Proposed financing will ease screen crunch -- eventually

The biggest challenge for 3D may no longer be moviegoers’ acceptance, but the ability of theaters to keep up with with demand for it.

The next few months will be a key test of the system’s capacity, as Disney opens “Alice in Wonderland” day and date on March 5 domestically and in several key terrorities overseas, while “Avatar” continues to play.

“The success of ‘Avatar’ has caused a new sense of urgency,” says Bud Mayo, topper of digital conversion service Cinedigm. “No longer can one or two screens in a multiplex be enough to accommodate the flow of content that is coming out in 3D.”

The sked heats up with the March 26 release of Paramount’s 3D toon “How to Train Your Dragon.” A week later on April 2, Warner Bros. launches “Clash of the Titans” with plans to also roll out in several overseas markets the same week. About 20 3D pics are currently dated for this year, with more likely to be added.

Summer 3D tentpole releases kick off with Dreamworks Animation’s “Shrek Forever After” on May 21.

After a successful 3D re-issue of the double-bill “Toy Story” last year, Disney rolls out the third installment on Jun. 18. Universal’s “Despicable Me,” voiced by Steve Carell and Will Arnett, opens July 19, and Warner Bros.’ “Cats and Dogs: The Revenge of Kitty Galore” bows July 30.

With only about 3,400 3D-equipped screens in the U.S. and Canada — less than 10% of all screens — exhibs are under the gun to convert theaters that can play the crush of titles.

The shortage of 3D-equipped theaters means that one big 3D release can quickly gobble up all the available screens. As of last week, “Avatar” was playing on more than 2,000 3D screens in the U.S. alone.

A new financing deal could go a substantial way towards easing the crush.

The largest exhibitors — AMC, Cinemark and Regal — banded together three years ago to form Digital Cinema Implementation Partners, which is making headway in its efforts to secure a reported $700 million fund through JPMorganChase to speed up the conversion of screens to digital. The funds would help pay for the installation of digital 3D equipped projectors for some 12,000 screens over the next few years.

Exhibitors anticipate that by the end of the year, there should be several thousand more screens, enough to accommodate a crush of 3D releases during the holiday frame including Warner’s “Harry Potter and the Half-Blood Prince: Part 1″ and Disney’s “Rapunzel.” The first face-off of 3D pics will hit Dec. 17, with Warner’s “Yogi Bear” and Disney’s “Tron Legacy” both bowing on that date.

Frank Rash, senior VP of strategic partnerships for AMC, says that within the first 12 months of receiving the DCIP funding, the exhib will roll out some 2,000 digital screens, half of which are expected to be equipped with 3D. Within the next three years or so, the exhib plans a circuit-wide digital conversion, totaling north of 4,000 screens.

Cinedigm says it expects to install at least 3,500 digital screens this year, with perhaps half of them 3D enabled. “As we move into 2011, I think we’ll see even more conversions, but it’s not a process that’s done overnight,” says Mayo.

Conversion can be both time-consuming and costly.

Digital conversion costs upwards of $70,000 per screen, with 3D capability adding another $10,000 to $15,000.

Real D and MasterImage require silver screens, as opposed to traditional white screens. Silver screens, which can total $6,000-$9,000, reflect more light, but have a small but noticeable downside when screening 2D films. Dolby and Xpand systems, however, do not require these special screens.

Retrofitting also depends on the varying 3D systems and can take several days. Silver screens require the longest lead-time installation, while Xpand’s system, for instance, is a three-hour plug-and-play process.

Some circuits choose to remodel one auditorium at a time, while others shut down an entire complex. Since most exhibs are reluctant to convert screens during the peak summer months, releases later in the year stand to benefit from better screen availability.

Some insiders suggest overseas markets are converting at a faster rate, especially since newer theaters are constructed with digital projection in place. Estimates of international 3D-equipped screens range from 4,000 to 5,000.

In Japan, a recent market survey predicted that by 2018, 20 percent of all screens in Japan will be 3D. Currently, only about 170 of Japan’s 3,400 screens have 3D capability.

“Essentially, abroad, there has been a more widespread deployment and adaptability to the format,” says Laura Peralta-Jones, VP of sales and marketing for Xpand, the 3D provider for Japan’s largest circuit, Toho Cinemas. “Most countries are deploying at very fast rates and getting caught up to where the studios are driving it.”

“We haven’t tapped half of what we can, but we’ve penetrated a lot more than expected at this stage,” Peralta-Jones says. Mark Schilling contributed to this report.

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