Digital cinemas open up more rev streams for U.S. fare

China Film Group to import pix outside unofficial quota

China is offering a carrot to the U.S. studios to encourage them to supply digital versions of major films to feed the country’s growing network of digital cinemas.

The China Film Group has informed the majors it will import digital pics outside the unofficial annual quota of 20 revenue-sharing films.

China’ s fledgling d-circuit is looming as a handy source of incremental coin for Hollywood for films that can be released digitally as well as in 35mm, and for titles that aren’t approved under the rev-sharing quota.

There are 13 digitally equipped cinemas with encryption processes approved by the U.S. studios, and the aim is to expand to 30 by the end of this year and to 100 within two years.

“Star Wars: Episode II — Attack of the Clones” was the first foreign film screened digitally in China. Launched in July at 13 d-cinemas as part a national release that eventually blanketed more than 800 screens, George Lucas’ blockbuster has grossed nearly $6 million. That ranks as the third-highest earner this year behind “Harry Potter and the Sorcerer’ s Stone” ($7.5 million) and “The Lord of the Rings: The Fellowship of the Ring” ($6.7 million).

Michael J. Werner, Fox Intl. theatricals supervisor for China, estimates those 13 cinemas will account for a disproportionately high 10%-15% of “Clones’ ” B.O. The d-cinemas charge $4.50-$6 per ticket, around double the average price. Werner believes “Star Wars” devotees embraced all three versions of “Clones” — digital with Chinese subtitles; subtitled 35mm prints; and dubbed 35mm prints.

“Ice Age” will be the next U.S. pic presented digitally in China when it rolls out nationally Sept. 30.

China Film Group hasn’t set a limit on the number of d-films that will be allowed per year but some U.S. execs expect that up to six will be approved.

The B.O. split is expected to be on the current rev-sharing formula, which typically gives the studios 13% of the gross.

A China Film insider tells Variety: “We have been trying to encourage an increase in the number of digital cinemas for some time. The main question we had was about technology. Obviously, there are concerns about technology and the issue of piracy. But most of our worries have been answered after discussions with a number of foreign transmission and delivery equipment companies.”

One landmark project is a 25-screen, 11,000-seat, digitally equipped cinema being built in the Wanfujing district of Beijing and due to open in 2004.

Separately, Tandberg Television is providing transmission and delivery systems for a planned network of 11 cinemas in seven cities across China. These theaters will show live, high-def coverage of news and sports.

Some U.S. execs say it will soon be viable to release films purely at d-cinemas. They estimate it costs around $20,000 to strike a digital master and duplicates. They figure a digital pic released on as few as 20 screens could gross $500,000, which would generate a return of $65,000 to the studio — a more attractive option than sending a pic (which didn’t make the annual quota) straight to video.

Meanwhile, John Woo’s “Windtalkers” bowed Sept. 13 on 278 screens in China, amassing a stellar $1 million in four days, including previews — one of its strongest openings worldwide.

“Bad Company” has been approved and is pegged for December via the Shanghai Film Group, which gets to handle one film a year separate from China Film’s usual monopoly.

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