Theaters face shortfall of $557.5 million

Digital rollout in Europe may be rapidly accelerating but 12%-15% of screens across the region still lack funding to digitize, estimated at some E450 million ($557.5 million).

According to a report from global media analyst Screen Digest, the rapid progress of mainstream digital cinema conversion is requiring an equally rapid appraisal of how to cover the costs for those cinemas that don’t fit into a commercially funded model or virtual print fee deals with major studios.

Overall conversion to digital will cost around $2.6 billion with $2 billion covered by the VPF model, leaving a shortfall of some $600 million.

There are 32,600 screens in Europe (excluding Russia), of which around 23,000 are targeted by private companies for a commercial rollout, backed by the U.S. majors. A further 4,000-5,000 larger circuits will organize their own rollout, leaving around 4,000-5,000 screens that need to find a solution to digitize.

Screen Digest’s head of cinema David Hancock said the numbers are a reminder that some territories need to find a solution to digitize or risk losing screens.

“I don’t think everyone has quite twigged to how close we are to digital cinema becoming the norm,” he said. “People need to start thinking creatively and addressing a way to find a solution.”

Arthouse screens, part-time cinemas, multiarts venues and repertory cinemas are the most at risk of failing to find funding to digital conversion, he said.

France and the U.K. lead the digital transition: France has 959 digital screens, much of that coming from the rollout program between exhib CGR and Arts Alliance Media; Blighty has 809 digital screens and the U.K. Film Council’s $18 million Digital Screen Network has digitized around 500 smaller cinema screens.This funding approach, which brings together a group of exhibs to organize a rollout is also being used in the Netherlands.

More traditional support funds are being explored in France, Germany, Finland, Sweden, Czech Republic and Poland.

A support fund is being prepared by Europe’s Media Program, which will underwrite loans granted to smaller exhibs for digitization.

“The creativity that Europe is known for is being shown more than ever in the approach to digital cinema conversion,” Hancock said. “In the past year, policy-makers have woken up to the fact that they may be needed to help a small number of screens to convert, specifically those that won’t fit into the mainstream model.”

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