Digital technology poised for global domination

Issues are stumbling blocks to full-scale transition

On the surface, it’s fairly straightforward: European and Asian movie theater owners, like their counterparts in North America, pretty much agree that it’s about time to scrap traditional celluloid and switch to digital projectors.

But nothing is that straightforward.

Although digital projection is beginning to grow in Europe — and about to boom in Asia as well — both exhibitors and companies that sell and service digital projectors agree that a raft of issues is dropping stumbling blocks in the way of full-scale transition.

The biggest question, as it was when U.S. screens began their transition, concerns who should pay for the conversion.

The answer: It depends.

“The biggest single difference is that a virtual print fee agreement has not been reached internationally like it has in the U.S.,” says J. Timothy Richards, CEO of Vue Entertainment, which owns 59 multiplexes across the U.K. and Ireland.

The virtual print fee, or VPF, is a way for movie distributors to subsidize the $75,000-plus cost of converting an analog screen to digital. Because distributors don’t have to pay for 35mm print rentals, they save money on digital movies and are willing to help subsidize the transition.

In some cases, governments have subsidized the switchover.

An initiative by the U.K. Film Council, for instance, paid for 240 screens, including 40 of Vue’s, to go digital.

“It’s an absolutely fantastic initiative, and it really has got the seed planted and has got everyone excited about the possibilities,” Richards says.

Drew Kaza, exec VP of digital development for Odeon/U.K., says Europe’s switch to digital has been slower than the U.S. conversion.

“There are a number of reasons,” he explains. “You’ve got language issues and all the things that have made the European market a set of distinct markets historically.”

Kaza’s company is the biggest player in Europe, with 180 sites and about 1,800 screens. It has significant holdings in Britain, Spain, Italy, Austria and Portugal. Odeon/U.K. has two all-digital nine-screen theaters in England, and Kaza likes the results.

“We’re averaging at this stage 85% to 90% digital at those two sites,” he says.

But Europe as a whole is complicated: The European Union alone is 27 countries with 23 official languages.

Then there are cultural differences.

“Oddly enough, there’s a chance that Germany could pop sooner than the others,” Kaza says. “The operators there have all been talking, and if it goes forward, the odds are the industry’s major players will try to move forward together.”

He notes that the Kinepolis Group, which owns 22 cinema complexes in Belgium, France, Spain, Poland and Switzerland, will have converted all its Belgian screens by the end of this year.

“I think the big year for digital is likely to be next year throughout Europe, and certainly in the U.K.,” Kaza predicts.

Tom Cotton, VP of business development for Technicolor Digital Cinema, Europe, is working on the Kinepolis switchover.

“We’ve made a lot of progress over the last year or two in understanding the markets and understanding the key players,” Cotton says. “Solutions aren’t far away.”

Nancy Fares, business manager for Texas Instruments’ DLP Cinema Products division, was in China and Japan in May, helping those nations convert their screens.

In China, where movie screens are controlled by the state, “the Chinese government has a big interest (because) they produce their own movies,” Fares says.

The digital technology allows China “one way they can get their message to many, many people all at the same time,” she explains, estimating that China will convert or build 700 digital screens this year.

“Their plan is much larger than that,” she says. “They’re about to announce and go public with the fact that there will be 3,000 screens in China.”