Tag Archives: AMC Entertainment

Universal and Disney Close To VPF Deal With DCIP

September 8, 2008

And then there were four. Four studios that is. Or so says the Wall Street Journal which broke a story today reporting that Universal Pictures and Walt Disney Company have reached a virtual print fee deal with Digital Cinema Implementation Partners, the joint venture formed by North American exhibitors Regal Entertainment, Cinemark and AMC Entertainment to finance, install and maintain digital cinema equipment in their theatres. The three chains, which represent a combined screen count of around 15,000, would like to start rolling out digital cinema as soon as the fourth quarter of this year, in time for the flood of 3D movies studios have slated for release next year.

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. Read More »

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Posted in Digital Cinema, Integrators

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DCIP Reaches VPF Agreement With Fox

By J. Sperling Reich

July 25, 2008

After industrywide speculation and concern over the absence of any news about virtual print fee (VPF) agreements being signed by Digital Cinema Implementation Partners (DCIP) the company finally announced their first deal which rumor has it is with Twentieth Century Fox. The news was reported by Reuters and has not yet been made official by DCIP, however the company’s CEO, Travis Reid was quoted as saying:

“A party has signed a deal and we think it won’t be long until we have multiple studios.”

There are no details yet about the terms of the deal, nor any confirmation that it is with Fox, though during a conference call on Thursday Regal Entertainment’s CEO confirmed that a VPF agreement had been reached with at least one studio:

“We can’t disclose which studio, but we consider it to be a major milestone. It is always difficult in getting someone to be willing to be the first.”

Paramount is also rumored to be close to announcing a deal with DCIP, as is Walt Disney Studios.

DCIP was formed by North America’s three largest exhibitors - AMC Entertainment, Cinemark and Regal Entertainment - to manage and finance the rollout of digital cinema equipment and technology within each circuit. With 14,000 screens between them it is easy to see why the industry eagerly awaited news that the studios had come to some form of agreement with DCIP to subsidize the cost of installing digital cinema equipment. Due to the large size of the rollout, such a deal was viewed as a bellwether for the types of VPF deals other exhibitors would be able to get. Recent VPF deals announced by other integrators such as AccessIT in the United States and XDC in Europe did little quell everyone’s anticipation over news from DCIP.

No doubt even DCIP was getting a little anxious over the lack of progress on their VPF agreements they were able to make public. The company was founded in February of 2007 by the three theater chains and had hoped to wrap up their negotiations with studios over VPFs by the end of last year. As almost anyone working in or following the industry now knows, the studios began playing hardball with integrators such as DCIP on the contractual terms of the VPF agreements, haggling over every last detail including usage fees for alternative content and the length of the deal. XDC’s VPF with Hollywood studios is reportedly only USD $850 per film, per run.

And there’s one main reason that the rollout of digital cinema has stalled at around 5,000 screens in North America (out of 37,000); rolling stock prints range from USD $1,200 to $1,500 so even with VPFs the the distributors save heaps of money, whereas exhibitors are forced to pay for expensive digital cinema equipment they claim won’t save them any money or increase their revenue. That the standards for this equipment are still being determined by SMPTE and DCI hasn’t helped matters either.

However, in 2009 Hollywood studios plan to release upwards of 11 movies in digital 3D which will require the equipment to be installed on a broader scale. Presently the number of screens equipped for digital 3D in North America hovers around 1,300, making it difficult to release two such films into the market at the same time. News of the DCIP deal may be a relief for a few studio executives have otherwise to struggle to find enough digital screens to place their 3D releases on. Studios have actually begun to push some of their 3D releases back into 2010 to make certain they will have enough screens to put them on.

The thinking within the industry is that once DCIP starts announcing VPF agreements the rollout of digital cinema should ramp up soon thereafter. Michael Lewis, chief executive of 3D systems provider RealD, told Reuters:

“When the DCIP deal drops, then digital cinema is really on its way.”

Here’s to hoping Mr. Lewis is also fortune teller.

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Posted in Digital Cinema, Integrators

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IMAX Goes Big In Australia With Hoyts

By J. Sperling Reich

July 14, 2008

IMAX has announced a joint venture with Hoyts Cinemas, one of Australia’s largest exhibitors, to build four theatres featuring IMAX Digital technology. The theatres will be built in Sydney, Perth and Melbourne with the first three opening in November of 2008 for the release of “Harry Potter and the Half Blood Prince”. The deal, which will double the number of IMAX theatres in Australia, is the first international joint venture in IMAX’s history.

The agreement has IMAX and Hoyts splitting the profits from the four new theatres as well as the cost of building them. The latter is not insignificant as both companies have not had an easy go of it financially over the past several years. In 2006, IMAX made their second unsuccessful attempt to find a buyer and was rumored to be near bankrupt. Their stock price, which in 1999 reached a high of $49 plummeted to below $4.00 in 2007 when the company revealed it was responding to a Securities and Exchange Commission accounting investigation and that year over year revenue was off.

As for Hoyts, after two years of poor performance revenue-wise, Pacific Equity Partners bought the theatre chain in the third quarter of 2007 for AUD $440 million from James Packer’s Publishing & Broadcasting and West Australian Newspapers. In a press release statement Hoyts CEO, Delfin Fernandez, was not shy about highlighting the financial benefits of the venture. Besides offering incremental revenue from increased attendance, Fernandez said:

“. . . IMAX Digital projection system eliminates the need for film prints, which significantly lowers operating costs and enables us to offer our customers a wider range of IMAX content.”

In an effort to stay relevant during a time when the industry is trending toward digital cinema IMAX launched IMAX Digital System in June. The projection system provides the same large format visuals that IMAX built it’s reputation on in both 2D and 3D. Despite their financial woes, over the last seven months the company has been busy signing contracts with exhibitors for upwards of 180 systems, 50 of which will be installed before the end of the year. Last December, IMAX signed a deal similar to the Hoyts agreement with AMC Entertainment that will have 100 new IMAX Digital theatres opening in 33 markets across the United States over the next three years. Like the Hoyts deal, the AMC pact doubles the number of IMAX screens in the territory. Then in March, IMAX entered into an agreement with Regal Entertainment Group to build 31 new theaters in 20 U.S. markets by the end of 2010.

You might be asking yourself where the cash poor IMAX will be getting all of the dough for such rollouts, though back in May the company lined up financing through Wachovia Capital Finance Corporation as well as an USD $18 million investment from their largest shareholder.

One of the benefits for Hoyts in doing a deal with IMAX is that the chain will be able to deploy some form of digital cinema equipment at time when the company has halted such rollouts to wait out the virtual print fee (VPF) battle between Australian exhibitors and Hollywood studios. Because Australian theatres are usually alloted recycled prints, the studios have shown little interest in giving exhibitors in the territory a worthwhile VPF.

The first three IMAX theatres will be installed at Sydney’s Entertainment Quarter 12, the Carousel 16 in Perth and the Highpoint 17 in Melbourne. The fourth theatre will be built next year in Melbourne.

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Posted in Large Format

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