of Crete, Neb., may have to drive 40 miles to Lincoln for a night at the movies.

It's a prospect that owner Thom Reeves doesn't want to ponder, but like thousands of small-theater operators across the country, he hasn't found a way out.

"This is my passion, to give back to the community," Reeves said. "I love this movie theater. I love what it does for the students I have employed there. We love our patrons. It's such a positive experience going on, and we're just a little sad this conversion is hitting us. How do we survive?"

For small-theater owners, the problem is the sudden switch from 35 mm film, an industry standard since about 1910, to digital — a format that's cheaper for both studios and distributors, and doesn't scratch as traditional film will. The switch means theater owners must buy new projection equipment, computers and a sound system.

Film studio 20th Century Fox has said it will phase out 35 mm film altogether by the end of 2013, and other production companies are expected to follow suit. Traditional film is expected to vanish over the next few years, despite the upcoming U.S. release of "The Master," which was shot with the rare but much higher definition 70 mm film.

Big chains can afford the digital transition, which can be cheaper when buying in bulk for multiscreen theaters. But those who own smaller theaters with one or two screens typically must take out a bank loan to pay for the equipment.

A film industry program can refund up to 80 percent of the cost to theater owners, but the payments are made gradually through fees based on the number of movies shown. To qualify for the help, theaters must have certain profit levels and show a minimum number of films, leaving many small operators without help.

Some small, independent theaters created a cooperative, the Cinema Buying Group, to pool their resources and participate in the industry program, but the cooperative also required a review of each theater's financial strength and other factors. Many of the smallest theaters didn't qualify or were hesitant to join.

Patrick Corcoran, a spokesman for the National Association of Theatre Owners, said costs of converting to digital average around $70,000 per screen. About 60 percent of the nation's 5,750 theaters have switched to all-digital equipment, he said.

The switch to digital began with the 1999 release of "Star Wars Episode I: The Phantom Menace," and accelerated with such computer animated films as Disney's "Chicken Little" and the 2009 Hollywood blockbuster, "Avatar," Corcoran said.

"In some markets, it's going to be a tough climb," he said. "But if you want to be in business as a first-run movie theater, you have to go digital."

Reeves, 46, who also is an insurance manager, said he only paid about $100,000 for the entire Isis Theater and never intended to make money from the operation. A good month brings about a $600 profit, he said, and most of that is spent on electrical fixes, carpet cleaning and other maintenance.

In Onarga, Ill., a city of 1,300 about 80 miles south of Chicago, Randy Lizzio is struggling to save his 75-year-old, single-screen Onarga Theater.

Lizzio launched a fundraising drive, including a dinner and auction with a local Mexican restaurant in a park, but after five months he has raised just $8,500 of the $65,000 he needs.

"The window is just about closed for us," Lizzio said. "... It's really tough for single-screen, little theaters, even though we're historic."

At the Ohio Theatre, a two-screen operation tucked into a row of picturesque downtown buildings in Madison, Ind., owner Tony Ratcliff also hasn't been able to raise the $81,000 needed for a digital conversion.

Ratcliff said he's trying to raise $25,000 for a down payment on a bank loan this fall, but he is behind his goal and now has little more than $9,000. Unless he can install digital equipment by next year, the theater may have to close. Ratcliff and other theater owners are looking at other uses for the theater, such live events, or renting it out for community gatherings.

Ratcliff said traditional, 35 mm film has become scarce, making it harder for his theater and others to get the films they need to stay in business. He pointed to one movie, "Courageous," which was released Sept. 30. Ratcliff said he could have received a digital version of the film in November but ended up waiting until late January to receive it in 35 mm because fewer copies were available. Movies often go to larger theaters first.

"It's only going to get worse, especially for small-town theaters," Ratcliff said. "We're the low man on the totem pole."

Allen Hinkle closed his Bonham Theater in Fairbury, Neb., on Aug. 2, after he couldn't sell the operation or attract enough donations.

It would cost $110,000 to install digital equipment in the 86-year-old theater, a brick structure featuring four large arched windows only a half block from the county courthouse.

As the final day neared, Hinkle said parents in the southern Nebraska town of 4,000 asked him what their kids would do now for entertainment. Hinkle said he didn't know how to respond.

On a warm, breezy night last week at the Isis Theater in Crete, few people showed up to see the 7:15 p.m. screening of "Total Recall."

Among the few were Gene and Robin Mignogna, a couple from Pennsauken, N.J., who were visiting relatives. Gene Mignogna said he was taking his wife on a date to celebrate his 57th birthday.

He smiled as he glanced up at the red and white theater marque.

"There's a kind of nostalgia, coming to places like this," he said.

(I used to run film soundtrack down on LP-270's also...)



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Carsten Kurz
Film God

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From: Cologne, NRW, Germany
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 - posted 09-06-2012 03:14 AM      Profile for Carsten Kurz   Email Carsten Kurz   Send New Private Message       Edit/Delete Post 
They should sustain a few months and then get one of the new S2k machines with integrated servers. They will sell around or below 30.000US$.

Barco, Christie, NEC already announced them already.

Christie Solaria One, Barco DP2k-10S, NEC NC900S

- Carsten

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Dennis Benjamin
Phenomenal Film Handler

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From: Denton, MD
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 - posted 09-06-2012 07:53 AM      Profile for Dennis Benjamin   Author's Homepage   Email Dennis Benjamin   Send New Private Message       Edit/Delete Post

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Edward Havens
Jedi Master Film Handler

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From: Los Angeles, CA
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 - posted 09-06-2012 09:56 AM      Profile for Edward Havens   Email Edward Havens   Send New Private Message       Edit/Delete Post 
Great, another story about a stubborn movie theatre owner crying because they've been dragging their knuckles for several years over the biggest seismic shift in our industry since the introduction of synchronized sound.

Never get tired of those. [Roll Eyes]

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Bobby Henderson
"Ask me about Trajan."

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From: Lawton, OK, USA
Registered: Apr 2001

 - posted 09-06-2012 10:52 AM      Profile for Bobby Henderson   Email Bobby Henderson   Send New Private Message       Edit/Delete Post 
Yeah, small town movie theaters are such great profit centers that it should be no problem at all for the owners of any such theater to scrape together 80 grand or so for a digital projection conversion in no time.
[Roll Eyes]

Some small town theaters have been able to make the switch to digital for reasons that do not exist in every market place. Broad-brushed judgments of some operators "dragging their knuckles" ignore problems those specific operators might have with trying to save up the money. How do you know some of these guys haven't already been trying for several years to save up the money? Banks aren't exactly eager to provide loans either, especially if a theater's P&L numbers aren't totally great.

Different small towns have different demographics, income levels, etc. -which equals different levels of customer traffic. Some theaters get community support for remodeling and equipment upgrades while other communities don't give a hoot if they have a movie theater or not. Some small town theaters are owned by people with deep pockets. I wonder if that's the case for the Palace Theater in Canadian, TX (population 2200). There's some serious oil money in the Texas Panhandle. That little theater is THX certified and has a Sony 4K digital projector.

Basically, unless I'm familiar with how a certain small town or independent theater has been operated I'm not going to be so quick to cast judgment on its ability or lack thereof of switching to digital projection.

Here in Lawton, I expect the Vaska Theater will close once the movie distributors stop shipping film prints. It's the oldest movie theater still in operation in Lawton. It's the last 2nd run/discount theater in town. The theater has a laundry list of improvements its operator has always wanted to make but could never quite get the positive cash flow needed to make it happen. A conversion to digital projection seems like pure fantasy for that place.

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Ron Funderburg
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From: Chickasha, Oklahoma, USA
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 - posted 09-06-2012 11:03 AM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
quote: Bobby Henderson
I wonder if that's the case for the Palace Theater in Canadian, TX (population 2200). There's some serious oil money in the Texas Panhandle. That little theater is THX certified and has a Sony 4K digital projector.
Bobby the theater in Canadian is actually owned by a family trust of one of the original oil baron's and leased to the family that operates (a sweet deal lease). The group buys them whatever equipment they need to keep their high quality ratings. Angel Deal!

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Frank Cox
Film God

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From: Melville Saskatchewan Canada
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 - posted 09-06-2012 12:06 PM      Profile for Frank Cox   Author's Homepage   Email Frank Cox   Send New Private Message       Edit/Delete Post 
Sask. Movie Houses At A Crossroads

I'm on this show, along with a few other Saskatchewan theatre owners.

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Edward Havens
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From: Los Angeles, CA
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 - posted 09-06-2012 01:08 PM      Profile for Edward Havens   Email Edward Havens   Send New Private Message       Edit/Delete Post 
Bobby, the writing has been on the wall about this industry of ours concerning digital projection for nearly a decade now, so it very much is knuckle dragging in my eyes.

Sure, trying to come up with $50-100k in a matter of months for any small independent theatre operator is going to be tough. But coming up with the same amount over four or five years, waiting for the inevitable duality of a rise in quality and a drop in price that comes with mass acceptance of a new technology, shouldn't have been as hard.

Digital Cinema is not our future. It is our now, and has been for a while. Those who weren't ready for it didn't plan very well.

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Mike Blakesley
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From: Forsyth, Montana
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 - posted 09-06-2012 01:38 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
As usual, there's a lot of misinformation in that article. Just once I would like to see one of the theatre owners say "I dragged my feet, thinking this whole digital thing would go away, but now we're in the soup because I kept procrastinating." That's the truth for a lot of operators. They are blaming the studios for this "sudden" conversion when it's been happening for a long time. It hasn't exactly been a secret...NATO has been blowing its horn on it for what, about 10 years now?

I think the biggest problem for a lot of small operators is, they haven't "kept up with the times" because they haven't made enough money. And, they haven't made enough money because they haven't kept up with the times.

In my high school years, at my parents' auto parts store, we had a stereo/TV department which I basically managed. This is where I became a "sound nut." When I got into the theatre business (1979) people were just starting to think about the upcoming "marriage" between the home stereo system and the TV set. So, when I started going to theatre conventions and hearing the speakers saying things like "You'd better give people something better than they can get at home, because HOME is what you're competing with, and it's only going to get tougher," I took that to heart. Rather than just keep polishing the same old thing and hoping for the best, we started upgrading the theatre. We're still doing that today, and our local citizens reward our efforts with good patronage.

One big secret, that MANY small operators miss, is to have their prices high enough to where they can make enough profit. I've never understood why small owners think their prices have to be super-cheap. They're showing the same movies, after all, and the popcorn is usually BETTER in a small place. There is one theatre (about 300 miles from us) that shows first run movies about a month off the break, but only charges FOUR DOLLARS for a ticket. No wonder they can't afford to convert to digital. Our prices are lower than a chain theatre, but I'd bet we're higher than the majority of the other small independents out there. And -- we get zero complaints about prices.

If you're in a big enough town, you can have super-low prices and get away with it, but most small operators don't have that luxury. In this day and age, anybody charging less than $7 for an adult ticket is just leaving money on the they COULD be using for their digital conversion or other upgrades.

I guess the other big secret, for us at least, is "have a day job." There are a lot of operators who buy a small theatre and expect to live off of it, or at least be able to hire other people to run it. Usually, that won't work. My wife and I both have fulltime jobs -- the theatre pays its own bills, pays for its upgrades and provides us with some extra income, but if it wasn't for our day jobs, we'd be in the soup too.

So -- if you want to run a small theatre you have to be prepared to work hard, reinvest continuously, and charge what your efforts are worth. It's not rocket science.

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Ron Funderburg
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From: Chickasha, Oklahoma, USA
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 - posted 09-06-2012 01:47 PM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
Mike preach on you got it right!

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Ronda Fitzsimmons
Film Handler

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From: Pottstown, PA, USA
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 - posted 09-06-2012 04:09 PM      Profile for Ronda Fitzsimmons   Author's Homepage   Email Ronda Fitzsimmons   Send New Private Message       Edit/Delete Post 
quote: Carsten Kurz
They should sustain a few months and then get one of the new S2k machines with integrated servers. They will sell around or below 30.000US$.

Barco, Christie, NEC already announced them already.

Christie Solaria One, Barco DP2k-10S, NEC NC900S

- Carsten

Anyone heard anything on when? It does seems like this might be a more affordable option for us. From what I've read and heard, this has the server, lens, and media block built in. What else would be needed?

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Victor Liorentas
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From: london ontario canada
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 - posted 09-06-2012 04:12 PM      Profile for Victor Liorentas   Email Victor Liorentas   Send New Private Message       Edit/Delete Post 
If you early digital adopters had not jumped on this digital bandwagon so quick [Big Grin] those of us more loyal to film could have kept on longer with film but noooo. [Smile]

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Scott Jentsch
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From: New Berlin, WI, USA
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 - posted 09-06-2012 05:42 PM      Profile for Scott Jentsch   Author's Homepage   Email Scott Jentsch   Send New Private Message       Edit/Delete Post 
From the TI press release about the S2K chipset:
Texas Instruments (TI) (NASDAQ: TXN) DLP Cinema®, the worldwide leader in digital cinema imaging technology, today announced the new S2K chipset, optimized for theatre screens up to 20 feet (six meters) wide in size for 2D presentations.
Screens measuring 20 feet wide should not be in any self-respecting movie theater that is not built as a screening room with a couple-dozen seats.

To get a 36-degree viewing angle, that puts the back row at just under 31 feet. That gives you, what, about four rows of 8-10 seats?

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Jonathan M. Crist
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From: Hershey, PA, USA
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 - posted 09-06-2012 06:12 PM      Profile for Jonathan M. Crist   Email Jonathan M. Crist   Send New Private Message       Edit/Delete Post 
From what I have heard the new S2K machines with the integrated servers are supposed to be able to handle screens up to 30 feet in width. But that would be sufficent for at least 50% of the screens in the US.

On the downside they are not supposed to be upgradable to 4K but for small auditoriums this seems like a non-issue to me.

These new machines are supposed to be available by the end of this year.

If they will take 30 foot screens and will be available by Christmas, then I then expect this will be fodder for the class action lawyers asserting that the manufactures and the dealers conspired not to tell their customers with screens 30 feet or less that this option was coming so as to sell the higher priced existing stock.

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Doug Willming
Film Handler

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From: San Antonio, TX, USA
Registered: Jan 2001

 - posted 09-06-2012 07:25 PM      Profile for Doug Willming   Author's Homepage   Email Doug Willming   Send New Private Message       Edit/Delete Post 
Ah, the joys of digital. While you are a third of the way to paying off your increasingly obsolete piece of equipment, something else comes along better and cheaper for half the price...whether it's a digital projector or an Apple IPhone.

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