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Topic: Small theater operators weigh digital conversion

Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
Registered: Jun 99

posted 04-22-2011 09:41 AM

Steve... Even 900.00 a month isn't a good deal unless they will give you prints. One customer of mine read the contract and says the lens can sit in his booth in it's case because he's on the 2K per feature pay to play plan and if he can't play he won't pay.

Mark

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Mike Blakesley
Film God

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

posted 04-22-2011 09:51 AM

quote:
Mr. John The-Sky-Is-Falling,-Oh-My Fithian who was clucking like a scared chicken that we were going to wake up and read about the end of print availability in next morning's paper for about 10 years now,

To be fair, this year is the first time I can remember Fithian actually giving a possible year for end-of-film (2013). And even then he says it's "our best guess." What he's been saying for years is that "the day is coming when film won't be available any more."

NATO has always said they can't get into specific negotiations between film companies and exhibition. That's up to the companies involved. But it tends to ham-string NATO as to what they can actually get done.

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Scott Jentsch
Phenomenal Film Handler

Posts: 1061
From: New Berlin, WI, USA
Registered: Apr 2003

posted 04-22-2011 10:34 AM

I can sympathize with smaller operations that are having a hard time dealing with the cost of the conversion to digital. I would imagine that facing such a cost must seem insurmountable if they are running on a shoestring budget to begin with.

However, the situation reminds me of the advice that I got when I was looking into going out on my own full-time. The advice was to never plan on running a real business on a shoestring. It's one thing to scrape by, especially in the beginning, but cutting things too close on the budget forces you to make decisions that you wouldn't otherwise make (that are not good business decisions, just survival tactics) and one unexpected major event could derail your entire business.

The digital conversion is a major event, but it could just as easily be a roof cave-in, an electrical malfunction requiring major repairs, etc. Every few months, there are stories in the news about some small historic theater that finally had to close because they weren't making a go of it, and everyone in town bemoans its closure, and some even try to organize an effort to "Save the Theater"

Except for the introduction of sound, or maybe when movie theaters had to convert from Academy Ratio to Flat and Scope-sized screens, I can't think of any other time when such a major investment was required.

But isn't that how the cookie crumbles?

A movie theater's only source of product is changing how they are going to deliver that product. The old way of doing things won't be gone tomorrow or the next day, but it shouldn't surprise anyone that the pressure is being applied now and soon that pressure will turn into scarcity.

If the end cost can be in the range of the $1,000 per screen per month figure, I don't think that's unreasonable. If a theater can make just $2.50 profit per customer, I'm sure that there has to be ways for an ingenious and motivated theater owner to figure out how to draw in an additional 400 people per month (per-screen) to offset the capital investment necessary in order to stay in business.

In tight-knit communities, it may be worth being transparent about these issues with customers. Explain that the industry is moving towards digital and without doing a conversion, you may not be showing movies for very much longer. Maybe you could find out if people are willing to donate to the cause, or introduce a special concession item that would allow people to show their support that way, or find out if they are willing to accept advertising of some sort to offset those costs.

Basically, proactively stage a "Save the Theater" campaign before the doors have to be locked and the lights turned off.

There's gotta be a way to develop a plan to help small operations overcome the impact of a significant capital expenditure. Maybe a thread here that is dedicated to people talking about what approaches are working and what fell flat? I think it would be good to see some testimonials/case studies from places that have done it. We can host them on our Extranet for easy reference if that helps any (but maybe the "Tips" section in the Warehouse here might be a better place?).

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Steve Guttag
We forgot the crackers Gromit!!!

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

posted 04-22-2011 10:53 AM

Technicolor will renegotiate an older $2K/title plan into the $900/month plan, if desired.

As to the $1000/month for digital...for what ends? It doesn't sell any more tickets? that is $1000/month/screen flushed down the toilet.

As to getting more revenue/people in the door...if theatres could, they would be doing it already. As Mike has professed in other threads...it isn't like running a theatre is a trip to the high-life of society.

-Steve

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Brad Miller
Administrator

Posts: 17775
From: Plano, TX (36.2 miles NW of Rockwall)
Registered: May 99

posted 04-22-2011 12:27 PM

quote: Frank Angel
So not only are the studios flippant about the burden convertion places on the exhibitor, but now they PUNISH the guy who does a conversion for not converting ALL his screens?

Frank, this isn't much different than Lucas requiring the big screen for his recent Star Wars movies. The studios want what they believe to be the best screen possible. The added "DCI security" also makes them drool.

quote: Steve Guttag
As to the $1000/month for digital...for what ends? It doesn't sell any more tickets? that is $1000/month/screen flushed down the toilet.

Better to flush $1000 down the toilet and run movies digitally than the flush lease to the building down the toilet because a theater owner was too busy talking about how he doesn't see a reason to convert.

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Ron Funderburg
Jedi Master Film Handler

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

posted 04-22-2011 01:21 PM

I guess everyone is in agreement that full conversion to Digital is not an if situation but a when. So Brad is dead on you either convert with whatever the charges are or you are not in business at some point. What advantage is there to being the last theater to convert?

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 04-22-2011 02:19 PM

Ron, how many independent theaters in rural areas of Southwest Oklahoma have converted to digital projection? I'm not aware of any that have done so.

Carmike converted its theaters in Lawton and Duncan to digital projection a couple years ago. The Central Mall 12 in Lawton converted one of its 12 screens to digital in order to run Avatar in 3D. That was when Dickinson was running the theater. Now this small upstart company, Showplex Cinemas, is running the place and 9 other former Dickinson sites. I don't know enough about Showplex to tell when/if they will convert these theaters to digital projection.

I'm pessimistic on the outlook for the Vaska theater here in Lawton.

The Washita Theater in Cordell is one of only two sites on Oklahoma with THX. The Moore Warren 14 is the other. According to Flixster, they're showing Hop at 4:30pm and 7:00pm. Just two shows, even on the weekend. For a town of 2000 people that's probably not going to generate a lot of cash flow. So I'm wondering if the theater will be able to afford doing a digital conversion. The Palace Theater in Canadian, TX (a town even smaller than Cordell) already did a digital conversion to a Sony 4K system and the theater is THX certified. But I suspect whoever owns that theater may be making a lot of money in something else like the oil business and running the movie theater as an expensive hobby.

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Ron Funderburg
Jedi Master Film Handler

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

posted 04-22-2011 02:30 PM

Bobby, Mitchell Theaters is based in in Guymon, OK and all six locations that they own are going digital. Guymon isn't exactly a metro center. Their Garden City location is 100% digital already as is the Newton Kansas location. All 45 screens will digital by June 1st. Most are in Kansas but Liberal, Ark City, and El Dorado are not population Centers.

The people I work for are going digital this year as well and Chickahsa isn't a booming town. I also have been told by the owner of Drive In here they are converting to Digital.

The Drive In in Big Springs, TX is converting to Digital along with about 20 drive ins around the country right now.

I don't know about Showplex Cinemas, it is a bit of challenge for them to be open all the sites they got from Dickenson were under performing locations.

I thought that the theater at Cordell was actually owned by the City of Cordell and leased to an operator? If I'm right then it will be up to the city council on that one going digital.

The theater at Canadian, TX is owned by an estate of some dead oil dude zillionair and leased out to an operator. Not sure the specific's on that deal but yes it is a wealth thing on the owner of the property and sort of an Angel deal for the Operator.

The theater at King Fisher has one of the three screens digital and 3D. There are plans to do the other two auditoriums.

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Mike Blakesley
Film God

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

posted 04-22-2011 02:56 PM

quote: Steve Guttag
As to the $1000/month for digital...for what ends? It doesn't sell any more tickets?

Not many projects sell any more tickets. Sure we redecorated the lobby, but nobody says "I go to more movies because they have a nice lobby." But any improvement we make helps people not go to less movies!

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Ron Funderburg
Jedi Master Film Handler

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

posted 04-22-2011 03:00 PM

What Mike said! We change carpet's, wall covers or whatever to help keep customers. Yes Digital is expensive will it add to the bottom line, don't know. But one thing is for sure film companies are going to stop footing the bill on film prints at some point.

So Again What Mike said!

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Steve Guttag
We forgot the crackers Gromit!!!

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

posted 04-22-2011 03:04 PM

Precisely, Mike...improvements to lobby, concession or even to presentation are mostly to maintain a given level of quality perception rather than be labeled a "dump." Improvements to sound and things like 70mm were indeed, originally, to gain market share, if not from new customer but to take a bigger piece of an existing pie.

Digital cinema does not offer that...just a greater expense.

As to Brad's gloom-n-doom comment...there really is no telling when film will be cut off...sure there is that 2013 date but does anyone one to bet on if film will no longer be available in 2014? Which do you think will be in greater demand in 2014, film or 3D?

-Steve

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Ron Funderburg
Jedi Master Film Handler

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

posted 04-22-2011 03:14 PM

Steve I wonder if you are not using Fuzzy logic when you say Digital doesn't add to grosses. The Warren Theater in Moore Oklahoma is all digital. It is the busiest theater in the state and has decimated the surrounding theaters Grosses (actually halved them to decimate it is reduce an enemy by 1/10th and they have certainly done more than that). They tout the all digital so are you sure it is just they are newer, or maybe nicer, or maybe it is all of it including the Digital.

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Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
Registered: Jun 99

posted 04-22-2011 04:01 PM

quote: Steve Guttag
Digital cinema does not offer that...just a greater expense.

And after it wore off neither did converting to sound... that little foray by the studios cost the average 450 seat theater the equivelent of 100 grand in 1928 for Vitaphone! Thats probably close to a million dollars today. A single digital cinema system doesn't cost 100 grand to install(or at least shouldn't be anywhere near that)! Wide screen and Cinerama SAVED our industry at a time when television had all but killed it off but the newness of that also wore off and eventually 70mm even had little meaning in the distribution world. None of those conversions were cheap in their time either. Even a decent conversion to Cinemascope cost 50 grand back in those days... screen, sound system and lenses... and many cases larger more modern arc lamps and generators. Cinerama... cost back then to convert any major theater had to approach a million dollars. Overall most theaters converted for wide screen and most cinemas today will go digital some how or other. Time for small operators to put on their thinking caps and get to work on how they are going to do it. Explore all the buisness options gents... including putting in some other type of buisness if necessary.

Mark

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Victor Liorentas
Jedi Master Film Handler

Posts: 800
From: london ontario canada
Registered: May 2009

posted 04-22-2011 04:06 PM

At least sound,widescreen,Cinema scope and Cinerama were upgrades!

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Mike Blakesley
Film God

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

posted 04-22-2011 04:23 PM

quote: Steven J Hart
We charge $6 for adults and $4 for under age 13.

Steve - I don't know your population or attendance figures, but I would guess that if you add $1 to your ticket price you would be able to make digital payments and then some -- and you would still be 25¢ less expensive than we are here. We charge $7.25 for adults and $5.25 for kids, and I can tell you that we NEVER get any complaints about our ticket prices. And we have a lower population and a "distressed" economy here, too. (What small town doesn't!)

You might see a little bit of resistance when you first raise prices, but (assuming you have a clean, well-run cinema and you're playing product in a timely way) I'll bet you'll be surprised at how accepting people will be.

There's also the possibility of used equipment -- but I would tread very carefully on that one.

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