Digital cinema deal not quite done

DCIP funding awaits fourth studio pact

The Wall Street Journal reported Monday that Universal and Disney had reached agreement with Digital Cinema Implementation Partners, the biggest exhib consortium without a studio deal for digital cinemas, on “virtual print fees” and financing for the conversion of thousands of additional screens.

Such deals would be a big step toward installing the thousands of additional digital 3-D screens needed for 2009’s parade of 3-D tentpoles.

But the story wasn’t quite right.

While the WSJ article reported correctly that Disney had come to terms with the DCIP and Universal is close to a deal, it also reported that Paramount and Fox had previously come to terms with the DCIP. Fox was reported to strike a deal earlier this year and has never confirmed it. Paramount, however, denies it has an agreement, despite additional published reports that its pact was close to done.

The difference between Par being in or out on the deal is substantial: Once four studios have pacted with DCIP, studio funding for the conversion to digital projectors kicks in and installation of digital screens can begin.

With Fox, Disney and Universal on board, Par would make four. But that fourth pact remains elusive, at least for now.

Given that digital projectors are a must for digital 3-D and that Fox has made a massive bet on James Cameron’s 3-D “Avatar,” it’s no surprise it got on board early. Par will be distributing DreamWorks Animation’s “Monsters vs. Aliens,” so it too has a big bet on digital 3-D.

DCIP, which represents Regal Entertainment, Cinemark and AMC, consists of some 14,000 screens. It will not begin converting screens to digital until there is a “virtual print fee” deal in place with at least four studios. With only 1,200 digital 3-D screens in the U.S., both exhibitors and studios want to see more installed, and soon.

The consortium says it is negotiating with all six studios. All six will, eventually, have to come to some agreement with exhibitors on virtual print fees in order to reap the benefits of digital cinema.

The WSJ article also exaggerated the studios’ cost savings from digital cinema. While d-cinema has many benefits for the majors, including reduced piracy, they insist they will save little money from not having to pay for prints, at least in the short term, because they’ll be helping defray the expense of the exhibs’ changeover to digital.