Film-Tech Forum ARCHIVE: VPF's or NOT?

This is topic VPF's or NOT? in forum Digital Cinema Forum at Film-Tech Forum ARCHIVE.

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Posted by Paul Brown (Member # 6130) on 12-18-2011, 08:59 PM:

Can someone enlighten to any of the drawbacks for VPF's?

.........
thanks

Posted by Mike Frese (Member # 4361) on 12-19-2011, 12:53 AM:

The big one is where you currently rank if you are a mainstream theater, IF you rank 2800 or better go for it. If you are a seasonal first run, there is evidence that you might find your ability to maintain your level of access you see now. If you are seasonal first run and you are not receiving a vpf, there is evidence that should have greater access.

So, where do you rank?

Posted by Paul Brown (Member # 6130) on 12-19-2011, 05:48 AM:

We run 1st run studio (all of them) on allocation (as we are in zone with carmike.. but we gross much much better) .. we are within first 500 - 800 on any platform release (ie. we have My Week with Marilyn for 4 weeks now, but not the Artist)
concern is I will loose our on the allocation? (or not) if going VPF? ..
thanks for your time with this.
Paul

Posted by Mike Blakesley (Member # 26) on 12-19-2011, 11:47 AM:

What does it mean "If you rank 2800 or better"? I've never heard that before regarding VPFs.

Posted by Scott Norwood (Member # 30) on 12-19-2011, 02:13 PM:

From what I can tell, the possible drawbacks include (at least) the following:

- NDA requirement and general secrecy (I find this offensive, personally)
- required NOC monitoring and service contract (you might want this anyway, but you might also prefer not to have big-brother involved)
- possible required upgrades in the future to ensure DCI compliance (again, you might want these anyway, but they also might just be a waste of money)
- possible interference with booking ability and/or use of equipment for rentals, private screenings, etc.
- possible restrictions on equipment choice
- other requirements (possible sound upgrades, possible need to remove 35mm equipment, possible inability to mix and match equipment within one multiplex)
- limited opportunity and/or benefit if not playing first-run major-studio releases for several weeks each
- restrictions on having a mix of 35mm and DLP in one multiplex (must convert all screens by specific date, etc.)

This has all been secondhand information, and I would ask that anyone who actually knows details (and can post about them) clarify or refute any and all of these points (or others).

My personal feeling is that the whole VPF thing reeks pretty badly, but I do not have all of the details and do not own a theatre, so my opinion is probably of limited value.

Posted by Mike Frese (Member # 4361) on 12-19-2011, 08:48 PM:

quote: Mike Blakesley
What does it mean "If you rank 2800 or better"? I've never heard that before regarding VPFs.

I have been told by 2 studio reps (top 5 major studios)and have heard stories where a seasonal first run (play on the break May-Aug, Nov & Dec, and play most movies 3300+ locations the rest of the year) have not gotten movies after converting to digital with a VPF vs before. For example a 3100 location October release: with a VPF you may not get. A theater at the 2800 location mark will not have this problem.

I am a seasonal first run. I will not be going the VPF route at this point because I do not want less availability of product. I have a 8-plex less than 15 mins away. So seldom is there any scraps if I play a movie 3-4 weeks later.

Now there have been a couple of studio reps (top 7-8 studios in this case) that have said that it be very likely to have better access to product being digital and VPF (usually with a $1000 guarantee).

Why you have not heard of this? 95-98% of locations that have been converted are in the 2800 or better range. But this topic has been discussed on another theater forum. One that I have not seen you on before.

Paul, are you with the Terrace Theater?

Posted by Mike Blakesley (Member # 26) on 12-19-2011, 09:27 PM:

quote: Mike Frese
Why you have not heard of this?

I just never heard the term "if you rank 2800 or better." I see what you mean now -- in other words, if we "rank 2800" it means we could get a print on the break if there are more than 2800 prints.

I haven't really noticed any difference in on-the-break availability from what we were experiencing before digital -- we haven't had to pay any guarantees either. The only difference has been that sometimes they wanted 3-week deals on 3D (or even 4-weeks sometimes) but they've mostly backed off on that now, depending on the movie of course.

Posted by Mike Frese (Member # 4361) on 12-19-2011, 09:38 PM:

quote: Mike Blakesley
I haven't really noticed any difference in on-the-break availability from what we were experiencing before digital

But you seldom play on the break, right? It has been your decision on whether or not you want to play a movie for 3 weeks. That has NOT changed very much. I have have seen the past month a more willingness to allow just 12 days on movies that were released on 11/11 & 12/9. But I am not going to hold my breath on that one.

Posted by David Zylstra (Member # 4230) on 12-19-2011, 10:30 PM:

the best way to find any possible drawbacks for your specific situation is to contact the agencies offering VPFs and get copies of their proposed contracts to see what drawbacks would hit your specific business situation (yes, you will most likely have to sign an NDA to get actual details - some have FAQ style documents that address drawback fears)

The best argument for taking VPFs is why would you not take some type of recoupment on your conversion costs?

I have locations under phase 1 and phase 2 deals, so far we have not hit any issues in regards to getting content or using the equipment.

Some of the drawbacks listed above exist even if you do not opt for a VPF program; i.e. DCI upgrades, big brother logging and audio upgrades would be required regardless of going digital by yourself or with VPFs.

Posted by Mike Frese (Member # 4361) on 12-19-2011, 10:42 PM:

quote: David Zylstra
I have locations under phase 1 and phase 2 deals, so far we have not hit any issues in regards to getting content or using the equipment.

Dave,
Where do these theaters exist on the totem pole of print allocation? For example did they play Dreamhouse in September on the Break or the Sitter on the break on 12/9? Those are 2600-2800 location movies.

Posted by David Zylstra (Member # 4230) on 12-20-2011, 12:07 AM:

Most of our theatres are in a large metro area market and have access to almost all films on opening day, but my point was meant to state that our VPF deals have not been a hindrance to our business in terms of what we show or how we use the equipment (i.e. we do not have a drawback in terms of choosing content to play or using the projectors in other ways).

I'd recommend talking directly to the agencies doing the VPF administration - they can tell you for sure whether or not you would qualify for VPFs.

I've explored the various VPF options and never ran across a "2800" qualification range, but it sounds like that is more on the booking side than the actual VPF qualification side. In my discussions with other exhibitors I've never heard of content not being booked because a theatre was under a VPF agreement (I know someone with 2 locations in small communities that I would guess are in the 3300 or worse range and he has not been denied a booking yet because of his VPFs).

Posted by Steve Guttag (Member # 268) on 12-20-2011, 03:57 AM:

quote: David Zylstra
Some of the drawbacks listed above exist even if you do not opt for a VPF program; i.e. DCI upgrades, big brother logging and audio upgrades would be required regardless of going digital by yourself or with VPFs.

This is not a true statement. The VPF deal is the only place I've seen, so far, where the studios can compel the theatre to update (constantly) to DCI specifications. For instance, I don't think a single one of our customers that have series 1 projectors have upgraded them (GORE board) that are not under a VPF program. There is nobody looking in (except maybe us). NOC requirements are only with VPF programs too. Again, this is studio driven. The thought being, if "we are paying you for putting in the digital gear, then you must do everything possible to ensure EVERY show plays." The NOC is "supposed" to aid in that by getting the information nearly instantly that there is an equipment issue so that it may be corrected as fast as possible. This, I've found, has been lacking in most NOCs. The other side of the NOC is to collect reports and send them off to the studios that ensure that you are indeed playing EVERY show.

VPF deals require 5.1 audio (it is a DCI requirement) minimum. If you buy it yourself, this is not a requirement as nobody, but you and your customers, will know if you don't have such a sound system...but come on...in this day and age, 5.1 should be a minimum. Then again, there are still some MONO 35mm theatres out there and I don't mean drive-ins. When was the last mono mixed movie released? (I'm guessing it was by Woody Allen).

As to restrictions on playing content...that can come up on VPF deals. There are means, depending on the VPF deal it will vary on the cost, to play non studio content but there will be a form of "penalty" payment/deduction depending on what shows would be affected (Friday/Saturday night being the Boardwalk/Park Place of this deal)...again if the studios are paying for the equipment, they want THEIR movies played!

The VPF integrators make their money on those VPF payments too. As such, they can be aggressive to ANY studio/firm to ensure they get the VPF payment from the entity that is offering the movie on your screen. This can be an issue for a theatre that plays small-releasing company type movies. The movie isn't going to play (digitally) if the VPF firm does not get their cut. A work around is to keep a 35mm system going since there are no VPF fees with things that actually have a real print. Cinedigm has been quite successful in getting many indie/small studios on the plan (literally hundreds of indies are signed up with them) so various VPF deals will be more attractive depending on what type of product you run.

-Steve

Posted by David Zylstra (Member # 4230) on 12-20-2011, 10:15 AM:

Most studios have some form of digital rider on their license agreements with exhibitors . . . . some include DCI compliance and logging requirements.

We have found only a single film over the past 6 years where we were told we should not have played it - it was in the early days and one mid sized studio had not finalized their VPF agreement with the integrator (one of our locations plays a portion of mainstream indie films and we have never had a problem). Obviously sub run and indie houses that play all the small independants would not benefit from VPFs.

Posted by Mike Blakesley (Member # 26) on 12-20-2011, 11:21 AM:

I imagine the logging requirements are the new version of ticket stubs. They'll mostly be ignored by the studios unless they suspect foul play of some sort.

Posted by Mike Frese (Member # 4361) on 12-20-2011, 12:12 PM:

quote: David Zylstra
I've explored the various VPF options and never ran across a "2800" qualification range, but it sounds like that is more on the booking side than the actual VPF qualification side. In my discussions with other exhibitors I've never heard of content not being booked because a theatre was under a VPF agreement (I know someone with 2 locations in small communities that I would guess are in the 3300 or worse range and he has not been denied a booking yet because of his VPFs).

You are correct. This is not a qualification to get VPFs. It is on the booking side and does a studio want to spend $700 more to book you theater. So at a 55% movie rental a theater would have to gross Approx $1300 just to pay that VPF. Add in another $250 or so to cover the cost of getting the movie to the theater servers and you need a gross of $1750 to pay for the movie.

Posted by Paul Brown (Member # 6130) on 12-20-2011, 02:34 PM:

All this is amazing. In our case, we have 3 of 4 converted with NEC series two.. (the fourth in the next month or so) ...
We outgross our nearest carmike (all series one NEC) and now get all the product we want (which is good and bad)
our city is not it the top 100 tier, so we don't get ,say , the Artist for Christmas, but we get Marilyn and Descendants in the first 300 - 400 prints. (cuz of our grosses) .
My main concern is we seem to now be getting EVERYTHING we want from every studio (our fight is for exclusive, etc.. on the smaller stuff), and I don't want to hinder this ability. It's a snowball.. if VPF prevents us (non spoken .. not getting a print) from say, 2 or 3 good movies a year.. then, this is money lost now, vs. gained back on VPF.
Without VPF, we sorta stand out --- but I also don't want to give up , essentially this automatic pay back.
I'm a bit dizzied by it all ...
I tried to speak to GDC about it (they are sending me a draft contract) .. but, then goal is to sign up as many, so I really couldn't get a straight answer. .. and it's easier for the film buyer if there is not VPF.

Thanks all.. for all the comments... any more thoughts?

Posted by Mark Gulbrandsen (Member # 72) on 12-23-2011, 02:29 PM:

It doesn't matter your ranking at all. That just says which program you'll end up in and how much you'll end up getting back. GDC also has their VPF program up and running, I have three customers going with it and it is far far easier to deal with than Cinedigm or any of the rest of em...

Mark

Posted by Mike Frese (Member # 4361) on 12-24-2011, 08:25 PM:

Mark,

We are talking about post VPF contract signing on the booking side of things after all paperwork is signed and equipment is installed. A smaller theater grossing in the 3100 range or so may not get a movie on the break if they are receiving a VPF. This would be for the marginal movies released Jan-April and Sept-October. Not the 3500-4200 location movies. This was told to me by 2 studio reps (top 6 mainstream movie studio grossers). And I know of a theater who is digital has been told "no" when asking for a movie but then told "yes" when he reminds the studio rep that he is not getting a VPF. That has happened a handful of times for him.

I could qualify for full 1st run status and full VPFs. I have NOT signed a deal because of what I said in the previous paragraph. I am in a competitive market and there is very little scraps left on a movie after 3-4 weeks so for me I need to get the movies on the break.

In Paul's situation: Sony Pictures Classics and Fox Searchlight are under their parent studio I have been told. It is a tough call for an arthouse.

Posted by Paul Brown (Member # 6130) on 12-27-2011, 10:20 AM:

Mark.. thanks for your advice.. and thoughts..
It is exactly what I am facing. I tend to get prints in the 2000 - 2400 nation wide releases , if we request...
but that all could be because we put ourselves in such an advantageous situation with respect to the studios. (it's all about money in and money out for them) . . .

Posted by Gordon McLeod (Member # 33) on 12-27-2011, 01:44 PM:

All VPF have issues and in my humble opinion are a method of control and in all cases do restrain free trade