Derelict Hoxton cinema

Opinion pieces and leader column in UK media have been alive with the debate about whether the imminent switch to digital cinema (imminent, once the credit crunch is over, that is) will lead to death and carnage amongst the smaller cinemas on the British Isles.

The debate was triggered by a comment by the UK Film Council’s Peter Buckingham that whilst the UKFC had funded 240+ screens conversion to digital, the UK Government will not bail out at-risk cinemas (unlike at-risk banks, one hastens to add). From the Telegraph:

Peter Buckingham of the UK Film Council warned that 300 independent cinemas – many in rural areas - are in series danger of closing because they can’t afford the transition.

“If they haven’t got digital they aren’t going to have anything to show in five years time,” he told The Times. “I don’t know what Plan B is – there is no public money available.”

The major multiplexes, which account for about 85 per cent of film takings, have so far refused to use their economies of scale to help smaller cinemas convert. The UK Film Council estimates it would cost £50 million to update all the vulnerable cinemas.

Derelict Catford cinema

Pretty grim outlook. But over in the Independent, John Walsh argues that we have been here before:

The death of the nation’s independent cinemas has been predicted so often that hearing the news of another imminent demise is like seeing another re-run of The Great Escape. Britain’s old movie palaces have been heading the way of the stegosaurus for half a century, scuppered by television, bingo parlours, dwindling visitor numbers, too many crap movies chasing too few screens, and the rise of the all-conquering DVD. But I still wipe away a tear on hearing that the switch from celluloid to digital projectors and servers may drive smaller cinemas out of business.

A very measured assesment was offered by Screen International’s always-worth-reading editor Mike Gubbins, writing in The Times (’The inability to evolve has darkened screens before’), with the first paragraph particularly worth pondering:

The switch to digital cinema has barely touched the consciousness of the public. Some may be aware of the hype surrounding 3D, while others may have seen an opera screened at the local cinema, but this is not a demand-led transformation.

The industry debate between those in favour, who hope to see greater choice, and opponents who fear more efficient domination of the Hollywood studios has rarely reached the public domain.

But the digital divide might become an ugly reality if large numbers of cinemas close. Stroll along any high street and see if you can spot the ornate frontage that was once a cinema.

For a sad reminder of previous cinemas that are now gone, visit Derelictlondon.com’s cinema page.

You can own a piece of Hollywood history for a mere. . . USD $31 million!

The Los Angeles Times reported yesterday that the El Capitan Theatre, located in the heart of Hollywood, has been put up for sale by its owner, CUNA Mutual Group.  The building in which the theatre resides also contains six-stories of office space filled with entertainment industry tenants, including the studio for late night talks show, “Jimmy Kimmel Live”.  The theatre sits across Hollywood Boulevard from Grauman’s Chinese Theatre and just down the street from the Egyptian Theatre.

Built in 1926 as a live theatre venue, the El Capitan has seen the entire gamut of Hollywood history.  From the first motion pictures with sound to the world premiere of “Citizen Kane” to the decline of Hollywood into filth and squalor, to its recent rise again as one of the hottest parts of Los Angeles.  Through it all the El Capitan never stopped functioning as a theatre accept during renovations.  In 1991, Walt Disney Company and Pacific Theaters spent $6 million restoring the venue to the way famed theatre designer G. Albert Lansburg had intended back in the 1920s and returned the outdoor lighting and architectural features to their original state.

Unfortunately, the restored El Capitan was open long when in 1994 the theatre suffered sever damage during the Northridge earthquake.  The building’s frame came close to being condemned and the theatre’s renovated interior was ruined by flooding when sprinkler systems malfunctioned.At the time the El Capitan’s owners decided that repairing the building would be too costly and turned it over to CUNA.  The theatre may not have survived if Disney hadn’t signed a long term lease.  That gave CUNA the confidence to spend $10 million to fix all the earthquake damage and return the theatre to pristine condition.

Disney remains the El Capitan’s tenant and told the LA Times that intended to remain in the theatre after its sale.  Most every major Disney animated film opens at the El Capitan, usually with a stage show featuring popular Disney characters.  The news that the theatre is now up for sale may worry some historical movie palace aficionados, but essentially the only thing CUNA hopes will change is the building’s landlord.  Company spokesperson Rick Uhlmann told the Times:

“The El Capitan has a bright history in the entertainment industry and we really want to find a buyer who will maintain its entertainment legacy for a long time.”

The two companies are far from strangers, as Overture already uses AccessIT’s distribution software and satellite delivery services.  As well, the mini-major had been distributing its films through AccessIT’s digital cinema network on a per film basis, including such titles as “Mad Money”, “Henry Pool Is Here”, “Sunshine Cleaning” and the indie hit “The Visitor”.  Overture, which was founded in 2006 by former studio execs Chris McGurk and Danny Rosett, only began releasing films this year.

Releasing films through a digital cinema network outside of a VPF agreement can often be costly because integrators usually charge a premium VPF to distributors without an ongoing deal.  The VPF agreement with AccessIT will actually allow Overture to lower its overhead by releasing digital versions of their films at a reduced fee structure.  The specific terms of the deal were, as usual, not made public, so we don’t know how much Overture will have to pay for each virtual print, though it is reportedly in line with what other distributors are paying.  However, many studios have publicly acknowledged their regret at having signed deals with AccessIT during the integrator’s Phase 1 roll out, feeling they paid too much as they initially ventured into the VPF waters.  The agreements pegged the cost of digital cinema equipment at around USD $120,000 per screen, far more than the estimated USD $80,000 it costs to install such hardware.  It would be interesting to know if Overture was forced to sign a deal at such exorbitant levels.

Of course, the press release announcing the agreement only contained quotes that were high on the deal, such as this one from Kyle Davies, Overture’s executive vice president of distribution:

“AccessIT has been a great partner for Overture Films in our inaugural year in the marketplace. From customer support to delivery services, we have been impressed with all they have to offer and we look forward to an expanded relationship as our studio continues to grow bringing digital features to theatres nationwide.”

It should be noted that the agreement does not seem to cover Phase 2 roll outs which AccessIT is presently negotiating with distributors.  The first Overture title to be released under the deal will be “Righteous Kill”, which opens on Friday, September 12th.

Eight of the screens will be reserved for traditional theatres complete with digital sound and extra-wide stadium seating that will provide plenty of leg room.  The two remaining screens have been transformed into SkyCity’s premium auditoriums, Cinema Deluxe.  They will seat 78 and 62 patrons respectively in reclining leather chairs.  Despite what may appear to be limited seating capacity, the VIP screens are full sized theatres with the same screen size, throw and digital sound as featured in the multiplex’s other auditoriums.  The largest screen in the complex will seat 364.

SkyCity Cinemas Manukau will also host a full bar in hopes of coaxing some extra New Zealand Dollars out of adult moviegoers before and after shows, as well as an interactive gaming arcade.  In what appears to be a press release, SkyCity’s general manager, Jane Hasting’s was quoted as saying the company hopes to lure moviegoers back to theatre with their new multiplex:

“SKYCITY Cinemas Manukau will give the people of Manukau City the ultimate cinema experience providing the very latest in cinema-going comfort, customer service and technology reinforcing that the best way to watch a movie is on the big screen at the cinema.”

It should come as no surprise that SkyCity would decide to expand in Manukau City, which is just south of Auckland.  The city is the fastest growning in New Zealand and is now the third largest behind Auckland and Christchurch.  With the opening of the theatre, SkyCity, the largest cinema chain in New Zealand, will expand its number of screens to 106 in 13 venues.  Owned by SkyCity Entertainment Group, SkyCity Cinemas began operation in 1991 as a joint venture with Village Roadshow, though bought out its partner in 2006.

Previously, DCIP had reached a VPF deal with Twentieth Century Fox, though the studio has never confirmed the news.  The signing of four studios is a crucial milestone which DCIP must cross in order to secure the USD $1 billion in financing the company has lined up from J.P. Morgan Chase to pay for all the expensive digital cinema equipment required to outfit theatres.  The Wall Street Journal had reported that Paramount Pictures had also signed a VPF agreement with DCIP, which had been rumored in the press but never officially announced.  Indeed, by the end of the day Variety had taken the air out of the Wall Street Journal’s big scoop by confirming that Paramount Pictures had not yet signed with DCIP.

Meanwhile, Sony Pictures and Warner Bros., while still in negotiations with DCIP for VPFs, don’t seem to be nearly as close to a deal as their counterparts.  They seem more than content to be the last two studios into the mix with DCIP.  The Wall Street Journal piece quotes Warner Bros.’ president of distribution, Dan Fellman, as saying:

“We’re working on trying to make a deal that is economically responsible for our company, whether it happens next week or whether it happens next month.”

There may be a valid reason for Sony and Warner Bros.’ reluctance to jump into participating in VPF arrangements with DCIP.  As Michael Karagosian of MKPE previously pointed out the two studios would pay 50% more than any of the other studios based on print counts for the top 150 films of 2006 and 2007.  In other words, Sony and Warner Bros. release the most films and thus would contribute the largest percentages to VPF deals signed with integrators such as DCIP.

Scott Sherr, the senior vice president of digital cinema operations at Sony told the Wall Street Journal:

“Digital is very important and critical to our strategy.  We’re moving carefully and thoughtfully and deliberately.”

VPF agreements, such as the ones DCIP is negotiating with Universal and Disney, are meant to help exhibitors defray the cost of installing digital cinema equipment.  Many throughout the industry have been hoping that the success of DCIP to negotiate VPF deals would help jump start the North American rollout of digital cinema in ernest.  Presently only 5,000 screens throughout the country, out of 39,000, have been converted to digital, with roughly 1,200 being 3D capable.

One completely erroneous statement in the Wall Street Journal article squarely falls the, “don’t believe everything you read” category:

The Hollywood studio’s payoff is later; once the equipment is rolled out and their financing obligations are done, digital distribution of movies will cost just pennies per digital “print”.

As anyone working at a studio can tell you, the creation of a digital cinema package for theatrical distribution and the security keys that go with it, while not as costly as rolling stock prints, aren’t exactly chump change.

The marquee outside the now closed Atco Multiplex Cinemas

The Boston Globe is reporting that National Amusements is closing two of its theatres in Massachusetts.  The Showcase Cinemas Lawrence 1-6 which opened in 1965 and employed 30 people, was shut down on Monday.  The Circle Cinemas in Brookline, which employed a staff of 21, will hold it’s final screenings on September 7th.

Of the two theatres the Circle Cinemas was by far the more historic venue.  It originally opened in 1946 as a single screen theatre called the Circle Theater, though was also known as the Cleveland Circle.  In 1976, the Cinema was divided in half and given the name Circle Cinemas.  The theatre developed into one of the best in Boston and in its heyday played most of the major releases.  The theatre booked mostly Paramount films, which is no surprise since National Amusements is owned by Sumner Redstone, the owner of Viacom, the parent organization of both Paramount Pictures and CBS.  (Editorial Addendum: Redstone did not purchase Paramount Pictures until 1993).  One such film was “Love Story” which played at the Circle Theatre for over a year six months starting in 1970.

Toward the end of its run the two theatres inside Circle Cinemas had been divided into seven awkward spaces.  Patrons often faulted the venue for having small theatres with tiny screens.  Then in 2005, the Brookline Health Department was contacted by several theatre patrons regarding an infestation of mice.

National Amusements gave no specific reason for the closures, though Wanda Whitson, a company spokesperson, told the Globe:

“We watch all of our theaters closely and make every effort to keep them as viable operating businesses. Once they are no longer viable, we make the decision to close them.”

Meanwhile, just a few states south along the East Coast the Atco Multiplex Cinemas in Waterford New Jersey closed its doors for good on Monday.  The suburban Philadelphia 14-screen venue, which opened in December of 1991, was also operated by National Amusements.  According to the Courier-Post, the theatre closed without public notice.  When the newspaper checked with National Amusements they too were told the “operation was no longer financially viable” by Ms. Whitson.

The marquee outside the Atco Multiplex Cinemas was stripped of the film titles that played over the weekend and instead a message to former customers was spelled out: CLOSED, THANK YOU FOR YOUR PATRONAGE.

National Amusements didn’t put out a press release announcing the closure of the three theatres, though who can blame them for not wanting to make a trend out of promoting their own theatre closures.  Whitson told the Courier-Post that National Amusements is presently trying to place the 100 theatre employees left without jobs at other multiplexes.

Village Roadshow chairman, Robert G. Kirby (Lawrence K. Ho/LA Times)

Back in March of this year, Australian exhibitor Village Roadshow Ltd. announced plans to bring their Gold Class luxury cinemas concept to the United States.  Already a huge hit in Australia, Village Roadshow teamed up with television producer Norman Lear’s Act III Communications and investment firm Lambert Entertainment in a USD $200 million venture that has plans to open 50 theaters in the U.S. over a five year period.  On Tuesday, the Los Angeles Times shed some light on what moviegoers can expect from Village Roadshow’s high-end cinemas.

Specifically, they can look forward to the price of admission - up to USD $35 per ticket.

Turns out Village Roadshow’s Gold Class Cinemas, which is based in Burbank, California, will be opening three theaters in the Los Angeles area by December of 2009.  It should come as no surprise that these theatres will be built in affluent areas such as One Colorado in Pasadena, Triangle Square in Costa Mesa and at the Guasti Winery in Ontario.  Rob Goldberg, the chief operating officer of Village Roadshow’s Gold Class Cinemas told the Times:

“First came the movie theater, then the modern multiplex.  This is the third phase.  It’s like an identity refresher. While the price point looks big, you get a lot for your extra 15 bucks.”

So what exactly are you getting for that extra USD $15?  Here are just a few of the amenities:

• Online reserved seating selection
• Free valet parking
• Concierge desk at check in
• Over-21 screenings
• Comfortable recliners for seating
• No advertising other than trailers
• No late seating
• Seasonal Gourmet menus
• Wine list with over 100 selections
• Meals served at your seat
• On-call wait staff

Unlike standard multiplexes, which have about 150 seats in each theatre, Gold Class will seat between 30 to 40 in wide comfortable chairs next to strategically positioned dining tables.  Of course food is not included in the price of admission.  Pressing the call button near each seat to flag down a waiter so you can order a gourmet meal and a beer will nearly double the price of your trip to the movies.  The reason for the high prices at both the box office and on the menu is most likely to cover operating costs.  Running a Gold Class Cinemas venue is not cheap.  Up to 30 workers will be on-site at any time, including chefs and cooks who can command $100,000 salaries.

Even with all the overhead, Village Roadshow reports that their luxury theatres in Australia, Greece and Singapore have turned profits.  But as the Times article points out, in Los Angeles, they won’t be the only exhibitor trying to attract wealthy patrons with a luxury theatre experience.  Pacific Theatres has opened Arclight Cinemas, their own version of high-end theatres, both in Hollywood and Sherman Oaks, while National Amusements Bridge Cinema de Luxe has been open for several years now.  Muvico has plans to open The Oaks 14 in Thousand Oaks this December.  The top price for a movie ticket at any of these theaters is between USD $12 and $16, about half of what Village Roadshow plans on charging.

Another hurdle for Village Roadshow will be that their Gold Class venues will not be tied to a theatre complex with more traditional offerings.  In other countries, their luxury theatres reside on a few screens in multiplexes that also cater to non-VIP customers at more moderate prices.  This single focus solely on luxury cinemas has some exhibition executives predicting the worst for Village Roadshow.  While a luxury theatre might attract guests during the weekend, Michael Whalen, president of Muvico Theaters Inc. wonders who will show up on weeknights.  He told the Times:

“Movies are meant to be enjoyed by large crowds that laugh at the jokes together, and this business depends on regular customers. But I could be wrong. It’s a free world and everybody gets to try their concept.”

And you can bet that if Village Roadshow’s luxury concept turns to be a winner, that other exhibitors, including Mr. Whalen, will be quick to imitate it.

Last year, “The Summer of British Film” used the Digital Screen Network to bring back classic British films. Seven films from Goldfinger to Withnail & I were shown digitally in 136 cinemas each Tuesday over a period of as many weeks. “We tied in with the BBC’s ‘British Film Forever’ series of documentaries, which looked at seven different film genres the preceding Saturday,” Stolz explains. “Each program genre under discussion was then illustrated [with] a classic British film in cinemas.” This initiative was “a great success and demonstrated the possibilities of digital programming, attracting cinema audiences of over 62,000. We received extremely enthusiastic responses from members of the public who were delighted to see these classic films back on the big screen. This summer we are supporting two distributors in releasing classics from the legendary British filmmaker David Lean.”

Although any one of Sir David’s films certainly more than matters, it was Warner Bros. which had already opened its vaults on that particular note. From mid-May onwards, the first “Movies That Matter” festival brought 15 marvelous titles for one-week engagements into 30 Vue Cinemas across the U.K. (www.warnermtm.co.uk). Starting in Casablanca and bloody well ending for Bonnie and Clyde, with highlights like The Wizard of Oz in between and East of Eden and North by Northwest further pointing in the right directions, the press notes promised them all to be “remastered to flawless, crystal-clear 2K-resolution digital cinema, the highest quality standard in cinemas today.”

Sadly the UKFC’s example has not been adopted very widely. With the exception of the anyways exceptional Norway, only Canada and Australia has adopted something similar, though these went arguably wrong by going for lower end e-cinema networks.

Apparently, with the recent shuttering of subsidiaries Warner Independent Pictures and New Line Cinema Warner Bros. finds itself with too many films to release over the next six to twelve months. Besides “RocknRolla” Goldstein reports that Warner would be happy to unload two additional films; Danny Boyle’s “Slumdog Millionaire”, originally a WIP release, and the New Line cop drama “Pride and Glory” starring Edward Norton and Colin Farrell. Silver became proactive in a finding a new home for his film when he realized Warner Bros. wasn’t about to spend the money to market the movie. Horn confirmed this in his conversation with Goldstein, saying:

“Joel has an 800-screen deal, which we’ll honor, but we might not be willing to spend the marketing money he wants us to. . . The filmmakers have every right to do what they think is best in support of their movies. But we have the right to do what’s best for Warner Bros. Sometimes the pursuit of those interests results in a disagreement. For now, we’re preparing to release the film in October, but I don’t see it starting out on 800 screens. If Joel is thinking there is someone out there willing to spend twice as much money as we’re willing to, I’m sure he will pursue that.”

While he was making the rounds at Warner Bros. Goldstein checked in with Dan Fellman, Warner’s head of distribution. The executive spoke about the juggling act he and his staff are conducting in an attempt to make sure the studio’s marketing and distribution departments aren’t overloaded going into the fall and holiday season. According to Horn, the studio would like to release about 25 or 26 films every year:

“I think having a new movie coming out every two weeks is plenty,“ Horn said. “Any more films than that and we’re putting too big a strain on the system. It’s just too crowded in the marketplace these days. I’d like for us to find a way to release movies like ‘Slumdog Millionaire,’ but we keep coming back to the same question–can we really do it justice?”

Given Goldstein’s column on Thursday, with Warner’s top brass going on the record, the answer to Mr. Fellman’s question appears to be “no”.

Many in the industry are familiar with Aylsworth through her work as Engineering Vice President of the Society of Motion Picture and Television Engineers. Over the past year she was instrumental in reorganizing the Technology Committees to better service emerging technologies such as digital cinema. In fact, before she took over as Engineer Vice President she was Chair of SMPTE’s D-Cinema Technology Committee, a group that created the first 24 standards for D-Cinema. Like many executives who work in standards bodies, Aylsworth participates in other standards activity, including those run by ATSC and CableLabs. Most recently she announced the creation of the 3-D Home Display Formats Task Force within SMPTE, a group that will help set standards for mastering stereoscopic content for home viewing.

Aylsworth’s new position within Warner Bros. is not unlike her old one in that she will be overseeing a group that is responsible for pushing the studio’s (as well as the industry’s) agenda in both national and international standards organizations. In addition, she will continue to head up the group within Warner Bros. responsible for reviewing and implementing emerging technologies in the content production and distribution space. In the press release announcing the promotion Chuck Dages, Executive Vice President, Emerging Technologies, Warner Bros. Home Entertainment Group was quoted reiterating Aylsworth’s background and rising stature within the industry:

“Wendy has taken a lead position not only for our studio but in the external organizations dedicated to creating new standards for such exciting innovations as digital cinema and 3-D viewing for the home. This promotion recognizes not only her achievements to date but the increasing importance of her efforts to our studio and our industry.”

While Aylsworth has built a strong reputation for herself in the entertainment industry, she began her professional career in technology working in the aerospace industry at companies such as Lockheed. She earned her MS/MBA in Managerial Sciences and Strategic Planning fro the University of Southern California and holds a BS in computer Sciences from the University of Michigan.