Film-Tech Forum ARCHIVE: Print Buying Cooperative

This is topic Print Buying Cooperative in forum Ground Level at Film-Tech Forum ARCHIVE.

To visit this topic, use this URL:
https://ft-forum.com/ft/cgi-bin/ubb/ultimatebb.cgi?ubb=get_topic;f=5;t=002740

Posted by Donald Brown (Member # 5427) on 12-21-2013, 04:10 PM:

Would any exhibitors that are not planning on converting to digital be interested in presenting the distribution companies with an exhibitor financed print buying cooperative to extend print availability?
It's an option to consider if the only alternative is closing.

Don Brown

Posted by Justin Hamaker (Member # 2165) on 12-21-2013, 04:46 PM:

That's an interesting idea, but I think there are a few major obstacles.

The first is that the infrastructure to create 35mm prints seems to be collapsing. While it may still be possible to have 35mm prints made for the next 5+ years, it's going to become an increasingly niche market.

The second is the cost of producing a 35mm print. I don't know what the current cost is for a print, but that cost is only going to increase. Even if you have 50-100 theatres participating, the question is whether those theatres do enough business to justify the cost of a print and still generate enough revenue to pay film rental and everything else.

The other issue is whether the studios will maintain the ability to create 35mm negatives. Even if they have directors who are interested in creating 35mm prints, will there be enough value to justify whatever costs might be associated.

I honestly think the only way this kind of plan would work is if you have a small handful of specialty theatres which only play select films in 35mm, without regard to when the movie appears on DVD or has played in their market at a digital theatre. I certainly can't imagine there being enough of a market to support 35mm for every major wide release.

Posted by Mitchell Dvoskin (Member # 751) on 12-22-2013, 12:24 PM:

> The first is that the infrastructure to create 35mm prints seems to be collapsing.

It has already collapsed, at least as far as exhibition is concerned. From the manufacture of raw film stock to the labs still capable of developing it, film is all but gone. Processing 35mm occasionally in small amounts is just not commercially viable. The infrastructure needed to manufacture the film stock, the chemicals needed to develop, the knowledge set needed to mix the chemicals, maintain and run the machines, is not something that will survive much longer.

>While it may still be possible to have 35mm prints made for the next 5+ years, it's going to become an increasingly niche market.

Film, as an exhibition format, does not have 5 years.

>The second is the cost of producing a 35mm print. I don't know what the current cost is for a print, but that cost is only going to increase.

It has already almost doubled from just a few years ago.

The only way film will remain viable as a commercial format is if there are print runs in the thousands on a regular basis, and that does not seem likely to ever happen again.

Posted by Scott Norwood (Member # 30) on 12-22-2013, 12:52 PM:

I don't see this working for first-run exhibition. Let's say that a feature-length 35mm print costs $2k to manufacture. Let's further say that the commercial viability of the average first-run feature is six weeks (which may be somewhat generous). That means that the print will cost about $333 per week of exhibition, plus shipping, plus the usual distributor boxoffice take (does anyone really believe that, even if they agreed to a plan like this, distributors would reduce their "film rental" rates just because no film is actually being rented?).

$333/week is over $17k/year. Let's assume that an average D-cinema installation goes for $60k/screen. That would pay for itself in three and a half years. By most measures, that would be a good investment, and there is a reasonable chance that an exhibitor could finance the cost over a longer period (say, five years), making the actual out-of-pocket expenses lower for D-cinema.

This sort of deal could maybe work for repertory engagements (get a few dozen theatres to commit to booking a specific title and divide the cost among them), but not for first-run, given the relatively short shelf-life of the product.

I love film as much as anyone, but I don't see how the economics work. Maybe it would have a chance if we had a bunch of rich theatre owners who loved the film medium, but there are precious few people in that category.

Posted by Jack Ondracek (Member # 1466) on 12-22-2013, 08:30 PM:

... and if you did "buy out" the print, the studios still would't let you keep it.

Posted by Terry Lynn-Stevens (Member # 7349) on 12-22-2013, 11:25 PM:

Right now prints are still being made, there are about 300 prints still made for a major feature. The cost is still around $2000-$3000 to make and not double. There is still a small infastructure left but it cannot support a huge release.

The studios are making it very difficult to book a new release, in some cases you have to show the studio that you are in fact able to make money in order for them to book you a print.

There are not many chain cinemas left running 35mm. I predict we will see a few one offs like Interstellar released in 35mm, I see private companies providing the leasing arrangements in order for the equipment to be installed for these rare releases.

quote: Donald Brown
exhibitor financed print buying cooperative to extend print availability

Unless you are grossing some serious box office numbers, I don't understand why anyone would want to pay for the release prints? Either close up shop or move to digital. If you have a business case where you can pay for the print costs on top of your regular operation expenses than more than likely you can put those print costs into the purchase of a digital projector.

Posted by Donald Brown (Member # 5427) on 12-23-2013, 02:47 PM:

The idea may be sustainable for some of the viable seasonal locations that remain profitable but are only operational during a brief summer season.
In such a situation, one might view the cost of a digital installation to be an unproductive use of resources, while the added expense of a print buy would facilitate continued operation on an adjusted margin.
Don Brown

Posted by Marcel Birgelen (Member # 6801) on 12-23-2013, 03:02 PM:

quote: Terry Lynn-Stevens
I see private companies providing the leasing arrangements in order for the equipment to be installed for these rare releases.

If you're not too nit-picky, you can even get a lot of 35mm gear for free. Lots of theaters are trying to get rid of it, because of limited space in the booth. In many cases, you would still need to get the knowledge to get it up-and-running off course.

A select number of cinemas may want to run 35mm exclusively, like the New Beverly Cinema in L.A., which is essentially owned by Quentin Tarantino. Those shops may have a hard time to get new prints in the future and for them, such an initiative (if it would get off the ground) could be a solution.

Posted by Terry Lynn-Stevens (Member # 7349) on 12-24-2013, 01:15 AM:

quote: Donald Brown
The idea may be sustainable for some of the viable seasonal locations that remain profitable but are only operational during a brief summer season.
In such a situation, one might view the cost of a digital installation to be an unproductive use of resources, while the added expense of a print buy would facilitate continued operation on an adjusted margin.

You are going to have to provide some numbers to convince me?

Let's say you are a seasonal drive in with two screens that is open four months of the year. You book one new release every week for the summer and during week two the print moves to screen two. 16 new releases at $2000 a print is $32000 in print fees, spread that over three summers and that is the cost of higher end digital projector. There is no business case for an exhibitor to pay for the prints.

Posted by Steve Kraus (Member # 476) on 12-25-2013, 10:16 AM:

"The cost is still around $2000-$3000" (emphasis added)

They didn't cost anywhere near that. Not that many years ago (pre DC collapse) I was chatting with a guy who runs a very tiny distribution operation about that very issue. Their biggest print run was probably no more than 20. And even for him, the cost per print for, say a five reel feature, was well under $1,000. So you can only imagine what the majors were paying with those massive print runs back then.

Posted by Brad Miller (Member # 2) on 12-25-2013, 11:51 AM:

A number I was quoted was $600/print for an average run. I could easily see that being $2000-3000 with film being essentially extinct.

Posted by Kenneth Wuepper (Member # 1174) on 12-25-2013, 02:59 PM:

One wonderful outcome from the "circuit" buying the print is they would either take care of it or have to pony up for the damage done at their theatre. Everyone would know when the damage was done and who caused it as they are moving the prints themselves.

Wow! Accountability at last?

Or as the little sign in the gift shop says, "You Broke it, You Bought It!"

Posted by Leo Enticknap (Member # 534) on 12-26-2013, 09:37 AM:

As others have pointed out, there is still just about the lab capacity out there to handle 200-300 print runs of a small number of blockbuster features. But how long any capacity at all exists (even among the specialist archival labs, that will charge closer to $10k for a two-hour color release print) will depend on how long Kodak continues to make and sell the stock and kit chemistry needed to process it. I'm guessing that there will be a "long tail" of production and archiving users of film, and how long that has enough spending power to make it viable for EK to keep the production lines open will determine that.

However, there is another reason why I suspect the studios would resist a cooperative arrangement whereby a third party actually owns the physical prints of newly released films: IP. The essential reason why the industry changed from a prints sold outright to a prints rented to theatres business model in the 19-teens was that studios wanted to keep control over their productions. TV, home video and the online distribution made that reason even more important.

If you have a 35mm print of the latest blockbuster in your possession, a few grand buys you all the hardware and software you need to pirate it into any desired digital format. OK, everyone knows that the current distribution arrangements don't prevent this from happening anyway, but the studios believe, rightly or wrongly, that if they remain the legal owners of the physical prints, they at least have the ability to plug leaks. I cannot see them agreeing to a setup whereby a third party owns the prints.

However, that's just in the case of new releases. For older titles circulating in rep, they already license screenings of prints owned by other people (usually archives, but sometimes private distributors and occasionally even film collectors). I may be wrong, but I suspect they'd have less problem with a collective of rep and second-run exhibitors establishing a central store of prints of titles that are, say, at least 20 years old, because they already allow this to happen with nonprofit archives and a few niche distributors. The essential difference between such an organization and an archive would be that it wouldn't impose the strict handling and presentation requirements that archives typically do. It would simply gather prints that studios and distributors would otherwise junk, and loan them to theatres as and when booked.

The obstacles would be (1) that exhibitors (or their bookers) would have to do what theatres booking archive prints have to do already: two lots of bureaucracy per booking, getting the print from one source and clearing the rights with another; and (2) that there would be substantial start-up and running costs for such an organization. You'd need a large building (preferably in a relatively cool and dry part of the country, and well connected to mainline shipping routes), a few staff and a bit of IT infrastructure, essentially. There is a cost to keeping a print securely on a vault shelf doing nothing, and this would have to be factored in to loan pricing.

If such a venture were to be run as a nonprofit, it might be possible to secure grant funding at least to get something going. But the opposition from studios would, I'd speculate, be such that they'd never agree to it to handle new releases.

Posted by Mike Blakesley (Member # 26) on 12-26-2013, 12:03 PM:

I think nobody has brought up the notion that even if a group of theaters was going to "pay for" the prints, there is still the cost of film rental which would be tacked on. Even if the studios are not having to pay for prints, they would still want their same percentage. If you don't believe that, you only need to look at matinee bookings...they'll charge you $300 for a movie and you have to provide your own BluRay at your cost. It would likely be the same scenario for the latest blockbusters.

Posted by Terry Lynn-Stevens (Member # 7349) on 12-26-2013, 05:07 PM:

quote: Leo Enticknap
I cannot see them agreeing to a setup whereby a third party owns the prints.

I don't see that happening, but I am sure there are some organizations that own 35mm or 70mm prints of some titles.

Posted by Donald Brown (Member # 5427) on 12-26-2013, 08:40 PM:

With the current use of exhibitor print buys, the distributor retains all ownership. The exhibitor merely pays for a print which the distributor was unwilling to furnish otherwise. One of the most successful print buys, that I am aware of, was undertaken by Hoyts immediately preceding the the phenomenal success of The Blair Witch Project.
The concept of a cooperative would require an association of regional exhibitors located within some manageable distance from one another. Each exhibitor would provide the print buy for a specific release or for a number of releases. The prints would then circulate within the circuit of cooperative buying theatres.
The print movements within a regional coop' could be coordinated in advance by the cooperating exhibitors, or they could be managed by the Technicolor UPS tandem as they are now.
The concept would have some very broad similarity to the old resort booking system. Such a system would provide a mix of first-run and sub-run product for participating exhibitors.
Don Brown

Posted by Bill Enos (Member # 440) on 01-17-2014, 07:15 PM:

By the time the contracts are drawn up, reviewed and modified by the participants in the coop, the attorneys paid, the lawsuits settled and the first several prints contracted for at least 3 to 4 years will have passed and assuming film is still available each of the members will have wasted enough resources to have made the conversion in the first place.

Posted by Adam Fraser (Member # 1074) on 01-17-2014, 07:37 PM:

After reading multiple VPF and MLA contracts, I have no doubt that the studios would require so much legal work it would be impossible and would cost more in legal fees than just purchasing digital equipment.

Example simple VPF contract that never happened: You book a first run movie, we will subtract $250 from the first two week's rent for a term of 5 years if you purchase qualifying equipment.

Example Studio VPF contract: You must sign an NDA to read the contract. Some were at least 20 pages long. There were at least 6 different versions, with so many stipulations and big brother clauses we just said screw it and paid for our equipment ourselves.