Film-Tech Forum ARCHIVE: Exhibition moving to digital? Not so fast

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Posted by Julio Roberto (Member # 4976) on 02-28-2009, 05:58 AM:

http://www.imdb.com/news/ni0667854/

quote:
Feb 3 2009 - The conversion of movie theaters from film to digital projection "has virtually come to a halt," IMAX CEO Rich Gelfond has told the London Financial Times. While studios and exhibitors have reached an agreement under which the theater owners would receive a "virtual print fee" for every film they run from digital media to cover the costs of the equipment, the economic slowdown has made it difficult for the exhibitors to borrow money. Gelfond, however, said IMAX plans to open 100 digital 3-D screens worldwide in 2009. The FT said that by next month, there will only be a total of 1,500 digital 3-D screens in the U.S., far fewer than the 5,000 that DreamWorks Animation had counted on for the release of Monsters vs. Aliens. Gelfond said that the movie will appear on 200 IMAX screens.

Posted by Mike Blakesley (Member # 26) on 02-28-2009, 09:37 AM:

Like many short media stories that try to sum something up in one paragraph, this one has a big problem: Only ONE studio (Paramount) has come up with an agreement to pay VPFs to exhibitors directly.

If the others would come on board, there might be a break in the logjam. Right now I'm not all that willing to pay 60 to 100 grand for a new system that will save major dollars for the film companies but not save me anything or increase my grosses nearly enough to pay the tab.

Posted by Monte L Fullmer (Member # 2797) on 02-28-2009, 01:19 PM:

quote: Mike Blakesley
but not save me anything or increase my grosses nearly enough to pay the tab.

True Mike - in 1972, I was working in a 'mom and pop; theatre called the Royal in Rigby, Idaho. It definitely was a barn when I started there in 1971, yet I help really clean it up to where it was making a profit for the owner. The booth was E-7's with Strong Mogul lamphouses. The booth did have Motiograph Mag Stereo, but a previous owner yank all the stereo stuff out yet the penthouses were left on the machines and the ALTEC-LANSINGS were left behind the screen.

I made a mention of putting back in that stereo, but the owner basically said like you said above "If it increases my tix sales, then I might think about it, otherwise, it's an idea we won't do yet..He knew that magnetic was on it's way out and I didn't know anything about seeing the business end of the industry then.

Later on that summer, he went automated, I lost my job and in 1980 the place burnt down due to a bad coal furnace, but some would point to arson due to his financial ruin later on when his business was faltering.

So, if the entire town of Forsyth wants digital and signed a contract to attend his theatre on a daily basis, then it would be profitable for Mike to switch....but, stay with film, stay with film.

-Monte

Posted by Julio Roberto (Member # 4976) on 02-28-2009, 05:51 PM:

quote: Mike Blakesley
Like many short media stories that try to sum something up in one paragraph, this one has a big problem: Only ONE studio (Paramount) has come up with an agreement to pay VPFs to exhibitors directly.

And even then, Paramount only does it in the USA (and Canada, I think). The rest of the world can kiss their behinds.

Oh well. Every month that passes that way, it's another month that Kodak/Fuji can breath better. It totally blows me that in so many years they still haven't offered a straight, no bull, no intermediaries, swap of cash for not-striking-prints. It's not rocket science.

Makes no sense to me. They are the ones to greatly benefit shortly down the road after everbody converts. Yet they expect theaters to pony up millions with virtually nothing to gain.

At this rate, theaters are just gonna bypass the entire 2K wave, just like they did the 1.2K wave, and wait for better times ahead way down the road.

At least with a decent 4K projection theaters have some quality cards Imax-like to play to move people away from their 60" HD TV's.

By the time 4K projectors arrive to cinemas (not counting Sony), I'm afraid homes are gonna be having 120" 8K 3D screens in their houses for $3000 (just joking, but at the rate this whole thing is going, I wouldn't be all that surprised).

Posted by James B Gardiner (Member # 5151) on 03-01-2009, 02:49 PM:

4K is a pipe dream for general distribution in the near term.
There is a lot more to having 4K on screen then just having a 4k projector.

I do personally agree that in some regard that the studios have been putting a campaign together to try and get theatres to upgrade without having to pay VPF. 3D for example.
They have burnt them selves as if they only invested earlier and did not try to pull one over exhibition, they would be billions better of then they are now.
Plus we have a mess when it comes to VPF and contractual issues involved in them. I hear its a 90page contract. Imagine how much a complex 90page contract would have cost to simply draw up. how many millions. Even consider changing it.. This paramount deal does sound good, but each cinema getting involved directly with a complex 90page document and possible legals. It actually does not make a lot f sense what Paramount has done. It simply not economical. We need to approach this as a group to keep costs down.

Posted by Julio Roberto (Member # 4976) on 03-01-2009, 03:23 PM:

I strongly disagree with the "legal complexity" of VPF. It is but an excuse to force intermediary controlling groups (i.e. whatever AccessIT is called now) into the equation.

For me, the "legal" implications are VERY simple. All I need is a piece of "signed" paper from my distributor that states:

"Dear cinema owner,

Starting today and until the year 2020, if you don't participate in any other VPF agreements for which we provide funds, we will be giving you a $1000 discount/kick back on every film you exhibit from us digitally for at least 1 week on DCI approved equipment instead of in 35mm. This offer is only valid til 2020. Thank you."

Obviously you would need to word that a bit better and probably make it 2 pages long explaining what VPF is and writing up a list of currently DCI approved equipment and a disclaimer that equipment outside that list may not be elegible for the discount, but no need for 90 pages of legal hoola.

It's just an offer to make a discount if their product, booked from them, is shown digital instead of film, that's all.

About 4K, no point in wasting time talking about it as it's not going to (really, aside from Sony and to some extend Imax) happen for a while, although it should. At least we are not stuck at the 1.3K they first touted for DCinema.

Posted by James B Gardiner (Member # 5151) on 03-01-2009, 03:41 PM:

Julio, lets say I am an integrator and get a deal to put systems in under VPF contract..
I run out and get anyone that the contract allows. For example. the contract may have been open enough to let me convert all the crappy $1 cinemas.. I run out and install as many as contracted very quickly. And these $1 cinemas are happy as in the end they get free top notch digital equipment.

The Distributers then turn around and say.. Hay this does nothing to reducing the number of prints as they are all 2nd/3rd run, SECOND hand print venues..

This type of BUSINESS operation is not uncommon, and lets say, may have happened on the inital VPF outlay!! :-|

So as a distributor, do you think they would be happy just giving money away like in the above. Or do you think they need to make a extensive and complete contract to safe guard against possible loop holes like above?

Are you a first run cinema and on a direct deal, have a chance to get a good deal, or a second run cinema and would have far less leverage. (Lower VPF)

This is not a simply issue Julio.

Posted by Julio Roberto (Member # 4976) on 03-01-2009, 04:27 PM:

It is.

Just make the offer for a discount to the houses you previously were willing to strike a print for.

Don't make the offer to the rest.

Last I checked, in free countries you could offer "discounts" to good clients.

It's actually the existance of (multiple) aggregators that complicate things. If they didn't exist, the deals would be straight forward.

Before, I was willing to strike a print for you. I now put in writing that, for the next (say) 10 years, if you play my films for at least 1 week within a month (or 3 weeks, or whatever) of its opening, I'll give you (up to, i.e.) a $1000 discount/kick back if you book it digital instead of 35mm.

Done. In one sentence.

As I said, of course, you would need something a bit better and probably 2 or 3 pages long.

But that's all.

All the rest, were excuses to obtain further controlling and financial advantages that, from my point of view, is backfiring.

Posted by Steve Guttag (Member # 268) on 03-01-2009, 08:35 PM:

So this deal goes to sub-run houses too...right? Now the studio is out at least double their print costs for the next decade. How about the overseas market? Are they in on the deal?

And what is this DCI compliant business? There is no FCI group that set standards for film that anyone had to comply with! Heck, there is still mono sound in both film and DCinemas.

See now, if they drop the DCI thing and allow A/V Video projectors...stand back and watch the conversion take place. [Roll Eyes]

Posted by Ron Curran (Member # 3631) on 03-01-2009, 10:33 PM:

Would it be possible to stack two 1.3K projectors to achieve 48 frames a second with 2K resolution? The quality and light output of the latest generation machines is excellent. Two of these and some server mods would set theatres back about a third of the cost of dci stuff. Others on this forum more knowlegable than myself have discussed how two digital machines can be aligned perfectly.

Unlike the dci versions, there will be a dozen manufacturers lining up to sell you superior models for the same price in five years.

Posted by Lyle Romer (Member # 1266) on 03-01-2009, 10:57 PM:

I think you'd need 4 1.3k projectors to create a 2k image. You need to add resolution in the horizontal and vertical plane. I don't remember the resolution of the 1.3k but it wasn't the same aspect ratio imager. I think it used anamorphics for both flat and scope formats.

Posted by Brian Guckian (Member # 1678) on 03-02-2009, 07:05 AM:

quote: Julio Roberto
Makes no sense to me. They are the ones to greatly benefit shortly down the road after everbody converts.

Wrong! People are still falling for this one.

Print "costs" for major entertainment conglomerates are but a tiny fraction of their annual overhead.

For example, back in 2000, print "costs" were just 4% of the average spend per title, and just 12% of the average P&A spend (derived from MPAA data).

Factor in mastering costs for digital, the true costs of "conversion" (including building works etc.), servicing and obsolescence, the need to still produce prints, and so on, and the supposed "cost savings" of digital simply disappear.

This may be why the "conversion" to digital has been somewhat problematic - behind the scenes, the economics simply don't stack up.

In fact, if the film industry really wanted to cut costs it would significantly reduce actors' payments and make serious inroads into marketing costs. The latter is one of the most lucrative aspects of the distribution business.

IMHO I never believed that digital was about improving Cinema at all and in fact is really about something else - power? control?

The truth is out there, as they say.

Posted by Mark Gulbrandsen (Member # 72) on 03-02-2009, 08:04 AM:

Well, Christie's Canadian plant is having to run two shifts to keep up with demand. Perhaps NEC and BARCO sales are the ones that are slow...

Mark

Posted by Julio Roberto (Member # 4976) on 03-02-2009, 08:38 AM:

quote: Brian Guckian
Wrong! People are still falling for this one.

So in your opinion, who is the one that benefits the most from the digital convertion?

If your answer is only digital equipment manufacturers ... then why are exhibitor buying and distributors paying (VPF through aggregators) if they indeed are the ones to (hardly, according to you) have any benefits at all?

I don't think you understood me. I didn't say distributotrs (in some countries, distributors don't equal studios as much as it does in the USA, i.e) make a LOT of money out of digital convertion.

I said that, out of those affected by digital convertion, they are the ones to gain the most in the long run.

Digital mastering is NOTHING compared to "film mastering" (i.e. putting the DI back to negative/interpositive answer print/release print/Dolby digital/DTS timecode/Crap code, etc).

Once "mastered", digital distribution equals virtually zero (once a high speed digital "internet" link is available) or $10 for a "re-usable lease" on a hard drive.

A 35mm print is a bit more than that [Smile]

Again, what I meant. DISTRIBUTORS (not only major studios) will benefit the most (that doesn't mean a lot, it means it will benefit more than exhibitors and even more than manufacturers of DCinema) from industry convertion to digital.

I think.

A single distributor has a significant annual bill for dealing (striking/licensing/transporting/warehousing/destroying) with release prints. Of coure, and we ALL know this, no need to be reminded, it is very small compared to their marketing bills.

Production is an entire different beast, and I don't think we should be mixing it with distribution or exhibition.

If digital cinema brings very little benefits to distributors, say only 2% saving of their annual operating costs, very little savings to exhibitors, say 5% in reduced labor costs once increased maintenance/obsolence costs are factored in, then why the hell the industry is converting at all?

To make DCinema manufacturers rich?

Posted by Brian Guckian (Member # 1678) on 03-04-2009, 12:31 PM:

Who benefits? Nobody...at least not to any great extent financially. It's easy to forget that (apart from the smaller concerns) the Distributors (including BTW their foreign operations) are in fact owned by the Studios.

quote: Mark Gulbrandsen
Well, Christie's Canadian plant is having to run two shifts to keep up with demand

Not arguing on that score Mark, rather that the "cost savings" argument has never been plausible in the bigger scheme of things.

As to why...one theory could be that digital is more closely aligned with the objectives of modern corporate systems. In this understanding, each screen in a cinema complex is a sub-unit of a larger unit (the complex), which in itself is a sub-unit of a larger unit again (the theatre chain). Digital (theoretically) allows for much higher standardisation, reduced labour input, and more centralisation, using "content" shared around networks.

Someone else might have the vocabulary to describe this better, but maybe digital cinema is simply the logical outcome of viewing cinema only in terms of an industrial process; i.e. something that merely produces "widgets" to order.

Posted by Todd McCracken (Member # 4718) on 03-04-2009, 02:14 PM:

"The conversion of movie theaters from film to digital projection "has virtually come to a halt,"

For Imax perhaps, Im personally knee deep in new site entries for new digital installs.

Posted by Steve Guttag (Member # 268) on 03-04-2009, 05:12 PM:

As an industry, even conventional cinemas, it has come to a halt. Mind you, our DCinema installations are at triple-digit increases from previous years. However, the companies that were planning on massive roll outs have all laid off workers due to slow down.

The bulk/all of our "cinema" installs are 3D releated though.

Steve

Posted by Mark Gulbrandsen (Member # 72) on 03-05-2009, 09:08 AM:

quote:
"The conversion of movie theaters from film to digital projection "has virtually come to a halt,"

I don't quite agree with that line. We are so busy we can hardly keep up with it and we three plex's going in the first half of the year that are all digital. Christie is running two shifts in Canada and is now delivering the M projector in quantity. I installed one of the first production units two days ago. In fact they have a 5 month backlog on deliveries just on the M to catch up with and by running two shfts ca hopefully cut that delivery time way down!! Come to a halt... not exactly but there are other states that have been harder hit by the recession. Fortunately the states I work in are not having any really big problems thay can't deal with on their own. In Wyoming for instance you wouldn't even know there is a recession. The other two companies... I have no idea how their sales are but with 3-D they shouldn't be awful bad. With the advent of the Paramount VPF more then likely other studios will follow suit and do the same. THis could mean the end of the "System Integrator" type of outfit and will surely spell the end of the CBG. Dealers will be doing the sales and service as they always have and which is how it should really be.

Our film projector sales haven't been all that good but digital has pretty much stepped in to replace those sales... although sales of DP-70's and parts is still climbing since the demise of the old Kinoton US. Kinoton Germany has also discontinued many, many DP-70 parts and no longer will rebuild intermittents. We can though. We just sent a completely rebuilt DP-70 to a Hollywood special effects company that included alot of custom options. Service work hasn't changed a bit except that I now service many digital sites 2-D and 3-D as well.

Mark

Posted by Matt Fields (Member # 3211) on 03-05-2009, 09:45 PM:

Which 3D systems are you guys installing the most of?

Posted by Mark Gulbrandsen (Member # 72) on 03-05-2009, 11:26 PM:

So far mostly Dolby but in the future it'll be Master Image for sure.

Posted by Michael Marini (Member # 3490) on 03-21-2009, 12:14 PM:

christie has let go 10 of their dig installers for lack of work