Tag Archives: Latin America

Latin American VPF Deals Hide Regional Problems – UPDATED

Butch Cassidy and Sundance Kid

[Ed: We have received lots of feedback and updated info from readers fram and active in the region. ¡Muchas Gracias/Muito Obrigado! The article has been UPDATED THROUGHOUT as a result.]

Much like Butch Cassidy and the Sundance Kid headed to Bolivia after they had run out of banks in the Wild West to hold up, so too digital cinema integrators have moved on to Latin America, now that virtual print fee (VPF) coffers are empty in North America and Europe. Yet despite the flurry of Latin America-related VPF press releases at the recent CinemaCon, there are fundamental issues that will make it a challenge to migrate the continent to digital cinema.

We have already discussed the press releases from CinemaCon 2014, including those  related to Latin America, so for a full breakdown have a look HERE. We will not provide a full analysis or analyse each deal, but try to look at the context and outlook for the region, as it struggles to catch up with the rest of the world in going digital.

As we pointed out during ShowEast 2012 it was the last chance for Latin American countries to get a VPF deal and we are unlikely to see many more major deals after this one. Gary Johns from Sony Electronics commented then that their VPF deals for North America were available until 31 March 2013, i.e. almost exactly a year ago. While international deals do have a little longer to run, studios like Twentieth Century Fox have politely but firmly informed exhibitors, distributors and (perhaps most importantly) government representatives in Brazil and elsewhere in Asia that the end of 35mm prints is nigh.

GDC at the Forefront – of press release announcements

It is noteworthy that deployment entities like Scrabble and GDC have signed separate VPF deployment deals with Hollywood studios (here and here respectively), highlighting that the continent could not easily follow deployment patterns and terms even for non-US or EU territories such as India and China. Of these two entities GDC has been the more active, with no less than five announcements relating to Latin America, while Scrabble has been largely silent recently. So what’s the motivation to be aggressive on the VPF front in Latin America?

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ShowEast 2012 is Latin America’s Last Chance for VPF Deals

This year’s ShowEast cinema trade show is likely to be the last one where any significant virtual print fee (VPF) deals are still on the table. Not only will there soon be no more actual 35mm prints to replace with fees for  virtual ones, following the winding down of film operation by Fuji and Kodak. But Hollywood studios too are rapidly winding down their funding mechanisms. This is particularly bad new for Latin American countries, which have the lowest digital cinema penetration numbers for any continent bar Africa. This was highlighted at the recent 2nd International Conference on Digitisation of Cinemas in Bogota, Colombia, which “focused on the difficulties being experienced by Colombia and Latin America in general in finding the financial model and public funds to help the region convert its cinemas to digital technologies adhering to the global standard.”

With approximately 13,500 systems installed around the world (over 10,000 in North America and over 3,000 in the rest of the world), Sony is intent on pushing its global market share up from the current one tenth of all world-wide screens. Hence Sony’s decision to extend its VPF scheme, most likely by agreeing to lower terms with the Hollywood studios in return for longer lead time. As quoted in THR:

“[Some] VPF deals for the U.S. and Canada ran out at the end of September. Ours are available until March 31, 2013,” reported Gary Johns, senior vp, digital cinema solutions at Sony Electronics. The deadline to sign up for Sony’s program in international markets extends even further out.

Sony is also using the ShowEast opportunity to showcase its newest SRX-R515P projector designed for small and medium auditoriums, as well as its Entertainment Access Glasses for hearing and visually impaired cinema patrons.

ShowEast has traditionally been the cinema trade show for Latin American countries and there is no more pressing issue for that region than the imminent end of 35mm prints and the do-or-die conversion to digital in less than a year. As such, it should come as no surprise that third-party digital cinema integrators, consultants and VPF brokers from across the world are homing in on Latin America. The most recent operator, India Scrabble, has just announced a deal for three territories:

The company has signed separate non-exclusive agreements with Hollywood studios Warner Bros Pictures International, Universal Pictures International, Walt Disney Motion Pictures International and Sony Pictures Releasing International Corporation… The roll-out of the technology will begin from 2013 and will initially be launched in Brazil, Mexico and Chile.

Note that 20th Century Fox and Paramount are missing from the list of studios. While neither of these two will get a free ride on the equipment installed by Scrabble under the terms with the other studios, it highlights the difficulty of getting VPF deals in place this late in the day. Other operators were already present in the region. Cinedigm signed a deal last year with Contenido Alternativo for satellite delivery of DCPs and alternative content, under which it would also “collaborate with theatres in Mexico to bring digital cinema deployment and Virtual Print Fee management services to the region,” on as-yet unsepcified terms. Cinedigm has more recently signed a deal for 290 screens out of the 437 operated by Caribbean Cinemas (pdf) in Puerto Rico, the Dominican Republic, Aruba, St. Lucia, St. Maarten, Antigua, St. Kitts, St. Thomas and Trinidad.

Cinedgim has also signed a deal (pdf) with Brazil’s DGT for the deployment of its software solutions suit, “in preparation for its VPF program roll out later this year.” Similarly, Arts Alliance has contracted with Mexico’s Cinemex for the deployment of its software, though the exhibitor is “negotiating its own VPF (Virtual Print Fee) deals directly with the studios” for its 2,000 screens. Yet the largest obstacle to digital cinema installations in LAtin American territories is not Hollywood studios refusing VPF deals but high tariffs and restrictions on imports of digital cinema equipment. Brazil recently reduced its import duty, but it won’t be until analog screens start going dark for lack of 35mm film that governments across the continent are likely to wake up. Come ShowEast 2013 it will be a very different picture for the continent.

 

Barco Expands In Latin America and India

Barco Logo.jpgAfter launching their 4K projector at ShowEast, Belgium based Barco is ramping up their global sales effort with the announcement of two new deals.

The first was a reseller partnership arrangement with Real Image in India, a country presently experiencing high growth in new multiplex openings. Real Image may be familiar to some as the company behind Qube Cinema. Barco will provide training, service and customer support to Real Image in a deal that should help the projector manufacturer strengthen marketing efforts and increase its install base throughout the territory.

Real Image will be able to offer Barco’s entire digital cinema product line to their customers, a necessity in a country where cinemas range from small single screen complexes in remote geographical areas to state-of-the-art venues in large urban areas. Arvind Rangnathan, Chief Executive Officer of Chennai based Real Image pointed this out in the press release announcing the partnership:

“The complete range of digital cinema projectors offered by Barco are ideal for this market, be it the mid-sized multiplex screen or the large single screen… we are now able to provide a stunning experience in 2D and 3D even on larger cinema screens.”

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RealD and Cinepolis see Latin America in 3D

Cinepolis logo Mexican exhibitor Cinepolis has big 3D plans for the whole of Latin america. Its deal with RealD envisions 500 screens to be converted in the next few years. From the press release:

The rollout of these 500 RealD 3D screens has already begun with six new screens installed for the release of Journey to the Center of the Earth, and will continue through 2010. The partnership makes RealD the exclusive choice of Cinepolis for digital 3D and creates a strong platform in the market for the upcoming slate of over thirty major studio 3D releases in 2009 and 2010.

The press release then goes on to quote Jeffrey Katzenberg and Disney before remembering to sample the opinions of the two companies that made the deal happen, showing you where the TRUE power of 3D lies today (content, content and, yes, more content). THR.com‘s take is that:

Cinepolis and RealD are co-financing the venture, though Cinepolis declined to disclose financial details when contacted Thursday.

The deal provides a major platform for 3-D cinema in Latin America as Cinepolis continues to expand in the region. Cinepolis rival Cinemark also has a partnership with RealD.

and

Cinepolis, owned by the Ramirez family, currently has more than 1,800 screens. In recent years, as Mexico’s exhibition market has grown more saturated, the exhibitor has expanded into Guatemala, Panama, El Salvador, Costa Rica, Honduras and Colombia. Moving forward, Cinepolis is eyeing Brazil’s underserved exhibition market.

So at the present screen count, one out of every 3.6 screens will be 3D. This is clearly a bit too high, so it is likely to come about when Cinepolis has increased its footprint across Latin America. It must also mean that the screens will embrace digital cinema in 2D first, though whether Cinepolis will finance this itself or with a third party provider is nit clear. This means that the deal might not be contingent on something like the delayed DCIP deal holding up Regal and Cinemark’s 3D plans.