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» Film-Tech Forum ARCHIVE   » Operations   » Digital Cinema Forum   » DCinema equipment lifespan - why so short? (Page 7)

 
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Author Topic: DCinema equipment lifespan - why so short?
David Zylstra
Master Film Handler

Posts: 432
From: Novi, MI, USA
Registered: Mar 2007

- posted 04-18-2008 11:20 AM      Profile for David Zylstra   Email David Zylstra   Send New Private Message       Edit/Delete Post 
There is savings when you choose AccessIT or TDC as your "deployment agency" - i.e. there are minimal upfront costs (I have not seen numbers on the exhibitor investment numbers under the latest VPF deal, but I liken it to the '90s conversion to digital sound - in some cases you could spend 6,000-10,000 per screen to install Dolby Digital or SDDS).

The maintenance number of $6,000 per screen is at least double the highest number I've heard out of any exhibitor who has contacted a deployment agency (don't forget that somewhere Carmike published their per screen costs that were lower than $3,000 per screen - it was posted somewhere on this site).

I can say that in our case with our 2 18 screen complexes that used to run 2 booth staffers on several shifts over the week, now we run only 1 per shift . . . . . labor savings has covered maybe 50-75% of our ongoing maintenance contract.

Any location that already has a manager run booth will not see any savings - just a reduction in the amount of physical booth work.

Don't forget that if an exhibitor is buying his own equipment he does not have to pay for a maintenance contract - only question is how much will long term repairs cost compared to having a maintenance contract.

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Ron Funderburg
Jedi Master Film Handler

Posts: 814
From: Chickasha, Oklahoma, USA
Registered: Nov 2007

- posted 04-18-2008 11:32 AM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
Who is paying for the equipment then?

What does the equipment cost? No where have I seen a cost factor for digital cinema being anywhere near as low as 10,000 per screen from anyone.

Looking at the CBG-NATO AcessIT press release really doesn't give you any idea of a transition period on this. It also doesn't give you any idea of the cost related the change over. Also it doesn't cover new construction at all the owners will bear that cost all on their own.

So I'm asking again who is paying for the equipment, not NATO or the CBG they are brokering the deal not paying for it. AcessIt is in it to make money. The film companies are only giving Virtual Print Fees which are not that much and paid to the AcessIT so in the end the theater is going to pay for the equipment either up front on in the long run. The equipment cost are staggering so where is this savings from people at a low in end of pay scale?

Does it get rid of a CEO or two? If not I see no money savings from the help being cut out of the equation.

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Darryl Spicer
Film God

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From: Lexington, KY, USA
Registered: Dec 2000

- posted 04-18-2008 01:07 PM      Profile for Darryl Spicer     Send New Private Message       Edit/Delete Post 
Hasn't this been brought up before that a lot of the installs going on are leased equipment. With DCIP they want to get investor backing to raise the money and work out deals with the film companies to help pay back the investors. How all this is going to work is out of my knowledge of the situation. In order for the investors to invest they have to be assured that they will get a return on the investment. The biggest exhibitor expense will be making things compatible where needed. Screens for 3-D, Making sound systems full 5.1 compatible Getting more racks to hold all the equipment that was in the consoles, Any ventilation needs.

There will be some savings on payroll maybe or that money can be diverted to theater maintenance issues. Someone still has to clean the port holes and remove the cob webs. (For those who do, that is.)

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Ron Funderburg
Jedi Master Film Handler

Posts: 814
From: Chickasha, Oklahoma, USA
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- posted 04-18-2008 01:53 PM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
No where does it say that it will be free for any of the equipment to the theaters and new theaters are not covered at all it is up to builders and owners to foot all those expenses their selves.

Investors are paid from what the theater pays either in interest or or the mark up (which is actually interest) in the leases. NATO's goal was never to make it free to the theater and Hollywood never said they would do more than a token payment VPF Virtual Print Fees are less than 2,000 a screen they are based on one print for each screen from what I read.

No where is their any indication what the 600 outfits and 8000 screens are paying per unit on anything out there. This deal that has been worked out is to have company that administers the finance, purchase and placement of equipment. But in the end it is still the theater that is pay for their the equipment.

Actually Hollywood is funding less of the purchase of one piece of equipment than Detroit gives in rebates for the purchase of individual cars!

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David Zylstra
Master Film Handler

Posts: 432
From: Novi, MI, USA
Registered: Mar 2007

- posted 04-18-2008 02:26 PM      Profile for David Zylstra   Email David Zylstra   Send New Private Message       Edit/Delete Post 
Unfortunately I cannot quote exact numbers since by contract we are bound to confidentiality. Also, I cannot divulge what prices my dealer has quoted me because it might be less than what he would quote to someone else (or what other dealers may quote, of course it may be higher).

I will say this - we were part of the first wave of AccessIT's rollout; per screen our up front costs were slightly more than the addition of digital sound was in the 90's, per screen we did have to do some modification since we had to do 100% dual systems(i.e. a few extra portholes, some platforms to get the digital projector high enough to shoot out of our OSA ports, etc) and our ongoing maintenance costs are in the range of Carmike's published expenses. Note that our expenditures were paid to Christie and not to AccessIT - so it can be said that our projectors were free and we paid for Christie to install everything (including most of the infrastructure).

To get their funding I'm very sure AccessIT had to prove to the people loaning them money that their 4,000(?) screen initial rollout showed profit from guaranteed VPF payments over the life of the loan repayment.

Here is what I've heard about the latest AccessIT VPF deal from public sources:
Converting existing locations will carry some form of exhibitor investment, only those who inquire about signing up for phase 2 will know the number.
Using AccessIT for new buildings carries a higher exhibitor investment rumored to be equal to the list price of new 35mm equipment.
The exhibitor investment may vary depending on the server chosen (they now have GDC and Dolby in addition to the DoReMi).

The best way to get firm, true pricing is to: 1) call your equipment dealer and ask for a quote; 2) call AccessIT and start the negotiation to be in phase 2; 3) if you are part of CBG wait for them to publish the pricing; or 4) call Technicolor Digital Cinema and start the negotiation to be included in their rollout.

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Ron Funderburg
Jedi Master Film Handler

Posts: 814
From: Chickasha, Oklahoma, USA
Registered: Nov 2007

- posted 04-18-2008 04:44 PM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
Shanks David for the actual information of a useful nature. Something from someone who is actually doing it. I thank you and will make an effort to research it further.

On a different matter Mark said
quote: Mark Gulbrandsen
Guys you can agree with me or not however if you go back to the main page and read the little paragraph that you "agree to" every time you come here you'll find that it says... "The Film Tech Forums are for various members related to the Cinema Industry" and so on....
Mark, you do realize that Poster for film, web sties for movies, web sites for theaters, print ad's, and title sequences are done by graphic artist? Or did you think they sprung forth from the fertile fields of California? Come on Mark graphic artist have been a part of the theater industry longer than popcorn! So how do you know that Bobby doesn't do work for a theater or a movie company? Do you do his taxes?

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Mark Gulbrandsen
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From: Music City
Registered: Jun 99

- posted 04-18-2008 05:57 PM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
quote: David Zylstra
The maintenance number of $6,000 per screen is at least double the highest number I've heard out of any exhibitor who has contacted a deployment agency (don't forget that somewhere Carmike published their per screen costs that were lower than $3,000 per screen - it was posted somewhere on this site).
Carmike is at $2500.00 per screen per year with a ten year contract on that. Now thats a giant payout of money at the beginning of each year for 2500 screens of digital and no way does it cost that much to maintain EACH screen in a complex. Even if that included lamps it's still over double what it should really be... As the equipment grows ever more reliable I think maintainance prices should really be dropping but from these vendors thats highly unlikely! ONe of our customers that has about 130 screens said if they had to pay that kind of service contract fee they'd close the entire chain down and just sell off the real estate.

quote: Ron Funderburg
What does the equipment cost? No where have I seen a cost factor for digital cinema being anywhere near as low as 10,000 per screen from anyone.
CBG was aiming for 8,000 to 10,000 per screen exhibitor cost last I heard. I don't think any actual exhibitor price per screen has been nailed in stone yet. The other thing an exhibitor has to consider on the CBG deal is what equipment he will get stuck with in the long haul, yes there's going to be a list to pick from but what if you pick the stuff that say parts are hard to get or servicing it is a real pain ion the ass. Its at this point that the exhibitor will begin to feel like he's been screwed and the large advantage of dealing with a knowledgable dealer instead could actually pay off. Very definately being stuck with certain brands of D-Cinema gear for a ten year or longer period could make an exhibitors life VERY miserable!

Mark

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David Stambaugh
Film God

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From: Eugene, Oregon
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- posted 04-18-2008 06:10 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
Wasn't the 90s bankruptcy thing caused by over-expansion? I mean exhibitors thought hey, if we build more screens, they will come. Edwards was building theaters on practically every street corner. Well it turned out the pool of consumers willing to pay $15 for a movie and a bag of popcorn is somewhat finite after all, especially given the rising tide of other entertainment options. Exhibitors learned a painful lesson on that issue.

Gosh if only exhibitors would return to single-screen sloped-floor 1200-seat theaters, with curtains, no pre-show advertising except for maybe 2-3 trailers, and changeovers (no platters). The Blackberry-carrying Youtube/Myspace generation would embrace this "new" concept with open arms and willingly pay $20 to watch "Zombie Strippers" under such perfect viewing conditions. [Big Grin]

Note that I did NOT say exhibitors are doing the right thing by converting to digital. All I said is THEY think they're doing the right thing. I haven't seen the numbers but they have. Presumably they have a business case to back their decision. We'll know for sure in 7-10 years. Of course they probably had a business case for the 90s wave of expansion too and we all know what happened with that.

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Mark Gulbrandsen
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From: Music City
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- posted 04-18-2008 07:23 PM      Profile for Mark Gulbrandsen   Email Mark Gulbrandsen   Send New Private Message       Edit/Delete Post 
Dave,

I can tell you that in the case of Cineplex they built too small... typically 6 to 8 screens only and too close to the nearest competition... sometimes across the street or right down the street. And Cineplex was not an operation to write home about any great aspect either. They had three really great locations... Century City, The Uptown in DC and McClurg Court in Chicago... all are gone now or more or less gone. Only one Cineplex (Now AMC) remaines here in SLC out of about a dozen or more locationns. IN Boise Edwards came in and plopped a 24 screen with an IMAX (Monte worked there) and literally squashed Cineplex in a weekend. I'm sure that happened at other locations in the country as well... but of course the domino effect also caught up with the Edwards boys and they went under too. I tihnk in the end it'll be just AMC and no one else.

Mark

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Ron Funderburg
Jedi Master Film Handler

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From: Chickasha, Oklahoma, USA
Registered: Nov 2007

- posted 04-18-2008 07:39 PM      Profile for Ron Funderburg   Author's Homepage   Email Ron Funderburg   Send New Private Message       Edit/Delete Post 
Mark, please tell me you don't mean that AMC will be the only people in the movie exhibition business in the future? That is just a crazy statement!

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David Zylstra
Master Film Handler

Posts: 432
From: Novi, MI, USA
Registered: Mar 2007

- posted 04-18-2008 07:58 PM      Profile for David Zylstra   Email David Zylstra   Send New Private Message       Edit/Delete Post 
quote: Mark Gulbrandsen
Carmike is at $2500.00 per screen per year with a ten year contract on that. Now thats a giant payout of money at the beginning of each year for 2500 screens of digital and no way does it cost that much to maintain EACH screen in a complex. Even if that included lamps it's still over double what it should really be...
I thought they were slightly lower, but I could be wrong.

The maintenance also includes all parts except consumables like filters and lamps, they even do lamp changes; but I heard Carmike started changing their own lamps for some reason (unconfirmed rumor) so maybe they got a reduction.

I can tell you that with the number of bad ballasts and DoReMis that have been changed out in the past 2 years they have spent a lot on parts.

With the amount we pay per year I have no qualms about having my staff call for service for every little thing that is wrong.

I do agree about the high costs - I don't understand why they are charging so much and it should be about $1,000 less (I do hear that the Barco maintenance for TDC sites costs more than Christie).

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Mike Blakesley
Film God

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From: Forsyth, Montana
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- posted 04-18-2008 08:02 PM      Profile for Mike Blakesley   Author's Homepage   Email Mike Blakesley   Send New Private Message       Edit/Delete Post 
quote:
Mark, please tell me you don't mean that AMC will be the only people in the movie exhibition business in the future? That is just a crazy statement!
I think he's referring to the Salt Lake City area. Well, looking at his post again, maybe not. At any rate, we're not for sale. So it'll be AMC...and me! [Big Grin]

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Tristan Lane
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From: Nampa, Idaho
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- posted 04-18-2008 08:14 PM      Profile for Tristan Lane   Email Tristan Lane   Send New Private Message       Edit/Delete Post 
Edwards made very good choices in the beginning of their expansion. Many of their megaplexes opened to very high grosses. Irvine Spectrum set records. Long Beach 26 and Boise 21 were at the top of the list every weekend. Most of the sites built in that era were well thought and the theaters themselves were quality built.

Rumor has it that when Sr. passed away, Jr. and his family began an aggressive expansion into markets that were already saturated with competition, or were nearby old Edwards locations. Although almost every large chain filed under Chapter 11 protection, most emerged with stronger numbers. One thing to remember was that Edwards wasn't "Bought out" by Regal. All three chains were picked up by an Investor and merged into one entity. Regal's administration and corporate structure were chosen to preside over all three circuits. The acquisition of Hoyt's and Signature followed after that.

BOT:

For the theater chain organizations that already have a paid staff on hand to handle projector repair and maint will save money by eliminating labor involved with day to day projection. I doubt that Regal or AMC would pay for 3rd party support when they already have a good service organization in house.

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David Stambaugh
Film God

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From: Eugene, Oregon
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- posted 04-18-2008 10:11 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
Edwards was a pioneer in some ways, and then they kind of ran it into the ground.

quote: Tristan Lane
All three chains were picked up by an Investor and merged into one entity.
You must be referring to Philip Anschutz? I think Anschutz is the majority owner of Regal, has been for a long time. When Regal/Anschutz bought the remains of Edwards and UA and folded them into Regal Entertainment Group, that was probably mostly his doing, but it was officially a Regal business acquisition.

Someone correct me if I have that wrong. I'm not in the business you know. I just read a lot. [Wink]

When Cinemark 17 opened here in 1999, it killed several other smaller multiplexes. Regal's 8-screen held on until 2007 but just barely. That was replaced with an all-new 15-screen. As it is now, I suspect the Eugene-Springfield market has too many screens for both Regal and Cinemark to do well here. There are 32 first-run screens, 34 if you count the Bijou Art Cinemas, plus a 12-screen Cinemark discount house. I suspect Cinemark 17 has taken a BIG hit with the opening of the new Regal 15.

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Louis Bornwasser
Film God

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From: prospect ky usa
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- posted 04-19-2008 05:49 AM      Profile for Louis Bornwasser   Author's Homepage   Email Louis Bornwasser   Send New Private Message       Edit/Delete Post 
As a bean-counter myself, the numbers still don't crunch. Louis

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