CinemaCon: The End of Film Distribution in North America Is Almost Here

LAS VEGAS -- By the end of this year, distributors might no longer deliver film prints to theaters in North America. Cans full of reels of celluloid will be a thing of the analog past. When it comes to movies, and how they are distributed, the digital revolution will be complete.  

The transition from film to digital is sure to be a big topic as exhibitors gather in Las Vegas for their annual CinemaCon convention.

The signs are all there -- and there have been plenty of warnings. At Showest, the predecessor to CinemaCon, in 2011, National Association of Theatre Owners president John Fithian predicted that the domestic distribution of movies on celluloid could cease before the end of 2013. Fithian reported that Fox had already notified exhibitors of its intent to end film distribution in the U.S. within two years. He predicted, “No one should rely on the distribution of film prints much longer.”

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By the end of 2012, 90,000, or 75 percent, of the world's cinema screens had gone digital, according to Michael Karagosian, president of MKPE Consulting.

He reports that 85 percent of the screens in North America had already made the digital switch, as have 67 percent in Europe. 

Studios welcomed the change, since it will ultimately be less expensive for them to distribute films digitally rather than have to ship cans of film around the country. Exhibitors, initially wary because of concerns about the expense of converting their auditoriums, ultimately came aboard once the studios agreed to virtual print fees that have helped subsidize the costs of the transition.

As a result, when a studio now releases a title in North America -- sending it out to 2,000-2,500 theaters -- they typically make just a small number of prints, maybe 300, according to Claude Gagnon, president of Technicolor Creative Services.

But for those who still rely on film, from production companies to distributors to theater owners, the future is now uncertain. In fact, studios and filmmakers might not be in control of their own destiny.

Film stock, which is used for everything from shooting movies to creating prints for archiving, is an endangered species. “Fujifilm delivered its last film print stock at the end of last month,” Karagosian reported in an address last week at the NAB Show. “What’s left is Kodak which, as it emerges from bankruptcy protection, will be operating at 10-15 percent of its former total capacity. We don't yet know what that means in terms of film stock production.”

On April 2, Fujifilm posted a statement on its website, stating that it had stopped production of the majority of its motion picture film products by March. “We would like to thank you very much for your patronage during the long history of manufacture, sales and marketing of these products which will continue to be available until the inventory is exhausted,” the company said. (While it has discontinued manufacturing of stock include color positive film and color negative film, it does plan to continue to support certain products such as recording film for digital separation for archiving.)

Kodak filed for chapter 11 bankruptcy protection in early 2011. Speaking with The Hollywood Reporter on Monday, Wayne Martin, Kodak’s general manager for image capture and distribution and film manufacturing flow manager, said, “We are continuing to manufacture and sell film products that cover origination as well as distribution. Motion pictures are part of our plan going forward.”

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“The film business is a key part of the plan for emerging from chapter 11,” he continued. “We know the world has changed, we have done a lot to keep this viable and provide choice.”

In July 2011, Deluxe and Technicolor began an orderly retreat from film, inking three-year subcontracting agreements that reduced their footprint of film services.

As part of the 2011 agreements, it was decided that Deluxe would subcontract its 35mm/16mm color negative processing business to Technicolor in the U.K. But change continues and Technicolor’s processing facility at Pinewood Studios is slated to shut it doors next month.

Some believe film is on its way to becoming a niche market opportunity, and the direction of the U.K. reflects this.

Deluxe-owned Company 3 and London film lab iDailies are striking a deal that supports 35mm projects currently in production or in pre-production in the U.K., including Kenneth Branagh's Cinderella for Disney.

The initiative is good news for the group known as Directors UK -- members including Ken Loach, Stephen Frears, Lynne Ramsay and Paul Greengrass -- which has lobbied Deluxe, Technicolor and studios including Warner Bros. to maintain a 35mm processing presence on home soil. Additional film services in the U.K. include those offered by Bucks Labs.

Meanwhile, Latin America continues to rely on film distribution, as only 49 percent of its screens have been coverted to digital, according to Karagosian.

Though an example of change in the Asia Pacific region, Deluxe has closed its release printing facilities in Australia.

Still, while exhibition has, for the most part, embraced digital, there are a number of filmmakers who are not ready to abandon celluloid. Technicolor’s Gaganon estimates that feature production is probably 75 percent digital at the moment. Though, in fact, six of the nine best picture nominees this year were lensed on film.

Additionally, archivists see a real need to rely on film for their work, since it is the only medium that has proven it can last for more than 100 years.

Film might be on the way out, but it won't give up without a fight.