Category Archives: Integrators

Hollywood unites on satellite movie delivery – but is it too late already?

With the overwhelming majority of multiplexes in the US converted to digital, the largest cinema chains have now reached agreement with the majority of Hollywood studios for the satellite delivery of DCPs. The Digital Cinema Distribution Coalition (DCDC) has added Walt Disney, Paramount Pictures and Lionsgate to co-founding studios Warner Bros and Universal Pictures. DCDC was formed in 2012 between DCIP (the digital cinema arm of the three largest US exhibitors AMC, Cinemark and Regal), Warners and Universal, with Deluxe/EchoStar handling the integration, in what was crucially billed as a “not-for-profit” venture. “Our goal is to drive the cost of distribution as low as we can get it,” DCDC spokesman Randolph Blotky tells The Hollywood Reporter. “We’d like to drive it to zero over the course of time.”

Satellite has long been seen as the most obvious way for distributing DCPs to multiplexes, at least for North America with its large geography and homogenous film distribution schedules. Several ventures had earlier promoted this concept, most notably Boeing Digital Cinema, but faced resistance from Hollywood studios that did not want a gate keeper or for a third-party operator to set up a business where previously only a strip of film separated them from the exhibitors. By being a joint studio-exhibitor operation that is non-profit, as well as run by the established service provider Deluxe, the DCDC arrangement seems the most palatable to all parties involved. Yet closer scrutiny of the deal raises several questions.

While THR’s headline states that ‘Five Studios Sign on for Satellite Movie Delivery’, it is in fact just two new studios (Paramount and Disney) joining the existing pair, with Lionsgate still only a mini-major. Absent are both 20th Century Fox and Sony Pictures, who also happen to be Deluxe’s two largest studio clients. Fox has an on/off relation to satellite delivery, having ruled it out in the early days, but allowed for tests with the likes of Boeing.  While these two may come on board later, it is notable that even a not-for-profit satellite solution could not persuade all studios to join in. One could even ask whether satellite delivery of DCPs is an idea whose time has passed.

DCDC’s origin was a proposal from Joe Fabiano, then with Pathfire, which was in bed with Warner Bros (Television) at the time. Six to seven years ago satellite made sense over hard drives, but hard drive *hardware* costs have dropped faster than satellite bandwidth costs, which are fairly static. The only costs associated with HDD that have not gone down are logistics and handling. This means that exhibitors have more to gain than studios, since it removes the need to ingest and handle hard drives. At the same time, fibre optic and even wireless bandwidth capacity has increased while costs have fallen, which is why in territories such as Europe and parts of Asia, these channels are looking more compelling than satellite. It may also be that the two holdout studios simply do not want to commit themselves to one fulfilment technology. While satellite delivery makes sense for smaller sized DCPs (animation – hence Disney), it would take something like two days to deliver ‘The Hobbit’ in HFR 3D with Dolby Atmos over satellite. Satellite may be coming, but HDDs are not going away. The real winner from this will be NCM, DCIP’s sister company for cinema advertising, which needs a better fulfilment vehicle with the transition from small MPEG to J2K DCPs. Sending hundreds of ads over satellite still makes more sense than sending half a dozen feature films DCPs.

Arts Alliance Rethinks Its Alternative Content Strategy

Arts Alliance MediaHow hard is it to find success with alternative content? The answer is; very. So many variables have to fall perfectly in place to find success, much less profit. No matter whether it’s sports, concerts or cultural events, there are rights clearances to obtain, theaters to secure and screenings to promote. None of this is easy, though there are a number of companies that have managed to make a name for themselves in alt. content by routinely producing high profile events including, Arts Alliance Media (AAM), Cinedigm and Fathom Events.

So imagine my surprise when in late November I started to receive emails and phone calls informing me that AAM was getting out of the alt. content business. How could this possibly be? After all, I had just interviewed Elizabeth Draper, who heads up AAM’s alt. content efforts, for a story on marketing such events in Boxoffice Magazine.

Rather than contribute to the rumor mill by posting such news with third party confirmation, I figured it would be best to go straight to the source by getting in touch with Howard Kiedaisch, AAM’s CEO. His email response sums up rather nicely not only AAM’s approach to alt. content, but also the company as a whole:

“Over the last three years AAM have released over 60 alternative content titles. Some have been very successful for our content and exhibition partners but in many cases have left little net contribution for AAM. Meanwhile, AAM’s VPF rollout business continues to grow nicely while our software has become a tremendous success with our recent deals. In looking at what to do going forward on the AC side, we have been reviewing our business model including both the revenue opportunity and the overhead requirements. Through that review we found it necessary to reduce the permanent staffing of the AC department at this time.

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Is Cinedigm A Digital Cinema Bellwether?

The time before, during and after any motion picture industry trade show is one filled with an endless stream of press releases. Any journalist covering the space receives dozens, if not hundreds, of emails from marketing departments and publicists during these periods filled with press releases. At some point, it becomes easy to read between the lines of such press releases, to determine which ones are truly important. But if one were to take a step back, it can also be easy to spot industry trends through the releases certain companies publish.

This was certainly the case at CinemaCon this past March, especially when it came to press releases distributed by Cinedigm. In the weeks leading up to the conference, the digital cinema deployment entity announced agreements with such exhibitors as Cinemaworld and B&B Theatres. AMC Theatres chose the company’s exhibition management system to help run their North American venues.

Then, during CinemaCon, announcements came that Goodrich Quality Theatres, Guzzo Cinemas, and Wehrenberg Theatres were all entering into deployment agreements with Cinedigm. This was interspersed with news about deals with Sonic Equipment Company and content distribution in Latin America. Shortly after the convention Cinedigm reported they had also signed Clearview Cinemas up to a deployment agreement.

Earlier this week Cinedigm thankfully aggregated much of the news about their deployment agreements into a single press release so that folks like me could keep all the information straight. It turns out I had good reason to take notice of how busy Cinedigm’s PR department has been lately – during the last quarter they signed deployment agreements with 32 exhibitors accounting for 1,402 screens at 142 sites. This is the largest number of exhibitors and screens signed during any quarter of the company’s history.

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Chris McGurk Says Cinedigm’s Future Is In Software And Content

Chris McGurk

Cinedigm's Chris McGurk

Not sure if you noticed, but over the past week Cinedigm’s stock price jumped over 33% from USD $1.50 to USD $2.00. It closed Friday out at USD $1.88. The sudden price increase in Cinedigm’s stock is likely due to a number of factors, rather than a single reason.

It has been a busy year so far for North America’s largest digital cinema deployment entity. In January industry veteran Chris McGurk (formerly with Overture Films and MGM) joined Cinedigm as it’s new chairman and CEO. In February the company announced improved financial results for the third quarter for fiscal 2011, hired back David Gajda as the chairman of their software division and signed Southern Theatres to a d-cinema deployment contract.

Last week AMC, the second largest U.S. theatre chain, selected Cinedigm’s Exhibition Management Solution to handle such head office tasks as film rental and revenue auditing. This was a day after the third annual Gabelli & Company Movie Industry Conference, where Cinedigm was represented by McGurk, whose presentation on maintaining theatrical film windows was reportedly well received.

In the following conversation, which took place on the eve of the first annual CinemaCon convention in Las Vegas, McGurk openly discusses the company’s stock price, digital Cinema, and most importantly, Cinedgim’s future business direction.

Celluloid Junkie: So, as someone who has attended ShoWest in the past as a studio executive, how does it feel to be heading to Las Vegas for CinemaCon as the head of a digital cinema deployment entity?

Chris McGurk: There’s a little bit of a difference but I think it’s kind of great because we’re positioned right in the middle. We’re not on the studio side and we’re not on the exhibition side, but we’re basically a facilitator for what both sides are trying to do and right now that’s a great position to be in. I was just at the Gabelli Conference last week in New York where we presented and listened to everyone talk for six hours. It seems the level of tension that exists between studios and exhibitors right now is higher than it’s ever been, primarily because of windowing. But I think a company like Cinedigm, a digital services provider, a provider of alternative content and software solutions, I think we’re in kind of a unique position to sort of get in the middle of all that and help find some solutions to make things work.

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Omnilab Media Lands Its First VPF Deal While Fighting Legal Dispute

Christopher Mapp of Omnilab Media

Omnilab's Christopher Mapp

Do you ever have days where you’re sorry curiosity got the better of you? Back on February 1st Omnilab Media Cinema Services announced that it had signed a virtual print fee agreement with Paramount Pictures. I decided not to post anything about it at the time believing that news of deals with additional studios would shortly follow.

It is highly unusual for a deployment entity to make public announcements about VPF deals unless they include three or four studios. In fact, some studios won’t allow press releases to be published unless an integrator has signed agreements with minimum number of studios. There are several reasons for this, not the least of which is that financing for most third-party rollouts can not be accessed until deals with several studios have been completed.

Apparently, I wasn’t alone in thinking we’d quickly be hearing about Omnilab’s additional VPF deals. The company’s managing director, Christopher Mapp, stated:

“The negotiation process with distributors for VPF contracts has been long and complex, however, with the excellent cooperation of the major distributors we are set to sign several more agreements imminently. We are in the final stages of our negotiations with other major studios and are also intending to contract with many Australian independent distributors.”

This last bit is a given since any distributor wishing to play content on equipment deployed by Omnilab under a VPF agreement would be need to pay a VPF as per the the studio’s strict contracts. The issue of independent distributors probably relates more to Omnilab being selected last September as the preferred digital cinema integrator by the Independent Cinema Association of Australia (ICAA).

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Why Cinedigm Hired Chris McGurk As CEO

Chris McGurk

Chris McGurk

Okay, I admit that the headline of this post is pure click bait. But did you really want to read another story headlined “Chris McGurk Named Cinedigm CEO”? Truth is I wasn’t in Cinedigm’s board room when they offered Chris McGurk their Chairman and CEO positions, and thus I have no “inside” information. However, from the moment Cinedigm announced McGurk as their new CEO earlier this week my inbox has been flooded with emails from those asking about my own thoughts on the news.

Rather than take the usual Internet approach of writing up an analytical post before the ink was dry on Cinedigm’s press release, I chose gather my thoughts about the news for a couple of days. While it may seem at first that McGurk is an odd choice to head a digital cinema deployment entity, upon reflection one can see the benefits Cinedigm gains with the hire.

As the press release trumpeting the hire so diligently pointed out, McGurk has a ton of film industry experience. Every story reporting McGurk’s new role at Cinedigm recounted his lengthy professional history. Still I feel compelled to do it here. I first became aware of McGurk in the early 1990′s while working as an intern at Walt Disney Studios. At the time McGurk was President of the Walt Disney Motion Picture Group and it was hard to find anyone who had a bad word to say about him. Quite the opposite in fact. McGurk’s tenure at Disney from 1988 to 1996 included a stint as Chief Financial Officer on the studio side, among several other roles. He held similar senior titles (President and Chief Operating Officer) during his three year stay at Universal Pictures from 1996 to 1999.

McGurk is probably most associated with his last two companies Metro-Goldwyn-Mayer, where he was Vice Chairman and COO from 1999 to 2005, as well as Overture Films, where he served as founder and Chief Executive Officer from 2006 to 2010. This may have more to do with the current state of those companies than McGurk’s actual achievements, but more on that later.

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Cinedigm Topper Adam Mizel Provides Industry and Company Update

Cinedigm LogoAs Show East got underway back in October North America’s largest digital cinema integrator, Cinedigm, published a press release that was meant to serve as an industry update on the digital rollout in the territory. According to Cinedigm there were 12,802 digital screens in North America out of approximately 39,000 screens (not counting IMAX screens). That’s an increase of 65 percent.

I wondered where some of the figures Cinedigm was sighting came from and the company’s Co-CEO, Adam M. Mizel, was kind enough to speak with me at the beginning of November. Our conversation took place a week before Cinedigm announced second quarter revenues of USD $18.9 million. This was a 7.8 percent increase over the same quarter from last year, though the company suffered a net loss for the quarter of USD $9.4 million from continuing operations. The net loss for the first six months of Cinedigm’s fiscal year was USD $16.3 million.

Such losses might sound dire; however these figures are a 19.5 percent and 12.2 percent improvement over Cinedigm’s second quarter and first six months from last year and reflect non-cash depreciation charges. A true testament to the uptick in digital cinema rollout activity is the 13.3 percent increase in Cinedigm’s revenue to USD $38.2 million, which has helped make the company cash flow positive.

The same day as their second quarter earnings announcement Cinedigm revealed their Phase 2 financing entity had landed up to USD $86 million in senior credit from Societe Generale and Natixis. An additional USD $23 million in junior capital will come from Macquarie Equipment Finance.

What exactly does all this mean? Well, now Cinedigm has the ability to offer exhibitors non-recourse financing to deploy digital cinema equipment. Because the loans are being offered to Cinedigm as non-recourse, Macquarie will hold onto the title for the equipment. Cinedigm will continue to do what it always has; deploy, manage, bill and monitor digital cinema systems, work with content providers and be responsible for all the administrative work to service the debt.

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Odeon Selects Unique Digital’s Platform For Digital Rollout

Odeon + Unique.jpg

Odeon & UCI Cinemas Group took another step forward in their digital cinema rollout this week by announcing their selection of Unique Digital’s software suite to help them manage digital content and equipment in converted theatres.

With 1,802 screens spread across 202 venues in seven countries, Odeon is Europe’s largest cinema circuit. They are so large in fact, that Odeon struck their own virtual print fee (VPF) agreements with Hollywood studios. Rather than rely on a deployment entity such as Arts Alliance Media or XDC, Odeon is handling the rollout all on their own.

However, it wouldn’t make much sense for Odeon to build their own digital cinema management software. That’s where Unique Digital comes in. [Full Disclosure: I have ongoing business dealings with Unique]. Odeon has selected to deploy Unique’s Rosetta Bridge, a theatre management system (TMS) and Cinema Accord, a back office system focused on managing digital content, keys and VPF agreements.

Based in London, and with offices in Dublin, Ireland and Bergen, Norway, Unique is one of Europe’s leading providers of software and network solutions that give motion picture exhibitors the ability to manage and support their cinema operations, including all content and equipment. In February, Unique was selected by Norway’s Film & Kino to help convert 90% of the country’s movie screens to digital.

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Travis Reid Departs DCIP To Head Up Screenvision

Travis Reid - Screenvision.jpg

Travis Reid

Last Thursday Digital Cinema Implementation Partners (DCIP) announced that Travis Reid, their CEO, had resigned. That same day on-screen advertising giant Screenvision announced that Shamrock Capital Advisors, a private equity fund founded by the late Roy Disney, had finalized the $160 million purchase of the company and had appointed Reid as its new CEO.

At ShowEast, which was just wrapping up at the time, many industry folks I spoke with were surprised to hear the news, though looking at it objectively, the move is somewhat inevitable.

Reid has had a long career in motion picture exhibition that includes his stint as the President and CEO of Loews Cineplex for which he worked from 1991 until 2005 when the chain was acquired by AMC Entertainment. In 2007 he joined DCIP, the deployment entity formed and owned by North America’s largest exhibitors; AMC, Regal Entertainment and Cinemark. Reid has also sat on the boards of Cineplex Galaxy, Yelmo and Fandango among others. As Shamrock’s Managing Director Steve Royer said in Screenvision’s press release:

“Travis has an over thirty-year history in the exhibition space having operated chains and most recently, pioneering the digital revolution for the cinema exhibition industry. He was our ideal candidate.”

Reid led DCIP through a challenging period in its formation and development. Not only did he successfully oversee the companies protracted negotiations with major studios for virtual print fees (VPFs), but just as it seemed digital cinema was taking off, the financial meltdown caused funding for rollouts to dry up for more than a year. Reid and DCIP persevered and in March of this year he secured $660 million in funding from a consortium of banks.

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AAM Topper Howard Kiedasch Discuss TMS Deal With Hoyts

AAM + Hoyts

It’s that time of year in the Northern Hemisphere where everyone wanders off on vacation at the end of summer. It’s very easy to let an important piece of news slip by without digesting it properly. So, I wanted to take a moment to highlight the announcement made early last week that Hoyts Cinemas had chosen deploy Arts Alliance Media‘s (AAM) Theatre Management System across their 400 screens in Australia and New Zealand.

It would be incredibly easy to brush the news off as just another press release from a digital cinema vendor. After all AAM has developed a TMS for the deployments it is undertaking in Europe. It’s not as if they have to build it from scratch. I’d argue however that it’s a bit more meaningful because Adam Wrightson was a part of the decision making process at Hoyts.

Wrightson is Hoyts, Group Technology Director and anyone that knows him, or has ever worked with him, knows how thorough he is when it comes to the technology the chain chooses to install. Presently he is working with Digital Cinema Implementation Partners Australia (DCIPA) to roll out digital cinema throughout Hoyts.

Any system or software developer that wants to do business with Hoyts has to get past Wrightson’s wary eye which is no easy task. After all, Wrightson is the kind of guy that can judiciously put together a detailed technical requirements document that leaves few if any engineering questions unanswered. A few years ago Wrightson sent me a specification document he wrote for a digital advertising network which came in at a mere 80 pages and had more color figures and diagrams than a world atlas. Getting a nod from Wrightson may as well be the digital cinema equivalent of being knighted.

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