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http://www.digitalcinemareport.com/node/785
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When asked if the exhibition business is as recession proof as some have claimed John Fithian, president of the National Association of Theatre Owners allows that movie theatres have always shown “a unique resilience” in challenging times. And as the exhibition industry gathers at the end of this month for ShoWest 2009 there are positive signs that, despite the harsh economic conditions worldwide, the movie business remains strong. Box office receipts and admissions were solid last year and box office returns for this past January were the largest ever: an increase of 17 percent over last year and a total take of $1.7 billion. Despite that promising news one question on the minds of all the attendees at the Las Vegas show will no doubt be: What happens now?
If there is any silver lining to the current economic crisis, says Fithian, it is that “only smart decisions get made when money is tight.” As evidence of that, and in the absence of a broader digital cinema roll out, many exhibitors of varying sizes are taking matters in their own hands and funding their own transition to digital with loans from local banks. Buried deep in the ongoing national stories about the slumping banking industry many small local and regional banks are quite stable and exhibitors are taking advantage. Self-financing is a reality for many exhibitors.
Fithian says there’s a simple explanation, both for the stalled broad roll out and for the trend in some exhibitors going it alone: “It’s much more difficult to get financing for 10,000 screens than it is for 10 screens.” He cautions that as attractive as it is in the short term, “self-financing is not a long term solution. We need a digital cinema system with all the parties involved participating.”
To that end, there are signs that the Digital Cinema Implementation Partners deal may finally get finalized in the coming months. “The credit markets have thawed a bit,” says Fithian. Virtual Print Fees deals are in place for all of the major Hollywood studios (“with one exception – Warner Bros.”) and as soon as affordable rates are available the major digital cinema roll out should begin in earnest. Fithian remains optimistic that a VPF deal with Warner Bros. will be worked out.
There will be other issues on exhibitors’ minds at ShoWest.
For several years Fithian has been urging the Hollywood studios to recognize that there are twelve months on the calendar and major releases don’t all have to coincide with Thanksgiving, Christmas, Memorial Day and July 4th. The studios have improved significantly. “They’ve done a better job of spreading them out,” he says.
There was a time when the number of screens in business was a critical issue. At times there were too few; other times too many. The total number of screens in North America is 38,000-plus in the US and roughly 3,000 in Canada. Fithian says that number has been “fairly constant for the past two years” and suggested it was probably a good number for the exhibition business as a whole.
While he suspects that the total number of screens will remain relatively stable that does not necessarily mean they will be the same screens tomorrow as today. Digital cinema will inevitably result in some theatres closing, possibly sooner than might have otherwise been the case. The new economics of the country in general and the cinema business is particular will drive this.
Digital 3D is the key driver in moviemaking and exhibition today and that will not change for the foreseeable future. As one indicator that the demand for 3D remains strong, Fithian says, “There’s a four-month backlog for silver screens.” He predicts there will be roughly 2,000 3D-ready screens in time for the release of Monsters vs Aliens. Despite that prediction, he says, “We still need more 3D screens.”
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