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State of Independents: Digital Cinema

State of Independents: Digital Cinema. David Hancock Head of Film and Cinema Screen Digest Europa Distribution Conference Estoril, Portugal, 21 November 2008. Outline of the morning. Digital Cinema Infrastructure Development of global market for digital cinema Focus on Europe

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State of Independents: Digital Cinema

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  1. State of Independents: Digital Cinema David Hancock Head of Film and Cinema Screen Digest Europa Distribution Conference Estoril, Portugal, 21 November 2008

  2. Outline of the morning Digital Cinema Infrastructure • Development of global market for digital cinema • Focus on Europe Two key themes for the day: • Public versus Private schemes • Where is the model for independents Presentations and debate

  3. Digital screens doubled in 2007, but marginal growth in 2008 Note: 2007 2K only installations or higher

  4. Screen growth curve slows

  5. Growth has stalled in North America, launch point still to feature internationally DCI Note: 2007 2K only installations or higher

  6. Growth has stalled in North America: planned projects are more than enough

  7. Digital content both 2D and 3D coming on stream : majority of digital prints from US Studios

  8. Focus on Europe: single territory growth but not yet reached mainstream launch point UK DE FR BE

  9. Focus on Europe: Where is the progress? • However, there has been progress on creating the market conditions necessary for a European roll-out • Content – Arts Alliance, XDC and Ymagis have now signed VPF-inspired deals with US studios for European screens (7,000, 8,000 and 5,500 screens respectively) • Technology – not quite there in DCI terms but clear path to achieve this • Business Models – mainstream model (such as VPF) is taking hold, but may not respond to all types of exhibitor or distributor and this is where government could intervene, if looking to • Understanding that different models may be needed for different market strata, or need to convince market of a “solidarity” approach. More territories looking at public models.

  10. Content driving 3D upgrades 1,498 3D screens H1 ‘08 Up from 1,284 in ‘07 258 in ’06, 95 in ’05 Top 5 International: China (85) Canada (66) UK (64) Japan (52) Russia (42) Insufficient screens To support simultaneous releases Rescheduling of titles to secure unique release window 3D: Content driving exhibitors to upgrade screens Hannah Montana U23D Journey Beowulf M.T.R N.B.C M.H C.L

  11. Public versus Private • Private schemes • Pros • Third party does the work • Scale brings prices down • Third party takes responsibility for equipment and software upgrades • Equipment tested and full maintenance support • Cons • Staggered and unmanaged roll-out • Longer transition period • Risk to small cinemas as less viable economics • Third-party takes a fee, adds to cost

  12. Public versus Private • Public schemes • Pros • Managed transition, minimises the transition period • Not for profit motive which keeps costs down • Scale brings prices down as far as possible • Cons • Doubts over whether the public sector can do it • Fundamental conflict between exhibitor requirements that need to be managed -needs “solidarity” or “mutuality” • Still need third party expertise to actually undertake the transition

  13. Where do Independents go from here? • What models are out there to help the independent sector to convert to digital? • Is the model the problem? • Is the VPF the problem? • Most other models still include the VPF at their core • Are the stakeholders the problem? • Who else can help to pay and why would they? • Telcos • Screen advertisers • Government/local authorities • Producers • What about a pan-European model • MEDIA • EIB • Europa Cinemas

  14. Indies: single screens at risk in Europe • 31,500 screens in Europe (not inc Russia and Ukraine) • 22 per cent single screens in W Europe • 49 per cent single screens in C/E Europe • 7,884 single screens can be considered at risk • Europa Cinemas counts 1,700 screens in its network 7,884

  15. In summary… • Growth of d-cinema rollout has slowed in US and not yet taken off fully in Europe • 3D is a major catalyst for digital roll-out this year • The market direction is towards the VPF, whether public or private model • This poses a risk for independents: • Who will provide the model for ¼ of the market? • What is the model for indies, and what are the starting points for creating it? • And so on to the debate….

  16. Thank you David.hancock@screendigest.com

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