Europe d-cinema rollout hung up on funding

Exhibitors air frustrations at annual Cinema Expo confab

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AMSTERDAM -- Dithering over funding and other details has European theater operators as frustrated as U.S. exhibitors with the slow rollout of digital cinema.

With bank financing still scarce, d-cinema proponents have been left scrambling for innovative other means of tapping into the required capital.

"It's very hard," said Howard Kiedaisch, CEO of the London-based d-cinema integrator Arts Alliance Media. "But we do take heart from the deal we were able to do in December."

In that case, Arts Alliance went to the Brussels-based tech financier Econocom to back its rollout of equipment to convert 400 screens in France. More conventional lenders remain on the digital sidelines on the continent and elsewhere, but there are some other signs of progress.

Presently, at least two Hollywood majors are poised to announce virtual print fee agreements covering screen conversions throughout Norway, using government funding to get things going. A similar, more limited arrangement is also being mulled for German exhibitors.

But much of the d-cinema talk at Cinema Expo -- the annual exhibition confab that opened its four-day run at the RAI convention center here Monday -- amounts to so much grumbling.

"Many of us are frustrated that it hasn't been going stronger," European Digital Cinema Forum chief Dave Monk acknowledged in an opening-day presentation. "That's because we've been struggling with recession and financial meltdown. But the boxoffice shows digital cinema is real -- not just some fancy-pants, one-off kind of thing."

Of course, the real sweet spot in digital cinema is 3-D, which allows exhibs to charge a premium price for movie tickets.

Gino Haddad of Beirut-based Circuit Empire said eight of the Middle East exhib's 92 screens have been converted to digital, and six of them now also boast 3-D capability.

"It's only for the difference between 35mm and 3-D that the customer is willing to pay the premium," Haddad said.

At Empire that means a markup of $2 to $3 on general ticket prices running $6 to $8, depending on location.

EDCF's Monk said 3-D's global footprint reached 4,000 screens in the second quarter.

Beverly Hills-based 3-D vendor RealD announced Monday that its European footprint has grown fivefold this year, with its worldwide installations now totaling more than 3,200 screens in 45 countries.

"RealD 3-D continues to defy global financial trends with consistent boxoffice results multiple times that of 2-D screens," RealD chief Michael Lewis said.

Digital projection also saves studios big bucks on distribution costs -- which is why they've been willing to sign VPFs around the world to help cover most installations costs.

The studio agreements provide payments stretching over several years. But upfront bank capital still is generally needed to get hardware shipped and installed.

And that's been the sticking point for longer than anybody likes to think about.

"Digital cinema is a small business that really requires a lot of work," Fortis Bank exec director Christophe de Winter shrugged during a d-cinema panel discussion.

The banking stall has kept exhibs from implementing thousands of planned screen conversions for the past year. In the U.S., execs at JPMorgan hope finally to go to market in July with a long-stalled lending syndication on behalf of the nation's three biggest circuits.

"These things are extremely complicated and frustrating," Disney senior vp Jason Brenek observed.

Once installed, d-cinema does offer another notable benefit for exhibs besides 3-D: alternative programming.

Arts Alliance numbers among distributors of cultural and sporting fare that now regularly supplements film programming in theaters around the world. The company also occasionally distributes niche-market specialty films such as "Iron Maiden, Flight 666," a heavy-metal concert documentary whose one-day theatrical success Arts Alliance hopes to replicate in September with the eco-drama "The Age of Stupid."

The Pete Postlethwaite starrer will promote its global release with a "solar cinema tent" premier in New York's Central Park in September. Arts Alliance may extend the "Stupid" run beyond its opening day if results match the pic's well-received recent run in the U.K.