Financing upgrades ding smaller chains

When it comes to 3D, it’s a tale of two Germanys.

The Teutonic box office enjoyed a boffo 18% boost in the first quarter of 2010 thanks in large part to “Avatar.” And while big, well-equipped multiplex operators are celebrating, many smaller exhibs have yet to partake of the juicy 3D pie.

As a result, the exhib market has seen a lopsided gain from the revenue boost generated by 3D business, and it could see greater division due to the uneven playing field, according to Thomas Negele, head of Germany’s exhib association HDF.

Only about 450 screens of the 4,734 movie screens in Germany offer 3D projection. And that number is expected to increase to just 700 by year’s end.

Exhibs face several major challenges in the race to upgrade. First, worldwide demand for projectors far outweighs supply, resulting in long delivery times. According to the HDF, the average wait is six months.

Another and more serious problem is financing. The cost for 3D upgrades is around $165,000 a pop. While 3D premium ticket prices are about $4 more than the average $9 ticket price, only a fraction of that remains in exhib pockets. According to the HDF, 75% of German screens sell fewer than 30,000 admissions a year, making the hefty investment very long-term.

German culture minister Bernd Neumann is set to unveil a digitization initiative in May that may help small and mid-sized exhib operators with the costs of upgrading.

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