3-D, cinema exhibition's killer application, goes global
By Alex Ben Block
June 19, 2009, 12:50 PM ET
The Princess Quay cinemas, which sit atop a scenic tri-level shopping
complex in the Northern England town of Kingston Upon Hull, regularly
play the hottest Hollywood movies -- but their projectionists have
never run a single foot of film through the sprockets of a projector.
The 11-screen complex was constructed from the ground up by Vue
Cinemas, the third-largest exhibitor in the U.K., as a model for the
future of exhibition in the post-film age. "It was 100% digital, no
35mm projectors running; we had a library server and everything," says
Mark de Quervain, sales and marketing director at Vue Entertainment,
which also operates 66 theaters in the U.K. and one each in Portugal
and Taiwan. "So it was pretty much the first digital multiplex in
Europe."
There were naysayers, he recalls, who warned it was too soon to go
all-digital. They argued theatrical trailers and some movies weren't
available in digital, which could cost them if a hot ticket came along
that was available only on celluloid.
"It really was a good test to understand the staffing, training, the
technical, how many films are available in digital, how many trailers
can you get in digital and so on," de Quervain says. "We had reported
at last year's (Cinema Expo International) that trailers were
difficult to get a hold of in digital but it's getting easier all the
time."
In rapid succession during the past year, major movie distributors
including Disney, Fox, Sony and Warner Bros. have begun making most
trailers and movies available in digital as well as film. As
exhibitors gather in Amsterdam for Cinema Expo -- which runs June
22-25 -- there's no more pressing question than when to convert to
digital and how to pay for it.
So far, conversion of analog screens to digital in developed countries
worldwide hasn't happened as quickly as expected. Anthony
Marcoly, president of sales and distribution at Walt Disney Studios
Motion Pictures International, says most of the close to 2,500 digital
screens outside the U.S. are one-offs in multiplexes specifically
added to show 3-D movies.
As in the U.S., conversion to all digital presentation won't occur
until financing sources open, and that depends on the global credit
crisis. That isn't stopping aggregators from doing deals in Europe,
Asia, Russia and elsewhere based on the U.S. model of "virtual print
fees" paid by studios to pay back the cost over time. The money needed
now has to be borrowed, and that has not been possible since last
fall. So while multiplexes worldwide rush to offer 3-D on at least one
or two screens per location, the existing theaters are still firmly in
the analog world.
The U.K., where booming boxoffice is up more than 16% for the first
quarter, is a good example. By global standards, it has been a leader
in digital and
3-D but since the economic crisis hit, conversion there to 2-D digital
"essentially, more or less, ground to a halt as I think it probably
did in most territories at the tail end of the autumn of last year,"
says Phil Clapp, CEO of the U.K.'s Cinema Exhibitors Assn.
That didn't mean the end of all digital, though. "The focus in the
recent past has been on installation of digital 3-D screens," says
Clapp, who projects that by year's end there will be about 600 digital
3-D sites from a total of 3,600 screens in the U.K.
Disney alone, which will be showing "Up" in Amsterdam in 3-D, will
offer 17 new 3-D movies during the next couple years, according to
Daniel Frigo, executive vp and GM at Disney International, who says
the booming U.K. boxoffice so far this year has been fueled by 3-D
movies. "We had 'Bolt' recently released across Europe and what was
fascinating was the boxoffice for 3-D was anywhere between 30% and 50%
of the total take on far fewer prints. That was just tremendous."
Exhibitors have taken notice. "Every multiplex in the U.K. will have a
3-D screen by Christmas," predicts Martin Dowley, managing director of
Digital Cinema Media, which provides preshow advertising to cinemas.
Dowley notes digital eliminates the cost to ship the cans of
celluloid, makes it easier to offer advertisers last-minute content
changes that can be beamed to theaters. He says their research shows
U.K. audiences "are loving the 3-D experience," and his company plans
ads in 3-D as well.
It's not just happening in the U.K. or Western Europe. Across
developing Eastern Europe, Russia, India and China there's a theater
building boom and they all are including one or two 3-D ready screens.
The opening of new theaters is inevitably followed by a rise in
boxoffice in that territory.
"We see 3-D worldwide grossing two and a half times the 2-D screens,"
Disney's Marcoly says. "That's been the incremental factor (in digital
conversion). Is that going to continue? We'll see. But obviously right
now from the consumer there's a big appetite for 3-D."
Imax CEO Richard Gelfond calls Europe "a key territory for us," but
says they have developments all over the world. They have two new Imax
theaters opening in Austria and a joint venture in Japan to open their
first Imax theaters outside of a museum. He says by the end of 2011,
Imax will have 41 sites in China.
An Imax theater opened two years ago in Hong Kong is producing
"excellent results," according to Bob Vallone, director and GM of Lark
International Multimedia, which operates as Studio City Cinemas and
United Artists Cinemas and controls the city's largest advance ticket
vendor.
"When we open a new movie, Imax is huge," says Vallone, who worked for
UA for many years in the U.S. before relocating to Hong Kong. "It does
10%-15% of the total boxoffice for that particular movie at a premium
price."
Vallone says 3-D is also very popular, with 80% of patrons choosing
3-D over 2-D for DreamWorks' "Monsters vs. Aliens" when given a
choice.
The boxoffice has remained strong in Hong Kong despite the credit
crunch, Vallone says, but they've felt a difference at the candy
counter. "A lot has to do with the economy," he adds. "People say they
really still want to go to the movies but once there, they're doing
more sharing. They're buying one popcorn instead of two and sharing.
Most of our customers are young and a lot have been directly impacted
by losing jobs or reduction of their jobs. There's a definite impact
on discretionary spending."
Surprisingly, Vallone says the rampant piracy in Hong Kong seems to
have cooled. "It's part of the business but honestly it's not as
visible as it used to be. Two years ago you could go on most major
streets in Hong Kong and see people selling current movies out of a
suitcase."
It's not enforcement which has turned it around, Vallone says. People
got tired of being cheated by street vendors. "The pirates are
criminals who really cheat people," Vallone says. "They say the movie
is 'Star Trek' and it's actually the original one from years ago; or
you will get two discs and one will be blank."
Globally the big concern has shifted to Internet piracy of movies,
MPAA chairman and CEO Dan Glickman says. "The big challenge comes as
we get more and more new ways to distribute, and it becomes easier and
easier to copy," he says. "We need a whole new set of strategies."
The MPAA released the 2009 Priority Watch List of countries where
piracy is a particular problem -- including the usual suspects such as
China, Mexico, Russia and Spain -- along with Canada, which was
elevated to the U.S. Trade Representatives Special 301 Report's
Priority Watch list as well. Glickman says Canada continues to lag
behind other major developed countries in responding to the tremendous
technological changes that have cost the movie industry millions.
Glickman notes that one additional benefit of 3-D is that it's hard to pirate.
Glickman praises a bill supported by France's President Nicolas
Sarkozy, which is working its way toward becoming a law in France as a
model for the future. Officially known as "Creation et Internet,"
which requires Internet ISPs to notify customers when illegal file
sharing is detected by a registered letter. The third time, the
customer is kicked off the Internet for three months. A similar bill
has been dismissed by the European parliament twice.
Around the world movie ticket sales have held up surprisingly well in
the face of the global economic downturn, with exhibitors benefiting
from the building of new theaters, better marketing and most of all
movies with international appeal.
"I think we've proven we're recession resistant," de Quervain says,
"but I don't think we're recession proof. We've got to be diligent
about giving value to people. And that's what we're doing."
Links referenced within this article
Local Warming
http://www.hollywoodreporter.com/hr/content_display/news/e3i5bc95dcbd3315867454360ef9ecc2ed3
CineExpo honorees
http://www.hollywoodreporter.com/hr/content_display/news/e3id499f8aa1018de837d7fae5508d35e23
CineExpo events
http://www.hollywoodreporter.com/hr/content_display/news/e3id499f8aa1018de837100febc4a167ff1
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