Is Europe finally ready for the d-cinema rollout?

http://www.hollywoodreporter.com/hr/content_display/news/e3i50d4ccb4056bd834eaeff88d2b3c35f5

 

By Andreas Fuchs

 

June 19, 2008, 05:44 PM ET

 

Can digital cinema break the language barrier in Europe? While there is continued optimism about the long-term forecast for the technology, insiders continue to lament the fact that an expensive price tag and Europe's cultural diversity are proving to be major stumbling blocks to the ongoing d-cinema rollout.

 

Nevertheless, progress over the last year has been steady: With a 41% increase in the number of digitally enabled screens over June 2007, Europe now accounts for 840 of some 1,800 installed internationally.

 

In North America the number of DCI-standard-compliant screens amounts to 4,700, the majority of which were deployed by systems integrator AccessIT and projector manufacturer Christie. Taken aside an ever-growing number of test sites by Dolby, Kodak, Sony and Technicolor on both sides of the Atlantic, two local players have truly upped the ante on the European front.

 

London-based Arts Alliance Media completed the 240-screen U.K. Digital Cinema Network in May 2007 and signed support agreements with five Hollywood studios: Paramount, Disney, Fox, Sony and Universal. One year later, its Belgium-based competitor, XDC International, followed suit with four of the majors -- Warner Bros., Paramount, Fox and Disney -- contributing product and financing to some 8,000 planned screens.

 

"XDC has negotiated with the studios, taking into account the needs of the European fragmented market," declares Fabrice Testa, vp sales and business development for the company. "The scope of the agreements is for 22 European countries. The challenge is to install fully integrated and networked solutions in the multiplex venues."

 

But in evaluating the financial and operational implications of hard drives versus cans of 35mm film, Veronika Kwan-Rubinek, president of international distribution for Warner Bros., says d-cinema has yet to offer an economic advantage due to the relatively high costs to support the few digital screens.

 

"The cost of the equipment continues to be exorbitant," Kwan-Rubinek says. "This has effectively slowed the pace of installations around the world. Only when these prices become attractive to all players in the market -- whether exhibition circuits, integrators, government or private entities, etc. -- will we be able to move more quickly."

 

Nevertheless, AAM CEO Howard Kiedaisch says the d-cinema era in Europe is well under way. "We are the only digital cinema provider in Europe to have signed up both studios and exhibitors to a Virtual Print Fee-based digital cinema rollout. The Virtual Print Fee business model is working in Europe."

 

While that may be true, many others across the continent, like Sony's Oliver Pasch, see Europe's numerous languages and cultures resulting in "completely different market situations." As the head of digital cinema Europe at Sony's Professional Division, Pasch believes it is unlikely that business models based upon VPF from Hollywood will work in those countries "where the share of Hollywood content at the boxoffice is less than 50%."

 

At Warner Bros., international releases have been slightly higher than that percentage due to the success of local productions like Germany's "The Red Baron" and the global 3-D release of "Beowulf," which Kwan-Rubinek says represented a "healthy 17% of the total international boxoffice, and this coming from just 311 screens, or 4% of the total international screens." Indeed, in Europe, digital 3-D collected slightly more than 20% of the total boxoffice from 200 screens.

 

So will 3-D convert the remaining d-cinema skeptics?

 

"As in North America, 3-D is providing a reason and a way for a few screens to deploy digital systems," says Robert Mayson, vp and general manager of Kodak Digital Motion Imaging. "But the overall business continues to be very fragmented in many countries and cinema chains."