Film-Tech Forum ARCHIVE: Why not receive VPFs?

This is topic Why not receive VPFs? in forum Digital Cinema Forum at Film-Tech Forum ARCHIVE.

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Posted by Mike Frese (Member # 4361) on 05-08-2011, 08:54 PM:

Using the following assumptions:

a) a theater needs to convert to digital within 24 mos.
b) the studios are paying at least a $600 VPF for each on-the-break movie ($600 is certainly toward the lower end of what has been thrown around with $750-800 been often quoted as well. $600 is a nice low-ball number that can take into account any integrator fee.
c) theater fits comfortably in the 85%+ first run status
d) theater keeps movie for an average of 4 weeks
e) theater plays 90% of it movies from the big studios supplementing with an occasional independent studio
f) at least 4 screens

The math: $600 x 13 (52 weeks / 4 weeks per movie) x 90% (not all movies may recieve VPFs) = $7020 per year per screen over 10 years approx. $70,000.

So what am I missing. Are the maintenance contracts that you must sign up for but not part of the cost recovery of VPFs just so outrageously costly? You would not sign up for these contracts if you did not on a VPF program?

Can we expect a sharp decrease in equipment costs after the built up demand from the chains are done converting?

Posted by Monte L Fullmer (Member # 2797) on 05-08-2011, 09:25 PM:

..at least your bulbs are gonna be free since they have to be changed out 3 to 4 times a year ... and the filters as well.

Posted by Mark Gulbrandsen (Member # 72) on 05-09-2011, 02:41 PM:

quote: Monte L Fullmer
at least your bulbs are gonna be free since they have to be changed out 3 to 4 times a year ... and the filters as well.

How on earth did you arrive at that Monte? That certainly is not true. MAny of my digital customrs run lots of hours, especially in the summer and they go through way more than 3 or 4 lamps a year. The customer still has to buy lamps and filters plus any parts once the typical 2 year projector-server equipment warranty goes ding... except in cases where the customer elects to extend the warranty. Now there may be service contracts that include lamps and filters being put out by some servicing agents but the customer is very definitely still paying for them through the service contract cost.

Getting back to VPF's.... Of course why not! You will also find your bank at first very skeptical that you will be getting free money but once they talk to the Integrator they are generally far more willing to loan you the dough to convert to digital. In some cases VPF payments may be assigned directly to the lending bank. Since most digital systems do not cost 70 grand that money you get back can also cover the cost of the monitoring rack that is ususally required by the integrator. You will also need a NOC service but that is very cheap and to your advantage.

Mark

Posted by Adam Fraser (Member # 1074) on 05-10-2011, 10:05 AM:

I find it absolutely stupid that those terms are required. How about just providing a VPF for every first run that you play, without all of the gotchas. Just make a flat rate of say $500-700 that is reduced from the first week of film rental for a certain amount of time with a defined end date. It would certainly entice more theatres to convert more quickly.

Just another behind the back way of eliminating the little guy from the equation.

Posted by Mark Gulbrandsen (Member # 72) on 05-10-2011, 11:59 AM:

Adam,

Not everyone plays first run exclusively nor are they eliminating the little guy. They have made lots of options in an attempt to cover all types of exhibitors. In other words they are NOT leaving out mom and pop! IMHO if a theater does even average grosses then it can and should be collecting VPF's. It's free money and all that is required is that you play the contracted shows. If you miss a show or two while you are playing alternative content then you just don't get paid for the missed shows. It's all really pretrty simple. I know of one single screen and a twin that are already collecting VPF's.

Mark

Posted by Gordon McLeod (Member # 33) on 05-10-2011, 01:27 PM:

Mark that is BS many vpf deals only work financially if you open a title on break and are over 4 screens (in fact several intigrators will not work with anyone under 4 screens at a location)
maybe in you area it works but not everywhere can you make a blanket statement like that

Posted by Mike Frese (Member # 4361) on 05-10-2011, 01:47 PM:

Mark,

If you do not play at least 85% of the your movies on the break, you are out of luck. UNLESS you joined the CBG before November of 2007. Then you might get a couple of hundred dollars or so on those move-over movies IF played within 6 weeks.

I am kind of shocked that CBG will not take in new members for the small grossing theater VPF deal. What do they have to lose? Why not have a member for the next 10 years and have a good deal of members?

Keep in mind if you play any move-over from the major studios, you have to make it up in a big way. Play Water For Elephants this coming week off break and you will need to play 6 movies on the break from that studio to make up for the one off the break.

Posted by Brad Miller (Member # 2) on 05-10-2011, 03:00 PM:

Guys, Adam IS correct.

What SHOULD have happened was the studios should have got together and made an announcement such as this:

quote:
It is the year 2005. Effective immediately, any theater that plays a movie on the break digitally, shall deduce $X amount of money from the first week's grosses. This is a one time deduction per title played (and they could have even gone on so far as to say "regardless of the number of screens the movie is playing on"). These payments will cease January 1, 2020 and 35mm film will no longer be manufactured after January 1, 2013.

But that would have made things WAY too easy and far too fair and logical. It would have also GREATLY sped up the digital conversion process.

Posted by Mark Gulbrandsen (Member # 72) on 05-12-2011, 05:12 PM:

Mike,

Then you need to look at the options for 2nd run theaters! They get something like ~200 per week for each digital title booked. Still have to be monitored though. Beyond that I can not post anything about it. I suggest you call Cinedigm directly so you can find out exactly what is offered. They will discuss it with you after you sign an NDA. If you do sign with them the 2nd run program will be done as a CBG program but your dealings will be with Cinedigm.

Brad is correct too! This could have all been done lots easier that it is being done now. I think some of the reason that things are the way they are now is because the studios don't trust the theaters... of course that goes both ways...

Mark

Posted by Geena Phillips (Member # 3726) on 06-19-2011, 05:12 PM:

Brad;

Objectively, you're right, but I suspect the studios wanted to avoid both the possible confusion and perception of unfairness that might have resulted from having separate fee structures for 35mm and digital.

Posted by Chris Slycord (Member # 4239) on 06-19-2011, 09:34 PM:

I'm being pedantic here but, as an fyi...
Monetary deduction has nothing to do with the word deduce.

Deduce is used to mean forming a conclusion based on information/evidence. The conclusion is called a deduction.

Deduct is used to mean subtracting an amount from a total. The amount subtracted is also called a deduction.

Though it's totally understandable to get these confused.