Film-Tech Forum ARCHIVE: VPFs are officially ending this week

This is topic VPFs are officially ending this week in forum Digital Cinema Forum at Film-Tech Forum ARCHIVE.

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Posted by Brad Miller (Member # 2) on 09-23-2012, 04:49 PM:

Just curious as to who hasn't signed up yet. The deadline is Sept 30th (Sunday) and as anyone who has been procrastinating knows, we are well past the time for "contract negotiations". At this point the VPF contracts have become a "take it or leave it" scenario, as there isn't "attorney time" to deal with any sort of negotiations with only a few days left.

Obviously there are lots of small town theaters that don't qualify, but I am asking here if there are still theaters out there that DO qualify that haven't signed the contract yet?

Cinedigm is still signing people up this week. Theaters can also still sign up for Film-Tech's and Christie's program. As I understand it from a reliable source, GDC has already hit their allocation and cannot sign anyone else up (maybe someone can confirm this). Regardless, we are down to the final week to get a contract signed or those theaters are on their own.

If your theater is one that would qualify, regardless of what program you go with, I beg you to put everything else aside and make a decision in then next 2-3 days TOPS, or you will be on your own without financial assistance to convert your theater.

Posted by Andrew Thomas (Member # 7000) on 09-23-2012, 08:57 PM:

I think a lot of people are going to be sad that they went the VPF route when they find out the TCO will ultimately be significantly higher for the VPFers over the non VPFers.

Posted by Steve Guttag (Member # 268) on 09-23-2012, 10:31 PM:

How so? About the only added expense to a VPF program is the NOC and most are rather reasonably priced for the minimum requirement of a VPF agreement.

The amount of money on the table...even if it does not cover 100% of the conversion is still a WHOLE LOT OF MONEY that the exhibitor never got for film equipment.

Now if you are referring to repair costs...I would have to agree that, in the long run, DCinema is going to be a more costly game to be in...the cheapest board level repair for DCinema is going to be more than the most expensive film projector repair (intermittent). There is also the life-span issue. Just this past week I pulled out Simplexes that were on their second theatre and were on the order of 30-years of service...something that I don't think their replacement servers/projectors will be able to claim. Heck, even the crappy "Film Systems" consoles made it longer than I think the DCinema equipment is going to last.

The other thing that hasn't really been thought out is the cost of new builds...the booth and related equipment just shot up in the cost of a new cinema.

Note, I think the cost of operating the new equipment is going to be significantly less...less on the payroll and less on electric. I'm running the entire DCinema system (projector, server, automation...etc) on the exact same breaker that used to just drive the rectifier of the film system...it is that much more efficient. The DCinema lamps (in the smaller wattages) are now getting some pretty impressive warranty hours with 2400-hours being typical for 2KW and 3000-hours being typical for smaller lamps...and many of these are 100% warranty hours rather than the Pro-rated hours of most of film-cinema's life.

Posted by David Zylstra (Member # 4230) on 09-23-2012, 10:59 PM:

I have 6 of 7 locations on VPF programs (1 was a new build and did not qualify) . . . so far no regrets on ongoing costs and reliability has been good.

If you go into a new build with your eyes open and the equipment cost factored in it just becomes another cost to get the business open (we have done 1 new build so far with another one coming in the next year). The additional cost can be compared to when theatres had to add 4 channel stereo sound with acoustical treatment to the construction cost, then digital sound on film processors, then stadium seating, etc. (granted the cost of digital is significant, but just one more "advancement" that increases initial equipment costs). The jury is out on how long the equipment will be repairable.

I heard the same thing about GDC hitting their quota.

Posted by Jim Cassedy (Member # 4115) on 09-23-2012, 11:59 PM:

quote: Steve Guttag
Just this past week I pulled out Simplexes that were on
their second theatre and were on the order of 30-years of service

This week I got a call from a theater owner who wanted to
know what it would cost to put his 70mm system, that the
digital installers trashed by cutting cables, drive belts,
and water hoses, BACK into service. Agggggggah! I KNEW
this was going to happen. D'oh!

Posted by Andrew Thomas (Member # 7000) on 09-24-2012, 12:29 AM:

I'll preface this by saying that my formal education is primarily in economics.

One of the things that happens 100% of the time that subsidization occurs within an industry is that prices either go up or remain artificially high. 100% of the time.

I think it is no surprise at all that mere months after the sign-up period for the various VPF programs end, all four manufacturers of D-cinema projectors are rolling out their smaller chip models that will be $20k cheaper for a projector/server combo that what is available today. I have no doubt that when the series 3, or whatever they choose to call them, units ship that they will be significantly cheaper than the models they will replace.

Once you read carefully through the requirements (well, I can only comment on the two programs that I was able to read contracts for) placed upon the exhibitors for keeping your VPF contract in place, you will realize that you are pretty well guaranteeing that you will keep your projection equipment on the bleeding edge technology wise. Do not be surprised when you get notice that you need to spend thousands per projector in a very short amount of time to stay up to date.

And the wording of these contracts are extremely worrisome. It is far too easy to get kicked out of the VPF programs for things out of your control.

There are some situations in which the VPF may make sense, but I am definitely willing to bet there are way more situations in which it doesn't. YMMV.

Posted by Brad Miller (Member # 2) on 09-24-2012, 12:53 AM:

Your logic is generally solid Andrew, but keep in mind digital cinema like all electronics will ALWAYS get better and cheaper...but in the case of the S2K systems they will only work on a MAXIMUM of a 30 foot wide screen and with at least a 1.8 gain screen. That is also burning the bulb as hot as it can go to achieve those numbers, and they also haven't factored into the equation real life things such as port window loss and the bulb's output at the end of its life and so forth. To be more realistic I'll bet those S2K machines end up having a real life maximum of 25 foot wide screens...and there are not that many theaters with screens under 25 feet in width. As such, just because they are coming out doesn't mean it is suddenly great news for theaters. Only a select few theaters with tiny screens can actually benefit from them.

Also the new IMBs with on-board storage is in my opinion a disaster waiting to happen. Bad, bad idea. Keep the storage separate.

Regarding upgrading, the studios can pretty much mandate that anytime along the way they want...VPFs or not.

As far as the contracts go, yes there are a couple that although the sales people may make people think the deal is wonderful, they really aren't. However there ARE a couple of VPF contracts that are pretty straightforward and some offer more actual guarantees than others in regards to getting your checks the way the system is designed. None of them are created equal. Those that have done their homework very carefully will come out just fine. [Wink]

Posted by Steve Guttag (Member # 268) on 09-24-2012, 01:01 AM:

Right now...DCinema equipment prices are artificially LOW...believe it or not. Since there was a cap on the equipment costs and since it was a total industry conversion, if the prices were too far a spread, a manufacturer could lose a huge number of sales. Compare a DCinema projector to an equivalent A/V projector in terms of brightness/resolution 3-Chip DLP...etc...DCinema machines are CHEAP!

The new projectors you speak of will NOT be 20K cheaper...but perhaps 10K or less (even factoring in a server)...BUT these new systems are for the smallest of the small screens in the industry...we are talking about 4000 lumens to what...7500 lumens? NEC is going to use HMI lamps instead of xenon (dual lamps)...that isn't going to be cheap in the long run either.

Manufacturers are going to make what the demand needs (and the technology will allow)...that is the series 2 projector...they cover a VERY wide range of theatre sizes and needs. Christie, with the CP2210 almost has the equivalent of the SK2 series in terms of size/light though the CP2210 is brighter than any of the upcoming baby projectors.

My prediction remains that the prices are going to go up once manufacturing goes back to the typical needs of the Cinema industry...the economy of scale will be gone. There won't be any VPF plans either.

I think that in this case, you 100% rule has already been proven incorrect. Normally a subsidized industry is protected...in this case, it was subsidized to force the hand of the consumer and those doing the subsidizing set a cap...that was lower than manufacturing wanted (witness the price reductions once that cap was there)...manufacturers had to fit below the cap or lose all sales.

Servers, I think will continue to decline in price due to the effects of the computer/IT industry which will have a much greater influence of the available hardware and even software.

Posted by Olivier Lemaire (Member # 5579) on 09-24-2012, 04:17 AM:

In Europe, afaik, end of private VPF is end of december 2012.

I write "private" because some countries (for example France) has also a state-sponsored program (yea, France is somewhat a socialist country - I know...) to help/supplement private VPF programs.

Strange by the way to have "only" 3 months swap with USA as european third parties started long after the state's one... but well.

Posted by Marnix Koster (Member # 6755) on 09-24-2012, 09:34 AM:

here in The Netherlands (europe) the digital project has just finished and all theaters have digital installations. Only some large vendors (Pathe and some others) have made there own deal the rest did this with the subsidized project.

The project is subsidized with some state money and with VPF income. The contract is a little bit killing, but workable.

Posted by Andrew Thomas (Member # 7000) on 09-24-2012, 01:15 PM:

Indeed Brad, the S2K units are only suitable for smaller screens, though through friends at TI I am led to believe that many of the remaining screens left to be switched that did not go the VPF route will be in the smaller screen category. This is all off the record conversations, but I don't have any reason to believe that their info was incorrect. And it is no surprise that their first products in the post VPF-cutoff are geared towards the types of theaters least likely to get into a VPF agreement.

But I also think we are a few short years away from having D-cinema units for the medium to large screen sizes that are significantly less expensive on the theaters because the ability to recoup costs will now fall squarely on the theaters. Look how many theaters waited until the very last minute (I heard GDC signed up 1500 screens in the last 4 weeks!) to get into a VPF program. They had to claw their way to achieving it.

Steve, I have to respectfully disagree with your assessment. First things first, I got a quote on a Barco 12C with Dolby server that came out to around $55k, and I just got the list price for the Barco 10C (the S2K model) of $36k all in, which probably means closer to 32-33k street price. I'm not a math major, but that is about $20k between the price of the two lowest end models.

Second, you have a really strange definition of "proof". We won't know until the next series of projectors releases as to who guessed right, but given the fact that the industry was willing to pump 60+ thousand dollars per screen into the pool (obviously most theaters won't claim quite that much in VPFs, though still tens of thousands of dollars) the manufacturers had no incentive to introduce lower priced units at all. Now that the cutoff is happening, we are already seeing the first significantly reduced price unit release and unshockingly it is targeted at a huge segment of the business that was very unlikely to drop $60+ thousand on a new D-cinema projector/server.

Posted by Gordon McLeod (Member # 33) on 09-24-2012, 04:09 PM:

Well those cheap projectors are aimed at the bottom feeders to start with so what they are not what i wish to install
That said the whole VPF system was designed to support the conversions of those theatres that made hollywood money and that was that

Posted by Steve Guttag (Member # 268) on 09-24-2012, 10:30 PM:

Andrew...as a dealer (for all of the DLP projectors)...I can tell you...I could supply you a DP2K-12C with a DSS200 server for about $10K less than you were quoted and hence my perspective that the difference is closer to $10K, not $20K.

I also was selling DLPs before the VPF programs existed...the prices were higher...significantly higher. I was selling DLPs when VPFs started...prices were higher...when the each time the cap was lowered...prices seemed to magically drop.

There is zero evidence, in this situation, that the VPF subsidy artificially raised the price of anything.

The new projectors are going to offer lower cost by giving one less...there is no big mystery there.

Posted by Jim Henk (Member # 3628) on 09-25-2012, 03:20 AM:

quote:
This week I got a call from a theater owner who wanted to
know what it would cost to put his 70mm system, that the
digital installers trashed by cutting cables, drive belts,
and water hoses, BACK into service. Agggggggah! I KNEW
this was going to happen. D'oh!

That's interesting. That's the second time I've heard this in 2 days. Apparently there's a theatre in Palm Springs that's talking about putting in 70mm so they can run The Master, (could they get a print?) and I heard in the same conversation that some directors are pushing for 70mm as a lower cost alternative to Imax.

It was just a hallway conversation, so take it for what it's worth.

Posted by Manny Knowles (Member # 1171) on 09-27-2012, 12:20 PM:

Ha! The old "follow the money" rule strikes again.

Directors who want the prestige associated with a film release can't convince anyone that 35mm is better, or marketable -- but IMAX is too expensive.

If it turns out that 5/70 is marketable and profitable, 70mm fans might just see a return of their favorite format.

So, let's see now -- for a big release, we'd have presentations in 2K, 4K, 2K3D, 4K3D, 35mm (perhaps), 5/70 and IMAX -- and HFR.

Posted by Ronda Fitzsimmons (Member # 1418) on 10-09-2012, 02:08 PM:

quote: Gordon McLeod
Well those cheap projectors are aimed at the bottom feeders to start with so what they are not what i wish to install
That said the whole VPF system was designed to support the conversions of those theatres that made hollywood money and that was that

Gordon, you hurt me! lol

As a bottom feeder myself, I disagree. We make Hollywood money, and all the money we make Hollywood, as sub-runs and move-overs is gravy. We provide good jobs, and we service our customers with a product they want. It's quite a relief for us to have the option to purchase more affordable units.

Steve, care to give me a quote? I can tell you, the quotes I got on 20 units was significantly different than what you are stating here. I have a group of other small owners interested as well. Probably could get to 40-50 screens with some work.

Posted by Mike Blakesley (Member # 26) on 10-09-2012, 05:32 PM:

We make Hollywood money, all right, just not a LOT OF money.

Our old booker used to say that the "big boys" are the ones who provide the limos for the executives, but we are the ones who provide the fresh flowers in their offices.

Posted by Jonathan Goeldner (Member # 4854) on 10-09-2012, 08:18 PM:

quote: Manny Knowles
Ha! The old "follow the money" rule strikes again.

Directors who want the prestige associated with a film release can't convince anyone that 35mm is better, or marketable -- but IMAX is too expensive.

If it turns out that 5/70 is marketable and profitable, 70mm fans might just see a return of their favorite format.

So, let's see now -- for a big release, we'd have presentations in 2K, 4K, 2K3D, 4K3D, 35mm (perhaps), 5/70 and IMAX -- and HFR.

we have a rumoured upcoming version of 'Ivanhoe' being filmed in 65mm, so yes the resurgence of 70mm is cool in my book.

Posted by Andrew Thomas (Member # 7000) on 10-10-2012, 01:17 AM:

So I saw that Sony extended their VPF sign-up window til March 2013. Wondering if any of the other programs will re-open for a brief period in the near future.