Smaller theaters struggle to keep pace with Hollywood

Europe’s digital cinema rollout is benefiting Hollywood at the expense of European cinema.

At least that’s the view of some at the recent European Day hosted by the EU’s Media program at the Rome Film Festival.

Fresh figures show that Europe, now in the midst of its main digital rollout, by early next year will see more than half — about 18,500 — of its screens become format-ready.

But there are crucial underlying problems, one being that Hollywood seems to be reaping the most benefit from the conversion, at the expense of Euro product and international indie cinema as a whole.

One reason is that, simply put, it’s much easier for multiplexes to shoulder the considerable costs of new equipment. Another is that the U.S. majors have had all their product available digitally since 2008. But that is not the case with European indie cinema, which in part is still stuck in a strictly celluloid world.

Over the past three years, the overall market share for U.S. films in Europe has increased from 65% to 68%; European pics’ share fell from 28% to 25% during the same period, according to European Audiovisual Observatory analyst Martin Kanzler.

Also, Europe’s digital conversion is being driven by 3D pics, most of which from Hollywood.

“If the consequence of digitization is to go for premium content, such as 3D and, arguably, alternative content (soccer, opera, concerts) this will cause a problem for independent distributors and, ultimately, for European films,” Kanzler warned.

Meanwhile, economic woes in countries like Greece, Spain and Italy are impacting the conversion process.

Elisabetta Brunella, topper of Euro exhib promotion initiative Media Salles, noted that while Europe’s digitalization is swift, the pace is occurring at different speeds within different countries.

Digital screens in Germany this year have been growing by about 60%, but the recent growth rate in Italy has been less than 20%.

The head of Italy’s exhibitors, Paolo Protti, lamented that a freeze in government funding for digital cinema conversions is slowing down the process. But he also said that Italo auds are going cold on 3D movies because of higher ticket costs in a difficult economy, as well as a disaffection to the format caused by Hollywood pics that became stereoscopic only in post.

“We are bearing the brunt of films released in 2009 and 2010 that weren’t real 3D and disappointed the public,” Protti lamented.

Another prominent Italo exhib, Carlo Bernaschi, bemoaned the fact that smaller exhibs that can’t afford the move to digital risk being left behind. “In a year’s time, the majors will probably stop printing film copies of their movies, and the smaller exhibitors (who have not converted yet) will be cut out and suffer hugely.”

Conversely, Kanzler pointed out that at the same time Hollywood is set to soon stop providing exhibitors with 35mm prints, few European producers offer digital master copies.

Europe is still a highly fragmented exhibition market where small movie theaters — comprising up to three screens — account for some 64% of all facilities, according to Kanzler; multiplexes boast two-thirds of all European digital screens.

Not having digital prints for European and indie product means that smaller exhibitors will have to support dual distribution for a longer time, which puts them, again, at a competitive disadvantage, Kanzler warned.

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