Digital cinemas toon up for more U.S. pix

Filmmakers go around Chinese restrictions with d-loop

SYDNEY — Thanks to hefty investment by the Chinese government, the country now boasts 54 digital screens. Is that enough to encourage the U.S. majors to release films there exclusively on the digital circuit?

Warner Bros. clearly thinks so, as its “Looney Tunes: Back in Action,” which bowed April 29, marked the first U.S. major release to play just on the D-loop, not in 35mm cinemas.

Some studios aren’t convinced. “Given the costs involved, releasing films on digital in China does not offer a commercial advantage,” says the rep of one U.S. major, who notes the market requires supplying four separate types of digital servers.

A number of Hollywood films have screened digitally as well as in 35mm cinemas, going back to “Star Wars: Episode II — Attack of the Clones,” and more recently “Finding Nemo,” “Harry Potter and the Chamber of Secrets” and “Paycheck.”

But until now only indie titles such as “K-19: The Widowmaker,” docu “Winged Migration” and Gallic pics “Just Visiting” and “Belphegor, Phantom of the Louvre” have taken the D-route.

One incentive for the Hollywood companies to supply the digital loop: Films that go out only in that format fall outside the unofficial annual quota of 20 revenue-sharing titles. (The rev-share terms, which typically give the studios a 13% cut of grosses, are the same for digital cinemas.)

Initial B.O. results for “Looney Tunes” weren’t available due to Labor Day holidays in China last week, but WB international theatrical distribution prez Veronika Kwan-Rubinek says, “We see tremendous potential in China, and our digital distribution strategy is one way for us to grow our business in this market and to introduce new and diverse product to a highly receptive audience.”

Millard Ochs, prez of WB Intl. Cinemas, was encouraged to find the per-screen average for “Looney Tunes” at his Tianjin theater was bigger than that of fellow debutante “Cold Mountain.”

“There will be 100 digital screens by the end of this year and as many as 500 by the time of the Beijing Olympics (in 2008), so I would expect to see a lot more digital releases,” he says.

Keen to attract more offshore investment in exhibition, the Chinese government has signaled it will boost the number of cities in which foreigners are allowed to own majority stakes in cinemas from seven to 17 later this year.

Meantime, the U.S. majors are divided over whether to support China Film’s plan to create a sub-run circuit, which would enable their films to play on hundreds more screens than the current 300-400 (Variety April 26-May 2).

Some studios aren’t in favor because ticket sales at the additional cinemas aren’t monitored via computer links to China Film, and they fear grosses would not be fully reported.

But Columbia TriStar Intl. senior VP Ralph Alexander says: “We welcome any initiative from China Film that expands the market. The revenue would be incremental, with no added costs in prints and marketing, and it might encourage cinemas to install computers.”