Film Jobs Decline As Digital Distribution

With the conversion of theaters in the U.S. almost complete, the end of movies on film is in sight

Significant cost savings in distribution drove studios to embrace digital projection of movies. Creatives still debate the technical advantages of digital vs. the romanticism of film, and preservationists fret over the fate of cinema classics. But with the conversion of theaters in the U.S. almost complete, the end of movies on film is in sight.

(From the pages of the April 16 issue of Variety.)

Martin Scorsese is holed up in an editing bay racing to finish cutting his latest film, “The Wolf of Wall Street.” But he’s not too busy to take a break before a family gathering to reflect on a profound and emotional milestone looming for him and the entire movie industry: the end of film.

The Oscar-winning director and impassioned film preservationist recalls a seminal moment from his childhood that sent him on his life’s path. He was 5 years old watching a black-and-white 1930s cartoon being screened at a family friend’s house in Brooklyn when he peered into the projector and saw the tiny images mechanically pass through the gate.

“That was, for me, a kind of mystical moment. That surprise, that pleasure, that urge to create movement somehow happened then and it continues today,” he says. “I grew up on celluloid.”

Little did Scorsese know then that some six decades later, film prints — which have defined motion pictures for more than a century — would be nearing extinction as the digital delivery of movies takes hold around the world.

“There’s a sadness about it, a sense of loss, certainly,” Scorsese says in a phone interview with Variety. “There was a sensual pleasure just watching celluloid … I loved being part of it.”

Scorsese, however, is no luddite, and like many of his fellow filmmakers has come to embrace the digital advances in theater projection as well as production. Filmmaking itself is evolving thanks to the creative possibilities that only digital projection offers — 3D, high or variable film rates, and more. Scorsese shot half of “Wolf of Wall Street” on digital because the medium needs far less light than film, an ideal situation for the streets of New York, the director says. He also opted to make his first family film, “Hugo,” in 3D, which relied on digital projection.

Of course, director James Cameron and his longtime producing partner Jon Landau are making movies that depend on digital technology both in the camera and at the theater. Digital projectors are more than just a replacement for film; they’ve proven to be an entirely new platform that opened up creative possibilities for filmmakers.

“We could never put high-quality 3D on the screen on film,” Landau says. The “Avatar” sequels, which the filmmaking partners are currently developing, will be shot at a high frame rate — another technology that is impractical on 35mm.

(Pictured Above: The Rise and Fall of Film: From the beginnings of flexible film to the dominion of digital – Click here to view full-size image.)

Still, there are holdouts, among them director Christopher Nolan, who remain committed to the film experience. Nolan simply isn’t satisfied with the quality of digital projection at the current standard, 2K resolution, which has only slightly more pixels than high-definition TV. “I think at a point where studios try to force theaters into converting by actually withdrawing film prints, that’s a very dangerous situation,” he cautions. “Because it means the vast majority of theaters will be showing something that frankly isn’t much better than what you can get in your house.”

Nolan maintains that 35mm prints offer “a depth to the image that digital formats don’t have. “You’re allowed to be in the world that is being projected in a profound way,” he says. “And, it’s what’s always distinguished the theatrical experience from the home entertainment experience.”

While many share Nolan’s and Scorsese’s deep appreciation for watching movies on film, the Hollywood studios, theater owners and technology companies have worked together — harmoniously, and then sometimes not — to push digital projection to the forefront as a more cost-effective way to get movies before audiences.

According to the National Assn. of Theatre Owners, 86% of the nearly 40,000 screens in the U.S. and Canada have already converted to digital, with the remaining 14% continuing to shrink.

SEE MORE: Victim of Its Success: Film’s Last Surge Plants Seeds of Its Demise

Two years ago at CinemaCon, NATO’s president John Fithian stated that the end of 35mm print distribution would come by the end of this year. His bold prediction was based, in part, on a letter 20th Century Fox had sent to exhibitors in 2011 saying it would stop distributing film “within the next year or two.” Disney had sent a similar letter to theater operators months earlier, advocating for digital conversion.

Neither Fithian nor any distributor is willing to wager exactly when the studios will deliver their final 35mm prints. Odds are that before the end of the year, one or more will decide that the meager returns from 35mm screens simply don’t justify the cost of prints, particularly for their tentpole releases. A candidate that makes the most sense is Lionsgate, which could (although it’s made no such commitment) debut its highly anticipated sequel “The Hunger Games: Catching Fire” in digital on Nov. 22.

Right now, though, it’s a wait-and-see game for the studios.

Jobs on the Cutting-Room Floor

Billions of dollars have been spent on the transition to digital, in anticipation that more billions will be saved for studios in the long run. Eventually, when satellite distribution of movies becomes a reality, the cost of striking and delivering one print — which is about $1,000 — could be reduced to $100 or less.

But such savings come with another kind of cost: the human toll it takes on the thousands of people who either have already lost their jobs or are at risk of doing so in a soon-to-be all-digital world. Theaters that can’t afford to convert to digital — which costs approximately $70,000 per screen — will shut down, putting ushers, concession stand workers, ticket sellers and other staffers on the street.

Technicolor and Deluxe have already laid off thousands. Fujifilm has exited the motion picture film business, leaving only Kodak distributing 35mm film stock in North America. And, the Rochester, N.Y., company is in Chapter 11 bankruptcy, and has also pinkslipped thousands of workers.

SEE MORE: As Film Labs Wind Down Prints Business, Job of Preservation Falling to Archivists

Still, studios fear that if they stop delivering film prints entirely, they’d be leaving money on the table, especially outside the U.S. Nearly 60% of theaters in Latin America are still projecting film. Asian markets, however, are at the forefront of digital conversion, and with burgeoning local infrastructures, the new theaters are built to accommodate digital. Some territories are already fully digital, including Norway and the Netherlands. In total, the international market has 53,366 digital screens, which represents 61% of the total 87,063 overseas.

In this country, there are many commercially viable analog theaters still in operation. Consider DreamWorks Animation’s release last year of “Rise of the Guardians”: Though the film was a box office disappointment and lost money due to its high cost of production and marketing, it crossed the $100 million mark in ticket sales largely because of an extended lifeline from subrun print cinemas.

That said, the grosses from 35mm screens on DWA’s recent release, “The Croods” — the last movie to be released at 4,000 theaters or more — were marginal compared with those coming from digital theaters; the pic’s $43.6 million opening weekend saw just $1.3 million, or about 3%, contributed by film-based venues.

The digital revolution was what the studios wanted all along; it was distributors, not exhibitors, who wanted to be finished with film. In fact, the studios agreed to subsidize exhibitors’ cost of digital conversion via virtual print fees.

Yet the imminent end to the delivery and exhibition of 35mm has become a sensitive issue for everyone. No distributor is willing to kick up bad press for being the first to drop film. Distributors and studios are also worried about lawsuits by exhibs that can’t afford to convert, and as a result would be put out of business. On behalf of exhibitors, Fithian insists NATO is trying not to hasten the issue, either.

“It’s in our interest to have film exist for as long as possible. Having dual inventory means that all of our theaters can play movies,” Fithian tells Variety. “In estimating dates, we’re arming exhibitors with information to prepare themselves for the transition.”

Since the deadline for signing new virtual print fee deals expired last September (for drive-ins it expires in June), most smaller theater owners yet to convert now are left weighing their options: Convert or close.

“I thought a good number of the smaller accounts were going to go out of business,” says Robert Milgram, an East Coast booking agent, who represents mostly small theaters (with a total of 220 screens). “As it turns out, they’re converting, but it’s tough.”

Milgram says drive-ins (he represents 16) are finding it hard to secure bank loans in time to meet the June VPF deadline. “A lot of these guys are going through denial,” says Milgram. “Some of the guys are just trying to make it through the summer on 35mm and brace for the fall.”

The indie sector also could be hit hard if arthouse theaters are forced to close, though some small towns like Red Bank, N.J., are fundraising to keep their local theaters (in the case of Red Bank, the Count Basie Theater) up to date or alive.

The majors, who at one time seemed ready to trumpet the completion of the digital transition, have instead decided to pass the buck. They’re balking at providing any specific date as to when they’ll stop distributing film; instead they say the availability of film stock will be the deciding factor.

Most of the studios have stockpiled enough 35mm print stock to last two to nine months, depending on the orders. Universal has the largest reserve, according to one source, while Paramount has none. Studio sources also say they expect the price of a print to skyrocket, from roughly $1,000 per print to $1,600 or more. In fact, the cost of film stock has seen at least three price hikes within the last 18 months.

Kodak Keeps the Faith

Kodak isn’t sticking to the party line. According to the film manufacturer, it’s still producing billions of feet of 35mm stock a year and turning a profit from it — so much so that its 35mm business is a key part of the company’s plan to emerge from bankruptcy. Kodak has been focused on trimming costs — and workers — from its production line in Rochester so it can keep the price of stock reasonable as orders shrink.

As for that big bump in the price for a print, Wayne Martin, Kodak’s film manufacturing-flow manager, insists, “We’re not going to drive a 60% increase in the cost of a print being struck from a Kodak film supply standpoint.” That means the first digital-only releases could come while Kodak is still happily filling orders for 35mm print stock.

The cost of film could also see a major increase overseas: There is only one major lab left in Europe, and it’s unlikely to last through the year. If that happens, countries like Italy and Spain, at only 40%-50% digital deployment, will have to begin importing film from smaller regional labs outside Europe.

SEE MORE: Jobs Jolted by Celluloid Sayonara

According to one studio source, Kodak has promised to let the studios know before it decides if and when it discontinues film production.

In truth, as long as the distributors are still paying virtual print fees, which cost an average $900 per key, there’s little difference for them between the cost of a film print and a Digital Cinema Package (DCP, i.e., digital print). But once all VPF deals evaporate over the next seven to eight years, the studio’s costs for a DCP will plummet. And with satellite distribution, already facilitated by the newly formed Digital Cinema Distribution Coalition, the cost of producing and distributing a DCP will dwindle to $100. At that point, 35mm prints will no longer be economically justifiable for studios.

“This is an industrywide initiative, and it always has been,” maintains DCDC consultant Randy Blotky. “I’ve treated that with great respect in all of our dealings with content-providers and exhibitors.”

For Nolan, the focus on costs is misplaced, even if the savings from digital are real. “This is a professional format. This is about putting on a show,” he says. “It shouldn’t be about the cheapest, the most convenient, it should be about what’s best.”

But the urge to cut costs is nothing new in Hollywood, and it quietly drove the evolution of film — and the look of the movies — long before anyone could imagine a replacement. After the 1940s, for instance, less silver was used in emulsions as a cost-saving measure, with the result being the blacks in films became less striking.

As print orders went up and the time to fulfill them went down, the quality of film prints declined. Filmmakers and the studios had long complained of crummy projection at theaters, and theater owners griped about receiving crummy prints.

These are precisely some of the problems the transition to digital cinema is supposed to correct.

“Digital (has) a certain level of consistency that sometimes didn’t exist because film prints are physical, they get beat up and sometimes are not replaced on a proper schedule,” says Stephen Lighthill, president of the American Society of Cinematographers.

But Nolan doubts that advantage means much. “The multiplexing of the past 20 years has meant that prints don’t stay in movie theaters very long anyway,” he says, “so that’s not anything like the issue it was 30 years ago.” Still, prod a movie pro, and you’re likely to hear some tale of woe from a recent 35mm showing at a multiplex: purple fog from a safe light in the lab, a scratch through an entire reel, or worse.

Film vs. Digital

The larger question is whether the rock-solid, razor-sharp images that come from a digital projector are a plus or a minus.

“(Film) has an immersive quality, and frankly, a feel to it, a romanticism if you like, that hasn’t yet been equaled by any form of digital projection,” says Nolan. “There’s a depth to the image that digital formats don’t have.”

Cinematographer John Bailey agrees that projected 35mm “seems to have a kind of animation and life to it — a breathing quality. It has to do a lot with the film grain; it has to do a lot with the projection shutters and the fact that every frame in a film print is completely distinct.”

Digital also has as many fans as foes.

But even someone as rabid about digital technology as Landau, who for years has helped facilitate Cameron’s tech-forward pictures, acknowledges that filmmakers who enlist it have a responsibility to make sure the quality is topnotch.

“Digital empowers us and it challenges us because you can get away with less,” Landau says. “3D and high-frame-rate and digital exacerbate everything. The good looks better and the bad looks worse. So we have to have an even higher standard with the quality we’re delivering.”

Bailey also worries that once “films” become digital data, their corporate distributors will gain more power to alter the content, even after the picture is in release. Indeed, Bailey thinks that was part of the studios’ plan all along. “I don’t think this bodes well for the creative community actually,” Bailey says. “For me as a filmmaker, as opposed to a film financier or distributor, it’s worrisome. I don’t know that this is something that is going to jump at us right away, but it’s an inevitable kind of temptation for the distributors.”

For those films already fixed on celluloid, there’s a different problem: Once theaters are all digital, how will prints be seen? What’s more, how will they be preserved?

Despite their varied feelings about digital cinema, Scorsese, Nolan and Landau share a common concern: What will happen to more than 100 years’ worth of movies that live only on film? Without film, will cinema dissect itself from its own past?

“The problem is as the prints disappear, the world of the film collectors disappears,” Scorsese says. “So there are not going to be any more film depots, no more warehouses where there are old prints. It means really the end of a sort of accidental film preservation.”

On this score, Nolan, Scorsese and Landau are united: The digital transition demands that the entire industry take action to ensure legacy titles are not just preserved in vaults, but available for viewing in the same form they were seen in originally.

“I think the answer is making sure as an industry that we preserve the infrastructure needed to continue to show library titles as they were created by the filmmakers of the past,” Landau says. He argues for keeping 35mm projectors in many projection booths, and for keeping enough film stock around so that new prints can be struck when needed. (Fujifilm set aside a considerable reserve before it discontinued its film operation last month.)

Nolan agrees: “Even if it’s not the revenue driver for (the studios), it’s incredibly important that film fans get to see films they love from the past in a theatrical setting.”

Whatever happens with preservation and library titles, the end of film prints for new releases appears certain, a fact that Scorsese seems resigned to — but optimistic about as well.

“All things must pass, to be philosophical about it,” he says. “History of cinema is always changing. And now that there’s a big technological change, you can feel sad about what’s past, but I must say, it’s very exciting.”

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