How 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.

AAM is currently reviewing its approach to the business but will continue to look to serve the market. The ambition is to find a way to optimize the offering to suit the needs of all parties involved. We will continue to offer distribution services for content owners as we always have but we are looking for more efficient and cost effective ways of booking and marketing content to cinemas.

The rest of the business goes on as usual as we enjoy our most successful period since we began 6 years ago. The near term changes we made in the AC team, strengthen the company as AC in its current form was not profitable and had a negative result on the bottom line of the company. Expect to hear more info in the not too distant future”

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.

Meanwhile, Cinedigm installed digital cinema equipment on 1,885 screens over their last fiscal year – more than in any other year of the company’s Phase 2 rollout which began in March of 2008.

The release was kind enough to tally up a few Cinedigm facts and figures in a tidy bullet pointed list:

• Signed 7,657 screens overall at 750 sites
• Installed 5,919 digital screens
• Signed 59 Cinema Buying Group exhibitors, representing close to 1,450 screens
• Signed exhibitor buyer deals representing close to 3,100 screens
• Signed Cinedigm financed deals, with Phase 2 representing close to 1,000 screens

So what does all this mean? Well, I’ll go back my original point; that by taking a step back, one might be able to guage digital cinema’s adoption and deployment rate within the North American market.

For argument’s sake, let’s discount all the Cinedigm press releases about equipment deals and content distribution as nothing more than corporate boasting. Let’s also throw out the last last three bullet points from their most recent release. What we are left with is a sudden surge in mid-size North American exhibition chains signing deployment agreements with one of the market’s largest integrators. The company has contracted 1,738 more screens than it has deployed, and based on their current rate of installation these screens should be fully converted during the next fiscal year as more theatre owners are likely to sign deployment agreements with various integrators.

In other words, on a macro level, this information helps answer any lingering questions concerning the speed of the digital cinema rollout in North America, or any doubts over the adoption of the technology. It seems as if, after a global financial crisis and a shortage of projection equipment, the digital cinema rollout has truly begun in earnest. Rather than converting one or two screens in a complex for 3D in advance of a blockbuster release like “Avatar”, mid-size theatre owners are converting entire circuits.

Of course, this is based only off the news coming out of one company in a single territory. I may also be stating the obvious or the current popular belief about the region’s d-cinema rollout, rather than divining any new-found wisdom from a batch of press releases. After all, industry leaders, such as John Fithian of the National Association of Theatre Owners, have expressed similar sentiments publicly over the last several months.

So, what do you think; is it possible to use Cinedigm, or similar companies in the space, as industry bellwethers? Let us know your thoughts in the comments section below.

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.

CJ: Could that explain why Cinedgim’s stock has increased so quickly over the past week or so?

CM: Well, we try not to track the stock every day or every week, but we’ve been out there telling the new story of the company and part of that was at the Gabelli conference and part of that was we announced a big software deal with AMC. Besides being the second largest chain in North America it’s also off our platform because AMC is a DCIP deployed circuit and so that was a great piece of news. So, I think that announcement in concert with the fact that we’ve been telling the new story of the company hopefully has begun to resonate and you’ve begun to see that reflected in the stock price over the past couple of weeks.

CJ: So, that’s the big question. What is Cinedigm’s “new story”?

CM: I looked at digital cinema back when we sold MGM back in 2006. It was something I was very serious about trying to get involved with, because even then I thought it was a complete game changer for the industry on a bunch of different levels. For a variety of different reasons I didn’t do that at that point, but probably in hindsight I should have given my three years in the indie film business. But I always viewed digital cinema as a game changer, not just the digital deployment and conversion of screens, but the businesses that you could build off of the digital backbone. Now you fast forward three or four years later and finally the digital revolution has arrived, maybe a few years later than a lot of people had expected. Now you’ve got 17,000 digital screens out there, almost half the screens in North America that are either deployed or under contract to be deployed. So finally you’ve got critical mass out there for the platform.

Now it’s time to realize the promise of digital cinema and build businesses off of that backbone and I think the two real areas that we’ve been saying Cinedigm can really take advantage of the digital platform, and not only really become market leaders in two different growth businesses but actually dominate those businesses, is the software businesses and the alternative content business. That’s the new story of the company that we’ve been telling. Digital deployment remains job number one for us and we’re very hopeful that we’re going to expand our footprint from 7,000 screens to northwards of 12,000 screens very rapidly, but we’ve really identified those two businesses of software and content as two businesses that we’re going to focus our resources on and build off of our position to grow those businesses and be the market leader in both.

CJ: Does a part of the decision to focus on software and content come from the fact that at some point deploying VPF financed d-cinema equipment can’t go on forever? At some point the VPFs will go away and thus no longer need to be managed.

CM: Not for a while, but it is going to go away. The integrators who have basically set up that platform are really in a unique position to leverage their position and the fact that they’re sort of out there and under the hood in theatres means they can really be the companies that facilitate building those businesses off the platform. For instance, on the software side, we’re the leading supplier of what I’d call operational software, theatre management software, at the theatre level and the circuit level already and we’re the leading independent supplier of distribution management software for all the independents and a couple of the major studios. The beauty of it is our software works on anything that’s DCI compliant. That’s why we just did our deal with AMC, even though obviously we aren’t responsible for deploying at AMC. We just think that’s a whole area where we can grow the business and become the standard in that whole arena and we really don’t have any competition at all other than home grown systems.

CJ: But surely there are some competitors out there. Both Arts Alliance and Unique Digital have developed theatre management systems which have had traction in the marketplace. Don’t you see them as competitors?

CM: Not really so much here domestically.

CJ: Does Cinedigm have plans to enter the international market, if not as a deployment entity, then maybe as a solutions and content provider?

CM: Oh yeah, we’ve got several pilot programs overseas. We just did a deal over in India. We hired Dave Gajda back, which is great. Part of his charter is to look for opportunities to expand our software footprint internationally. He’ll look for M&A activity in that whole space to execute our agenda and to use his relationships and his forward thinking development focus to try and build a whole other generation of software that we can apply both to exhibitors, to distributors and also in the market research arena. We think that’s an area we should explore to develop tools to understand audiences better in theatre and help exhibitors and the studios more precisely market against that audience. That’s going to be a big part of our future. I think we’re really strongly positioned there now and you’re going to see a lot of growth in that space and hopefully a string of additional announcements above and beyond the AMC announcement which we just made.

Content obviously is the other arena that I’m particularly interested in. The company has done some really good things in the past, some sporting events like the World Cup and BCS. Some concerts like Dave Matthews and we’ve got a programatic series called KidToons which has been successful for us, but the goal now is to take our position in that space and really amp it up to become the market leader in that whole area and we’re putting together a pretty comprehensive plan to tackle the business and take it to a higher level which we hope to implement in the second half of this year.

The cool thing that we have right now, that I’m really excited about is this Foo Fighters concert. What I love about it is, yes it’s the first live 3D musical experience, but it sort of showcases all the capabilities of our network and what digital cinema can really do. On the one hand we’re releasing an independent film because, A, it’s a documentary, and B, we’re going to have a live concert, and C, it’s going to be in 3D and then D, there’s going to be an interactive component to it as well. All in one on April 5th we’re going to be able to showcase all of these elements that digital cinema brings to the screen.

If there’s been one thing that I think that the whole industry has failed to do regarding digital cinema is really emphasize the most important aspect of it and that is that it really enhances the audience experience in theatre. We talk about cost savings and all the other things that it does, but first and foremost it creates a better experience in theatre for the audience. You get the big screen, you get everything in digital in hi-def, in 3D, you can do interactive, you can do live and you can have all these different expanded choices in content, like concerts. So net-net the real upside of digital cinema always has been the fact that it enhances the audience experience and enables theatres to leapfrog anything that a consumer can do at home. That simple high concept I don’t think we all did a good enough job over the last few years of really telling the world that that’s what digital cinema is all about and that’s what I love about this Foo Fighter concert because it’s all that rolled up into one presentation.

CJ: Do you think there will ever be a time where the “alternative” label will dropped from alternative content and it will simply be content along the lines of feature films?

CM: I absolutely agree with you. I hate that name. Because what does it mean? Is it non-regular content? It’s entertainment that audiences want to see in theatres, just as they want to see wide release films. When you look at the capacity utilization on average for theatres, it’s less than 20% on an annual basis and Monday through Thursday it’s less than 5% on average. So just marginal increases in capacity utilization in theatres could create gigantic businesses. If we could fill up 10% or 15% more of those seats you’re talking about billions of dollars on an annual basis accruing back to different categories of content. I do think that it can be a huge business. Will it be as big as the film business in the next five years? No, but I think it can be a tremendous new revenue stream for content providers and exhibition.

CJ: Do you think the current VPF deals stand in the way of alternative content really taking off?

CM: I’ve got to tell you even with the VPFs I think there’s a way to create a really solid financial model for alternative content that hasn’t been created yet. A lot of what’s been done so far in this whole space has frankly been done on a trial and error basis. I don’t think anyone has rigorously looked at it and said, “Here is the potential size of the business based on available capacity. Here are the categories for other types of content that have the most potential to succeed in this business because there’s an opportunity to premium price, there’s an opportunity to bring in sponsorships, there’s an opportunity to find an audience that really wants to see this content, there’s an opportunity to create an ancillary business.” And I think the other single most important thing that nobody has done right now is forged a true partnership with exhibition that’s given exhibition a chance to participate in the full revenue stream of the content.

Our network proposal, a key part of it, is we’re going to make sure we cut our exhibitor partners in on our piece of the backend on any content that launches on their screens so that for the first time they’ll be participating in downstream income from VOD, and DVD and television and any foreign pre-sales, if there are any. I think for the first time you’ll get an alignment of a business model between a content distributor and exhibition and I think that’s a smarter way to go about releasing content in this day and age. Both the content provider and the exhibitor will have the same interest for the first time and that’s sort of a unique feature of the network proposal that we’re going to be selling at CinemaCon which I think is really going to help us grow this business quickly.

CJ: Cinedigm’s current VPF deals end in September of 2012. Has any thought been given to extending those VPF contracts with the studios?

CM: What I’ve heard from the studios, it’s a pretty hard and fast deadline for us and everybody else. You’ve got to understand that at this point in the rollout for the studios it’s been several years and part of the upside in this whole thing and part of coming up with the VPF concept was they were going to subsidize the rollout and the equipment but at a certain point it was going to stop. They want the clock to start to tick toward a point where they’re able to realize all those savings on their bottom line. From the discussions I’ve had with the studios they are quite serious about that September deadline. That’s part of the reason at CinemaCon the theme at Cinedigm, and you’ll see it when you come to our booth, is “The Time Is Now”. Get it done now. I think that deadline is going to help drive an even greater exceleration in deployment over the next year-and-a-half.

CJ: One criticism of Cinedigm is that the company hasn’t had positive earnings. Will that change in the near future?

CM: Netflix wasn’t cash flow positive for the first ten years of their existence and now what’s their market cap? You know last quarter we were actually cash postive in our non-deployment business and that’s a trend that’s going to continue going forward. We’ve said to investors time and again every thousand screens we deploy drops about $2.5 million in EBITDA to our bottom line. We’re over 7,000 screens now. We feel pretty good and very comfortobalbe about our position right now. I think you’re going to see an excelarting trend in that arena and I think we’re very positive about the next 12 months both in terms of the growth opportunities I’ve talked about and the financial performance we’re going to be able to deliver. I would suggest anyone who has any questions about our balance sheet just watch our results over the next 12 months and I think there’s going to be a lot of good news.

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).

ICAA members represent 700 independent cinema screens throughout Australia and New Zealand. Omnilab’s cinema services company was created specifically to administrate the VPFs for the organization, as well as supply and deploy digital cinema equipment and network services.

But how does any of this explain why Omnilab announced VPF agreements with just a single studio or when deals with other distributors might close? It doesn’t really… unless one decides to do a little background research at which point the answer becomes quite clear and very messy. This is precisely where I wish I had resisted the urge to satisfy my curiosity.

A quick public records search revealed that Omnilab Media is involved in an ongoing legal dispute with Digital Cinema Network Pty Ltd. DCN was formed in 2008 by Martin Gardiner, James Gardiner and Michael Smith to secure VPF agreements for the ultimate benefit of independent Australian commercial cinema owners.

Martin and James Gardiner are no doubt familiar to anyone working in the digital cinema space over the last several years. The brothers founded and run DigitAll, a Melbourne-based technology company working on software and systems for exhibitors. They have had a sustained presence at trade shows such as ShoWest and in industry groups such as ISDCF.

One could spend a lot of time reading through the circuitous legalese that make up the court documents and get a pretty good sense of the sordid history behind the litigation. Feel free to do so on your own. Like me, you’ll no doubt notice the Outlines of Evidence include the familiar names of certain studio executives who may wind up being legally compelled to provide testimony.

If both DCN and Omnilab believed they were negotiating VPF agreements for Australia’s independent theatre owners, it’s not hard to see how the dispute arose. As the suit claims, it all boils down to:

“…who is entitled to enter into, and receive the benefits flowing out of, valuable contracts with certain US film studios, which will grant financial subsidies to independent Australian commercial cinema owners to upgrade their analogue projection equipment to digital projection equipment.”

So the answer to my original question about why Omnilab had announced only one VPF deal is that there is some legal confusion over who exactly the studios should be negotiating VPF contracts with in the first place. According to court records one studio has understandably declined to continue VPF discussions with any party while litigation is pending.

Unfortunately, we may not be hearing about additional VPF agreements for Australia’s independent cinemas until the whole matter is resolved.

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.

McGurk comes to Cinedigm armed with numerous relationships at all the Hollywood studios Cinedigm has signed virtual print fee (VPF) agreements with. It is unlikely he will get any extensions for Cinedigm’s VPF rollout period which comes to an end in a little over a year. Even so, having someone in the corner office with friends in high places at each studio certainly couldn’t hurt.

In addition, having spent more than 20 years in senior management at four different studios means McGurk knows a thing or two about content. As McGurk himself pointed out in media interviews after his hiring was announced, there is a realistic opportunity to leverage the 6,000 plus digital screens Cinedigm oversees to distribute content. He told The Wrap:

“The neat thing for me is that even though it’s a service business, I’ll also keep my hand in the content business…They’re turning multiplexes into networked programming venues. It’s a great thing for exhibitors, now there are fewer and fewer films being distributed by majors and others. This is a way to fill up a lot of that space that is going to exist with fewer movies.”

In speaking with the Los Angeles Times, he said:

“We’re going to hopefully provide a whole new business model to exhibitors.”

McGurk’s enthusiasm for independent content offerings are refreshing, if not contagious. He’ll quickly learn (and probably already knows) that though the studios are making fewer movies, they still want their films booked on every multiplex screen, especially during prime showtimes. So, no matter what alternative distribution schemes McGurk and Cinedigm conjure up, they’ll still have to contend with the studios supplying the VPFs that subsidize the digital cinema equipment which enables flexibility in programming.

Another thought is that the installation of a senior executive such as McGurk might make Cinedigm far more attractive to potential investors and/or buyers. Don’t forget, one of Cinedigm’s primary owners is the private equity firm Sageview Capital. Sageview’s founder Ned Gilhuly was quoted in the press release announcing McGurk’s hire and the company’s Adam Mizel acted as CEO for the latter half of 2010. Stakeholders such as Sageview rightly want to see a return on their investment and one way to do that (besides the Payment In Kind and warrants they presently hold) is through a liquidation event, such as a public offering or sale. As Cinedigm is already a public company, a sale is a more likely scenario. Though this is all pure speculation on my part.

At the very least, McGurk is no stranger to balance sheets and high-finance. Remember that bit about his CFO role over at Disney? In McGurk Sageview has found an executive with experience running the finances of a public company. That’s probably a smart move since Zacks Investment Research just listed Cinedigm as one of five companies in the application software industry with the highest debt-to-capital ratio.

Now, to address all those who left negative comments about McGurk’s hiring on websites such as Deadline. The common refrain through the mostly anonymous criticism was that companies McGurk has led tend to “fall apart”. I can only assume such accusations refer to both MGM and Overture Films. While defending McGurk is not something I can or should do, I’m not quite sure he should be faulted for MGM’s current financial woes given that on his watch the company was sold for USD $5 billion. The failure of Overture is also hard to pin solely on McGurk since the company’s main investor, Liberty Media’s John Malone, never followed through on fully backing the venture and has since dumped most of his movie business assets.

That brings me back to all those emails I received this past week about Cinedigm and McGurk. I found it interesting that not once did anybody ask why McGurk would want to run a company operating in the fiercely competitive and unsettled digital cinema market. Maybe everyone just thought he needed a job and Cinedigm happened to be hiring. Yet his answer to this question, which appeared in the Los Angeles Times, might be indicative of what Cinedigm believes McGurk brings to the company; experienced leadership, adept at reading the industry and predicting its future direction:

“I saw that money was beginning to come back to entertainment, but [investors] didn’t want to invest in traditional production or releasing. Investors are now focused on new media and digital businesses. This is that kind of opportunity.”

As 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.

Cinedigm’s Phase 2 subsidiary will install as many as 2,100 digital cinema systems with this non-recourse financing. While Christie projectors were used in the majority of Phase 1 deployments, Barco and NEC will provide digital projectors for the company’s non-recourse financing facility while Christie, Barco and NEC will support exhibitors who purchase their own systems in the Phase 2 rollout.

With all of this in mind, here is the transcript of my conversation with Mr. Mizel:

Celluloid Junkie: How is Cinedigm measuring the figures in its industry update press release? How did you come up with a figure of 12,802 digital screens in North America?

Adam Mizel: That’s about 13,500 now, as of a week or two ago. Basically we have our own data that is up to date on all digital instillations because our business unit that delivers features and trailers to digital sites on behalf of the studios has to keep a very detailed trusted device list. So we know exactly how many sites are out there, at least those reporting and if you want to get something delivered to you, you’re reporting. The studios track it, we track it, and so we have reliable numbers. We generally do not release this information to the public as a reporting metric but we do provide a view of what is out there based on actual sites Cinedigm has delivered to.

CJ: It’s been pretty widely reported that 3D has been driving digital cinema growth and installations for the past 18 months. Do you think without 3D d-cinema would have taken off? Will there be an increase in 2D screens?

AM: I think 3D has accelerated the adoption curve, but that curve was going to occur. I think 3D was an accelerant.

CJ: Is it true then that 2D screen installations have pretty much stalled?

AM: That’s not true. There are not 13,500 3D screens. What you are seeing right now driving the significant growth in installations in North America are both Cinedigm and DCIP installing and converting complete multiplexes which means that most of those screens are 2D, not 3D. When a multiplex converts, the theatre owner is going to determine how many screens are going to be 3D; usually somewhere between 20 and 40 percent. So most of the screen growth you’re seeing is 2D screens being added.

CJ: So then maybe 2009 was an anomaly for 3D growth due to the financial crisis. Were exhibitors only installing whatever 3D they could afford but now that the economy is getting better they are starting to convert whole multiplexes? That would increase the number of 2D installations.

AM: Right. Basically until 2010 most of the installations that were getting done were exhibitors on their own purchasing a small number of digital systems in order to show 3D movies. With the financing markets now more stable and with both Cinedigm and DCIP having access to financing exhibitors are converting entire multiplexes and benefiting from virtual print fees to support that occurring.

CJ: How has the financial crisis affected Cinedigm this year? Has it gotten any easier to find funding for rollouts?

AM: A simple statement is that 2010 has turned out to be the year for digital cinema and for Cinedigm that 2008 was supposed to be. Effectively I think the industry lost approximately 24 months as the financial crisis really shut down capital market access for digital cinema. That changed this year and is evident in our increasing both exhibitor signings and exhibitor deployments. We are confident Cinedigm will continue to see growth in both signings and deployments in the New Year.

CJ: At certain industry events members of NATO’s Cinema Buying Group often air frustrations that everything isn’t moving faster. Has CBG or its members voiced any concerns to you directly?

AM: We talk to them quite frequently and our message is consistent. Digital cinema is picking up pace and that it’s important for those CBG members to figure out the strategic and financing path they want to take. Because there are slightly less than two years left in the deployment period under various studio agreements for CBG members to access VPF financing, it is important for them to begin their conversion process as soon as possible.

CJ: At one point there was some discussion around getting Cinedigm’s virtual print fees (VPFs) revised to accommodate CBG members. Is that still the plan or has that happened already?

AM: That did occur. There have been a number of amendments to the virtual print fee agreements to accommodate the needs of the CBG members and so those now reflect the changes. There’s no CBG VPF per se, but Cinedigm has further refined how the mechanics work to make sure everyone’s needs are met.

CJ: Can CBG members work with Cinedigm to finance their digital conversion or do they have to bring their own financing?

AM: Every exhibitor that we talk to has a choice of providing their own financing, and being the exhibitor buyer of the equipment, or working with us on a non-recourse financing solution.

CJ: So it’s the same for CBG and non-CBG members?

AM: There is access for all exhibitors who meet the credit criteria, whatever the lender may be. We have those individual conversations with individual exhibitors and figure out what will work best for them from a financing perspective.

CJ: In your industry update you mentioned that Cinedigm has closed deals for 1600 exhibitor buyer screens and 800 Cinedigm financed screens. Are exhibitor backed screens twice the number of financed screens due to the credit crisis and difficulty in finding financing?

AM: Yes, I think you will see growth in both of those numbers. I can’t predict the timing or the order but we are certainly seeing more exhibitor buyers in our historical results percentage than going forward just because the financing markets have been more open for that kind of recourse financing.

CJ: Are exhibitors who purchase equipment on their own turning to Cinedigm to secure a VPF?

AM: Exhibitors are very smart business people and they want to make sure they fully understand their choices and make sure they find the best partner. Cinedigm has a long record of being a terrific partner to the exhibition industry and making sure we consistently deliver the highest quality of service to allow exhibitors to get their circuit converted to digital and help support their operations. I think exhibitors see that and they understand that and we’ve been doing this for five or six years now with a terrific track record.

CJ: Some North American exhibitors have said they feel forced to use Cinedigm if they want a VPF because there are no other integrators in North America (save for DCIP). This has led to speculation that a competitor from abroad might enter the territory. Are you aware of any such plans?

AM: Cinedigm frequently speaks with all of the major participants in the industry, so we have a good sense of most conversations and we feel confident that we offer the best combination of value and service for the exhibitors. We’re pretty comfortable with our current position in the industry.

CJ: Well then, let’s reverse the question. Are there any plans for Cinedigm to go international?

AM: Cinedigm features one of the best infrastructures for administering the deployment of digital cinema. We certainly have conversations with other exhibitors and financing entities globally to discuss ways we can help them with their deployments. We are certainly exploring in those conversations ways in which we can leverage our infrastructure to support other entities as they look at how they get into digital cinema.

CJ: You’ve personally been quoted as saying “digital cinema opens up an entire world of entertainment options for networked digital theatres.” Wouldn’t studios, who pay the bulk of the VPFs, have issue with non-studio content being put onto digital screens?

AM: The bulk of the attendance and revenues generated in movie theatres are on the weekends so the real question and opportunity with digital cinema is to help the exhibition industry and all the different content owners and distributors find attractive, interesting and compelling content for those off-peak periods in cinemas when they are not well attended. The importance is finding the opportunities to leverage that fixed infrastructure in a manner that it doesn’t get leveraged today.

CJ: Is there any opportunity for non-studio distributed content to break into the peak hours?

AM: Sure. And the big studios do the same thing. If you look at “Slumdog Millionaire” that opened on five or seven screens and gradually grew to thousands and ultimately an Academy Award. In that example Fox was doing the very thing you are describing, which is taking a movie and testing it and seeing how it played, how it gained word-of-mouth backing and then it gathered attendance. This supported its growth in distribution on a very cost effective marketing basis. Something like that can be done by others. I think this digital conversion provides creative ways to test the performance of content and content that has legs will further and further expand distribution. If it makes sense it will make money and that’s what will happen. And in some instances it may eventually lead to partnering with one of the bigger studios for distribution. There are just so many avenues that grow out of it that none of us fully know what will happen because we’re experimenting in a new world of content distribution.

CJ: So then independent distributors and filmmakers won’t face any hurdles with VPFs?

AM: There are both virtual print fees and alternate content fees so I think it depends on the type of content, how it’s being booked and played and the economic returns that it generates. Distribution can grow in different ways. I think in fact, in the digital world it opens up many more opportunities because as you said, the cost of producing and distributing canisters of film was fixed and the same no matter how often it played, how many nights a week, how widely, you had a significant fixed cost. In the digital world, even in the VPF and ACF world, you have many more options and creative ways to structure things.

CJ: At some point the period of VPFs will be over; studios will stop issuing them and their terms will conclude. Has Cinedigm begun to think about what it will do in a future without VPFs?

AM: The way we look at our business is right now we are deploying an open source digital cinema platform, that is providing the financing, billing, monitoring and verification. This platform includes all of the work we do around the deployments for exhibitors, including our delivery infrastructure whether it is via satellites, hard drives or broadband delivery as well as the software that makes the network work. The platforms Cinedigm and others are deploying are all interoperable given the DCI standards. In addition to that platform, we are developing different applications to really take advantage of the new capabilities available in digital cinema. That can be alternative content entertainment, other forms of software that allow you to have other ways to manage and operate your studio or circuit, or it can be interactive data and analytical tools. I think in the long run our business is around the different applications that leverage the digital cinema platform. For the next couple of years there will be a lot of work to do for everybody in putting out the platform and in parallel building those applications. That’s what we spend all of our time on and it takes a lot of time and energy to do both.

CJ: It’s no secret that theatre owners aren’t big fans of the exhibitor agreements they have to sign with integrators. However, large parts of these are dictated by VPF agreements. Is there anything that you would want to clarify for exhibitors about Cinedigm’s agreements or about the company itself?

AM: I think exhibitors have a very good sense of our history, our focus, our capabilities and our track record of success.

You’re right though, fundamentally many of the terms and structures in our agreements with exhibitors are dictated by two things, the virtual print fee agreements with the studios and the requirements of the lenders. In that process, Cinedigm is the servicer and our goal is to try to find the balance for all three constituents; the exhibitors, the lenders and the studios. A lot of that is limited by the requirements of the studios and the lenders, but we have and we continue to advocate many issues that we think are important to exhibitors in making this work for them. One of the things that is most important to exhibitors is that the cost of this deployment, outside of their upfront contributions, is being born by the studios. And to be clear, the cost of the equipment, the financing and Cinedigm’s servicing costs are all being paid for out of the virtual print fees that are paid by the studios and not by exhibitors. Our job is to be in the middle to make that work for everybody.

This process is complicated and we acknowledge that. Part of our job is to explain the details in clearer terms. What we are talking about in many instances is relatively complex asset backed securitizations of a long term payment stream from a diversified pool of movie studios. That is not what most people in business deal with at all, much less in exhibition. It’s not what they’ve had to deal with and like I said, part of our job is to try and help translating from very different languages that everyone speaks and making it understandable for all parties.

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.

Odeon will use Rosetta Bridge TMS to manage both d-cinema and advertising content in each of their sites. Because the application is server and projector agnostic, it will also allow theatre managers to monitor and control digital cinema equipment within a complex. Cinema Accord, on the other hand, is designed to centrally manage remote digital cinema installations. The software, which has already been integrated with a number of box office and enterprise systems, will allow Odeon to monitor and operate TMS instances in each of their cinemas.

The announcement is significant to both companies for a number of reasons. It means that Odeon continues to move forward on their GBP £70 million (EUR €82.71 million or USD $109.3 million) digital conversion which is due to be complete in 2012. By June of this year the theatre chain had already rolled out 490 screens, more than any other exhibitor in Europe. And when circuit as large as Odeon goes completely digital it should help sway (or in some cases force) other exhibitors to roll out the technology.

For Unique the agreement helps put a stamp of approval on their software solutions. What’s more, Odeon is widely known for conducting rigorous due diligence and technology evaluations, as Roger Harris, the company’s COO, alluded to in the press release:

“Odeon made a full evaluation of the complete range of hardware and software solutions available, and in the end we were impressed by the level of experience and technical ability offered by Unique Digital”.

As a sign that Unique can compete in the international marketplace with solid products, the deal is not unlike the one AAM struck with Hoyts this past August, which has the Australian circuit rolling out a TMS developed by the British deployment entity.

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.

In DCIP’s press release announcing the leadership change Gerry Lopez, CEO and President of AMC Entertainment, highlighted Reid’s achievements at DCIP:

“Travis has done an outstanding job in guiding the formation of DCIP, including the negotiation of studio and vendor agreements, securing financing and managing the initial deployment of DCIP’s digital projection systems,”

With financing in place, VPF deals completed and the digital rollout reportedly ahead of schedule, there may be little left to do at DCIP for an executive of Reid’s caliber and stature. As a deployment entity DCIP is unlikely to grow beyond the the three exhibitors it already services. As well, once their VPFs reach the end of their terms DCIP’s responsibility of administrating them will no longer be needed. By then, each of the three circuits will probably have moved their digital cinema operations and support in-house, leaving little need for a company such as DCIP to exist.

So with DCIP on solid footing, Reid has logically chosen to move on to Screenvision, a company with growth potential. Screevision already has 150 exhibitor partners in its network and screens ads from more than 4,000 advertisers across 15,000 screens throughout the U.S. Shamrock purchased a 50 percent stake in Screenvision from ITV, the British broadcasting company. This leaves Shamrock with 61.2 percent of Screenvision, while Technicolor controls 18.8 percent and Carmike Cinemas holds 20 percent of the company with which it recently closed a 30-year exclusive deal.

Some high level industry executives I spoke with were curious why Reid wasn’t prevented from moving to Screenvision due to non-compete clauses in his contracts with either DCIP or AMC. Those companies worked very closely with National CineMedia, a direct competitor of Screenvision, and Reid may have intimate knowledge about the operations of his new chief rival.

NCM is in the process of upgrading its digital advertising network, whereas Reid will have to help Screenvision complete their switchover to digital, something he seems to be well aware of according to a statement he made to Mediaweek:

“We need to make sure our network capitalizes on the conversion to digital. I don’t need to walk in with a list of items, just work with the current management team. Growth has been well managed. We have more than 40 percent of the market and that’s good for any business.”

Meanwhile, DCIP and it’s board of directors is left to search for a new CEO, a process which as already begun. Rich Manzione, DCIP’s Chief Operating Officer, has been put in charge of the business until a CEO has been hired. The company has already installed digital cinema equipment on more than 4,000 screens at 870 theatres nationwide and will eventually roll out the technology to upwards of 15,000 screens.

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.

Of course that’s just one of the reason’s to take note of last week’s announcement. A few others were highlighted by Howard Kiedasch, CEO of AAM, when I spoke with him via email shortly after the deal was announced. Our conversation follows. I hope to get Wrightson’s side of the story sometime during the next week and I’ll be sure to post it.

Celluloid Junkie: Was it always AAM’s intention to sell its TMS outside the deployments it was managing? When was the decision made to sell the software independently?

Howard Kiedasch: To be honest, it was something we had in the back of our minds but selling the TMS independently was not our first objective. We had been initially focused on our VPF clients as that was the task before us. However, the software was always built with the intention that it could eventually be sold separately. After we developed the product, saw what was in the marketplace and demonstrated our product to others, we believed we were offering something better than any of our competitors.

CJ: When did you start developing your TMS?

HK: Though we have been in the digital cinema business for over seven years, we did not start initially developing our own TMS. By starting later, we were able to learn from some of the mistakes others had made and review their products before building our own. I’m very proud of what our team has built and the reaction we’ve been getting by all those who see it. We have the best development team in the business and I’m really excited about what we will be doing next.

What was surprising (and we never really anticipated commercialising) is our back office VPF billing, reporting and asset management software. That software was developed because we needed it to manage our agreements with the studios and the financiers. However 9 months ago, we realised there are others who are signing VPF agreements and putting together financing packages but need some way of managing those deals. We’ve created the necessary software and process so it is easy for us to help others jump into the game without them having to reinvent the wheel.

CJ: So then would you say there are advantages to being an integrator when designing a TMS for the broader market beyond a tool AAM will have to use?

HK: With over five years of DC operation having installed over 700 screens and working with exhibitors in 8 different countries, we’ve seen a wide range of needs and desires from our cinema partners. Pulling together all this knowledge and experience allows us to deliver a product that can work under numerous scenarios and support many different operator requirements. Sure, cinemas in one country are generally the same as cinemas in another but there are always local idiosyncrasies that will be important to that specific customer. We believe in being flexible and servicing those various requirements.

CJ: What are some of the challenges of being a “software” or “enterprise systems” company rather than an integrator?

HK: As an integrator, the primary value we bring is the VPF payments. Most exhibitors are looking for that income stream as the VPF deals are complicated and in limited supply. This is very different from being a straight software supplier where our product needs to stand on it’s own. We need to provide the best solution for the money and respond to the customer’s needs. If we were not fully committed to this business, we would never get the attention of a company like Hoyts.

CJ: What do you think pushed AAM over the top with Hoyts?

HK: It comes down to two things. First there is the product itself. Our TMS was reviewed and field tested by the Hoyts team and determined to be the most flexible and best fit for purpose. Almost equally important is the team that sits behind it. Our relationship with Hoyts has been a very interactive one and the communications between the two teams has been very strong. Considering that this is a 10 year deal, you need to have a company you can trust and a group of people you want to work with. This is a marathon not a sprint so you need to be able to go the distance together.

CJ: How will Hoyts and AAM collaborate on future versions of the software?

HK: We see this as a true partnership. Hoyts is really looking to take advantage of digital cinema and make the most of the technology. Delfin Fernandez (Hoyt’s CEO) and his team do not simply see this as replacing celluloid machines with digital projectors. They are looking to significantly improve the way they do business and are leading the industry in this regard. We have already seen building our TMS as a collaborative effort. The Hoyts team has many ideas of how they want to work in the future and what they want from a TMS. We have been thrilled to tap into their experience and will continue to do so in the future. That’s part of the deal.

CJ: From AAM’s perspective, what is the significance of the deal with Hoyts?

HK: This is the first deal done with an exhibitor who isn’t being strong armed into taking an integrator’s software to get the VPF deal. In this case, Hoyts went out into the marketplace and looked at all the options available. After trialling various solutions, they decided on AAM’s TMS. Being chosen ahead of all the competition is obviously very satisfying. What makes this deal even more impressive is the quality of the customer. Adam Wrightson (Hoyts CTO) is one of, if not the most forward thinking and competent CTO’s in the cinema business. He and his team really got under the hood of our software and dug in deep to see if it was up to the task. Obviously they believed in the product and the team.

Sony's SRX-R320 Projector

If Sony wanted to make a big splash at Cinema Expo in Amsterdam this past week then they did one heck of a job. On Tuesday, the second day of the conference, Sony announced two exhibitor agreements with National Amusements and AMC Entertainment’s United Kingdom based theatres for digital conversions. The company, known for its 4K digital cinema solution, also struck up partnerships with three European digital cinema dealers.

National Amusements
The biggest of these announcements had to be the news that National Amusements had chosen Sony as their integrator. The theatre chainis one of the largest in the world, operating 950 screens across venues in the U.K., United States and Latin America. National Amusements is the fifth largest theatre chain in North America.

Under their existing virtual print fee (VPF) agreements with Hollywood studios, Sony will install their 4K digital cinema projectors on all of National Amusements’ screens. They will start immediately with Showcase Cinemas, National Amusements’ U.K. theatre chain where Sony Digital Cinema 4K systems will be deployed on all 276 screens. In an effort to quickly ramp up the number of 3D screens at the circuits disposal, Sony will install the first 24 systems before the end of July.

There was no mention when installation of d-cinema equipment would begin in the U.S. or South America.  In fact the press release seemed purposefully non-committal, referring to the deal as an “expected global exhibitor agreement”. One could read into the use of the word “expected” or assume that Sony will be deploying equipment to the 450 screens National Amusements has in Connecticut, Massachusetts, New Jersey, New York, Ohio and Rhode Island. The theatre chain owns 16 theatres in South America which would probably be included in any worldwide rollout.

It should also be noted that the release specifically referred to the equipment being installed as Sony Digital Cinema 4K Systems. That’s because the Sony media block (LMT-300) which plays content to the 4K projector (SRX-R320) is actually inside the chassis of the projector. This is for security purposes; the locked cabinet protects against tampering and negates the need for encryption such as CineLink 2 between the media block and the projector. Sony will also be providing their theatre management system.

The statement given by Duncan Short, Vice President of International Operations at National Amusements, specifically mentioned Sony’s technology as one of the reason’s the circuit chose them:

“The Sony 4K digital systems provide outstanding image and sound quality, and will enable us to extend our programming to 3D and alternative content, delivering exciting entertainment experiences to our existing and future customers.”

AMC In The U.K.
Sony’s announcement regarding AMC’s theatres in the U.K. was not all that surprising. After all, AMC has already chosen (through DCIP) Sony’s 4K systems for their North American theatres. In the U.K. Sony will install their d-cinema kit at both AMC theatres; the Broadway Plaza 12 in Birmingham and Great Northern 16 in Manchester.

AMC’s decision to stick with Sony in the U.K. may be an indication that they are satisfied with the technology and support they are getting in North America. If there was ever an opportunity to move away from an agreement that wasn’t working out so well, then converting cinemas outside the U.S. and Canada would have been it. Another theory might be that the circuit simply wants some continuity in the equipment it is installing in all their venues.

European Dealer Partnerships
To help Sony extend its reach in the European market the company has entered into partnerships with three respected dealers; Hulskamp Audiovisueel in the Netherlands, Protronic in Switzerland and Sound Associates in the U.K.

Sony already has some very good representation in the territory thanks to Oliver Pasch, the head of digital cinema at Sony Professional in Europe. In the press release announcing the partnerships he explained that Sony is committed to growing their distribution channels throughout Europe:

“Working hand in hand with these specialist dealers, we can jointly deliver outstanding 2D and 3D technology to support cinemas exhibitors across Europe.”

The partnerships were describes as “strategic” though not exclusive. This means the dealers will likely continue selling DLP projectors and add Sony’s 4K projectors to their offerings. Sony not only increases its ability to distribute their technology in Europe, but will also now have reliable local service groups to support deployments in each country.