Studio deals extend digital cinema in Europe

Warners, Paramount, Fox, Disney sign with XDC

In a move that could jumpstart the digital cinema transition in Europe, Warner Bros., Paramount Pictures, 20th Century Fox and Walt Disney Studios have signed virtual print fee-style agreements that could result in the rollout of 8,000 new digital cinema installations in 22 countries.

There are now fewer than 1,000 digital cinema screens installed on the continent.

The agreements have been reached with XDC, a Belgium-based digital cinema service company that is preparing a digital cinema deployment plan.

XDC is expected to reach similar European agreements with Universal and Sony in the near future. It plans to negotiate comparable financing agreements with European movie distributors.

Warners, Paramount, Fox and Disney have agreed to co-finance more than 65% of the value of digital exhibition systems for a estimated investment up to €600 million ($947 million) over a maximum 10 years from the point of installation. The roll-out period would last for five years at most.

However, other hurdles remain before XDC can begin work. The company must sell its co-financing proposal to Europe-based cinema exhibitors and raise equity and debt to fund the rollout.

With current economic conditions, financing is an area that challenges all d-cinema deployers.

D-cinema deployment deals in the U.S. generally rely on a virtual print fee model to offset exhibitors' installation costs. Recent negotiations in the States between studios and exhibitors -- most notably the Digital Cinema Integration Partners made up of Regal, AMC and Cinemark USA -- have stalled due to financials.

The VPF model has been more challenging to implement oversees. Other than this new one from XDC, only one broadly available VPF deal is in place in Europe, through Arts Alliance Media.

Of the XDC agreements, the company's chief executive Serge Plasch said: "These milestone agreements offer European exhibitors a viable business model to convert their screens to digital cinema."

This is the first digital cinema deployment agreement for Warner Bros. Pictures International, said Veronika Kwan-Rubinek, president of international distribution for Warner Bros. Pictures.

XDC, a unit of EVS Broadcast Equipment, said there is a potential of 35,000 screens to digitize across Europe.

There are nearly 5,000 digital cinema screens now installed in the U.S., which has an estimated 39,000 screens in total.

XDC expects its infrastructure deployment to help it to develop its other activities: The design and sale of cinema servers and software applications, the installation and maintenance of complete digital cinema systems for exhibitors; and digital content processing and distribution services for movie distributors and advertising sales houses.

Leo Cendrowicz in Brussels contributed to this report.