D-cinema deadlock

Pace of upgrades makes March target tough

At least 10 3-D digital features are planned for 2009, but the clock is ticking when it comes to the deployment of digital theater installations.

"(DreamWorks Animation CEO) Jeffrey Katzenberg has stated that he wants 5,000 3-D-ready digital-cinema screens by March," National Association of Theatre Owners president John Fithian said. "That is aggressive. We can get there, but I kind of doubt it."

DWA's "Monsters vs. Aliens" is slated for release March 27. But with that date less than a year away, out of an estimated 39,000 screens in North America, there are now just 5,000 d-cinema screens — including a little more than 1,000 with 3-D capabilities.

Fithian warned in April during the National Association of Broadcasters Show that "unless digital cinema deals are made in the next one to two months, we will not have time to deploy the screens for 2009."

More than a month since NAB, new d-cinema deals remain at an impasse. Deployment deals generally rely on a virtual print fee model through which studios contribute an agreed fee per screen, per movie to offset exhibitors' installation costs.

"In the last 30 days, things have not progressed as well as I had hoped, expected and, frankly, been committed to by all the parties involved," Katzenberg said last week. "It's ongoing as we speak, but in terms of getting the big three exhibitors (Regal, AMC and Cinemark) on board and actively moving forward, I feel as though things have dragged along."

Responded Fithian: "Jeffrey has his concerns about exhibitors, I understand that, that's his job. I have my concerns about a minority of the studios not working hard enough to reach a deal. … We need all the studios to participate in this process for this to happen quickly, and that is not happening right now."

Fithian didn't name names, but insiders point a finger at Warners for dragging its heels.

The Digital Cinema Integration Partners — a joint venture owned by Regal, AMC and Cinemark that represents 14,000 screens in the U.S and Canada — is in negotiations with the studios.

In March, Access Integrated Technologies — the integrator for the majority of digital installations in North America — introduced a "Phase 2" program that incorporates virtual print fee deals that already have been established with Disney, Fox, Paramount and Universal, all of which have committed to provide movies to as many as 10,000 d-cinema systems in the U.S. and Canada. Added company president Chuck Goldwater, "We are making good progress with Sony and Warner Bros."

AccessIT CEO Bud May said the company is making "excellent progress" toward securing debt financing based on the virtual print fee model, and Phase 2 deployment is slated to begin in July.

Last month, the Cinema Buying Group — a buying program for small and independent theater operators — inked a deal with AccessIT, making the d-cinema deployer the integrator for the CBG's 600-plus members. That move represents more than 8,000 CBG screens, the majority of which are expected to fit into Phase 2 deployment.

At Kodak Digital Cinema, Bob Mayson reported that a financing plan is in place, and Kodak has two studio VPF deals, which he declined to name, completed. He hopes to announce a complete plan late in the second quarter, with deployment beginning during the second half of the year.

Technicolor Digital Cinema has VPF deals with DreamWorks, Fox, Sony, Universal and Warners and is working on the financing.

Noted TDC's Curt Belmer, "Today it's still challenging due to the tight market and the gap that continues to remain between studio subsidy and exhibitors willingness to pay."

Even once VPF deals are reached, plenty of work remains.

"There are a limited number of technicians who know this stuff," Fithian said. "It is a question of how much time it takes to install these systems and get them up and running."

Goldwater reported that at AccessIT's peak, the company was installing systems for nearly 500 screens per month. He added, "That was with a single vendor (Christie). We expect not only could we repeat that, but with additional vendors that Phase 2 will include, we can multiply our capacity at a greater rate."

"We can install 10 screens a day," Kodak's Mayson said, adding that if the deals are made quickly, it still is possible to make Katzenberg's goal.(partialdiff)
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