Digital projection, VOD advances changing industry

The film biz is at a digital tipping point.

That was the main message at the “Digital Cinema and the New Entertainment Model” panel on Sunday afternoon at PGA’s Produced By conference on the Disney lot in Burbank.

The speakers agreed that recent developments – including the penetration of digital projection to about 50% of all U.S. screens and the rapid growth of VOD – are leading to radical changes in the way content is produced, distributed and consumed.

Exhibition would greatly benefit by going entirely digital and switching to a “networked, addressable model” in which content is sent to theaters digitally rather than via cumbersome, expensive 35mm film prints, said CAA’s Adam Devejian.

New technology is making possible all sorts of alternative content for exhibitors, whose theaters are now largely fallow most of the time, especially from Monday through Thursday, noted panel moderator Chris McGurk, the new topper at Cinedigm Digital Cinema, which works with studios, distribs and exhibs to expand digital technology.

Enlightened production shingles are prepping for the changes to come, including distribution via VOD, said GreenStreet Films prexy John Penotta. “We’re still a traditional film company, looking for product, doing budgets, finding P&A financing partners, but now we’re also building digital distribution dollars into our budgets, which we’ve never done before.”

“Igby Goes Down” producer Marco Weber is targeting a VOD release model. Today “I would never do a theatrical release on a smaller movie,” he said. “I would on a $10 million movie, but on a lower budget, a strong VOD situation would give me a better upside than a traditional big release with a big P&A. On those pictures, theatrical can eat up your profit.”

Digital home distribution numbers are now significant, said Clark Hallren of Clear Scope Partners, adding that they range between $1 million and $2 million for many films, and can rise as high as $10 million for some.

McGurk said exhibs want more independent product now to fill up their ample screen time, noting that they can use digital technology to raise revenues by programming theme weeknights around topics such as environmental films and docus, selling corporate sponsorships and advertising to supplement admission fees.

Ironically, panelists were lukewarm on the prospects of 3D, which is the biggest change enabled so far by the theaters’ conversion to digital projection.

“3D isn’t a game-changer for the indie world,” said Weber. “It’s an add-on,” said Hallren.

“I wouldn’t want to be an exhibitor,” replied Hallren when McGurk brought up the subject of premium VOD, whereby studios will make films available to the home 60 days after theatrical release for $30, noting the plan is a wedge that could be used to lower the window to 55 days, 45 days and less, and that the price could also drop to $25, $20 or less as the biz finds its market level.

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