Cinema Screens at Risk from Digital

From SAWA Newsletter � February, 2009

 

Where is the model for Europe's independent cinemas?

● There are 8,074 single screen cinemas in Western and Eastern Europe―25.6 per cent of all screens

● Over half of Eastern Europe's screens (54.7 per cent) are housed in single screen cinemas

● Public film bodies are now showing a marked interest in digitising their nations' screens

 

There are now over 7,500 d-cinema screens in the world, of which 1,200 are in Europe. As we move closer to the sharp end

of digital cinema conversion, there is a growing understanding that some models for conversion in the market may not be

suitable for all types of cinema. There is a risk that some screens will be left behind, and public authorities, national and

supra-national, are waking up to this potential problem.

 

Norway and Germany have taken the lead in terms of organising publicly-inspired funding models, and we now have Finland,

Poland, Czech Republic, UK and France speaking in public about their own schemes, and countries like Denmark also joining the

debate with their own investigations as a precursor to defining a public position.

 

The screens perceived to be at risk at present are non-multiplex screens that do not screen first-run mainstream movies. There

are 8,074 single screen cinemas in Europe (Western and Eastern,not including Russia and Ukraine) out of a total 31,547 screens,

and a further 6,861 screens in sites with between two and four screens. Just over half of the total European screens (52.7 per

cent) are housed in multiplex cinemas (defined as five screens and above).

 

One of the newest and most interesting public models is that being developed in Poland. In a market of 980 screens, of which

400 are in multiplexes accounting for 80 per cent of the market, a wide group of interested parties are putting together a

plan to digitise up to 400 of the remaining (non-multiplex)screens. The notable factor of this plan is that it has film pro-

ducers at its heart ― the only territory so far where producers have been fully included in the debate concerning the transi-

tion to digital conversion. The reasoning is that these screens are the key outlets for local film product and if they disappear

due to lack of financing for digital cinema, the market for local films dries up. Additionally, it will make it cheaper to distribute

local films onto screens.

 

Another initiative aiming to establish a publicly inspired model is the Collectifs des Independants pour le Numérique (CIN;

end 04 mid 05 end 05 mid 06 end 06 mid 07 end 07 mid 08  bringing together a wide range of trade bodies and collective

groups of French cinema professionals), which has the registered interest of 300 exhibitors representing 600 screens. The

model would include public financing and private contributions-virtual print fee (VPF) or other. The grouping has test

sites in three regions of France and is currently putting together a wider test.

 

The European Commission's MEDIA programme is also now considering its options in assisting the transition to digital cin-

ema, a softening of its previous position. MEDIA is in discussions with the European Investment Bank to create a fund for

digital conversion, in which EIB puts up a significant proportion of funding (via loans) and MEDIA also adds an amount

into a common pot. The proposal is for a policy-driven third party VPF, with the establishment of a pan-European fund at

its core.

 

There are now five private rollout entities in the European market, three with sufficient studio backing to be able to sign

exhibitors. XDC, Arts Alliance Media and Ymagis are all working with the VPF at their core, which is highly suitable for screens

that programme a high proportion of first-run movies in a year. Ymagis says it can work with smaller screens as they also

work with a flexible print fee (which is in essence a VPF that declines by week of release, which is also possible in the VPF

model). Ymagis now has 72 screens signed in 14 exhibitors in France; two thirds of which are art-house screens. However, it

is also true that the VPF can also work with different types of screens, as long as they show a good proportion of first-run

movies.

 

Irish scheme DCL is also still working towards a full digitization of the Irish market.

 

The most recent newcomer to the deployment market is Sony, which has established a global rollout plan for its 4K projector

solution (SDDS) with backing from three studios. Sony's target is 9,000 screens worldwide, which would give them an approxi-

mate 8.2 per cent market share of d-screens (ie, modern screens converted) when the conversion is finished, highlight-

ing the niche nature of the 4K proposal. Sony's target is generally not independent single-screen cinemas.

 

The recent Europa Cinemas conference in Paris put the spotlight on public and private schemes, the result being a surpris-

ing degree of common ground between the two schemes. The heart of most current public and private schemes is the Virtual

Print Fee (VPF) model, which is where the concern is focused. Unsurprisingly, the suggested VPF levels of publicly inspired

models are significantly lower than the VPF negotiated for private deployment entities.

 

The VPF is simply a mechanism created to take distribution savings and use them to pay a proportion of digital conversion

over a period of time. It relies on a steady stream of first-run movies being played on a cinema screen. The problem does not

come from the model itself, it comes from the business model of the exhibitor. There are different categories of exhibitor

operating in the market, and this particular model may not apply to some of them. It is here that the problem for the

independent sector arises, and therefore it is here that public policy has to focus. The solution is either to create a plan for a

single stratum of exhibitors only or to create and impose a plan for a whole market. Both approaches are currently being

developed

 

Diagrams included

1.       D-Cinema Screen Growth � Graph and table

2.       Single Screens as a Proportion of all Screens

3.       Cinema Screens by Size of Complex

4.       European Deployment Plans