The European
cinema experts meet in Barcelona to discuss the challenge of digitalisation
At the course organized by MEDIA Salles
in Helsinki last February, Michael Karagosian – the expert
who assisted the U.S. exhibitors’ association (NATO) in their
approach to digital – chose the following title for his talk:
“Year 11 and Still Talking about the Roll-out.” In fact
what is considered the first commercial digital screening dates
back to 1999: a decade later the screens that have adopted the new
technology have grown to around 9,000*. We might ask whether this
is a lot or a little but what is quite undeniable is that today
the digital transition is the burning issue for the cinema industry.
It is the subject of the conference decided by the Spanish Government,
at present at its term of office in the EU Presidency.
From left: Antonie Drzymala, Legal and Business
Affairs, XDC Cinema, Belgium
David Hancock, Senior Analyst and Head of Film and Cinema, Screen
Digest
Steve Perrin, CEO, UK Digital Funding Group
Rickard Gramfors, Project Manager of Digital House, Folkets Hus
och Parker
Spain invites Europe to a
reflection on the new technologies and the independence of the cinemas
For two days digitization was discussed in Barcelona, from
a specific perspective: the impact that it may have on the sector
of independent exhibition. The approximately 200 guests –
officials from public organizations responsible for the cinema and
experts from the professional sphere – dealt mainly with questions
regarding economic models – those that have already been experimented
or those that are being studied – which might finance the
transition, overcoming the paradox behind this revolution: the promise
of savings on the distribution front, the need for investment by
the exhibitor.
Will VPF be sufficient to finance digitization in Europe’s
cinemas?
VPF in the limelight then, considered as it is in the preparatory
document, drawn up by the “Think Tank on European Film and
Film Policy”, the only feasible mechanism from a purely commercial
point of view for transferring resources from distribution to exhibition,
unless the exhibitors opt for converting the equipment at their
own cost. What is more, it is a mechanism that is not without “harmful
side effects”, particularly in a context like Europe, characterized
by a multitude of exhibition companies, many of which small or small-medium
sized, that are sometimes unwilling to accept a third party in the
traditional dynamics between distributor/exhibitor in the form of
a financial intermediary who, on the one hand, anticipates the funds
for buying the equipment and, on the other, recovers it through
VPF, i.e. the contribution of the distributors.
Yet even if objections to the intermediary should be overcome –
and this is figure that has become necessary since the studios,
whilst ready to co-finance the transition, have laid down the condition
that this contribution, for special purposes and for a fixed duration,
should not be confused with or superimposed in any way on the rental
fee - another crucial issue remains open in Europe: how many screens
would be excluded from the “classic” VPF? The Think
Tank estimates a fairly large slice of them: from 6,000 to 14,000
screens (out of a total of around 30,000). Calculating, moreover,
that the VPF model, the extent of which is reckoned on the basis
of the established distribution dynamics of 35mm films, would perpetrate
the market logics of film, denying or at least delaying considerably
the benefits that digitization promises. On the one hand, the distributors
will not see any savings until they have finished paying the VPF,
and on the other the exhibitors will not gain the full benefits
of programming flexibility until they have become owners of their
equipment (which, for the duration of the VPF agreement, belongs
to the financing organism).
The intermediaries operating in Europe claim they can digitize
over 80% of screens
The validity of VPF is – obviously – sustained
by the companies that have put themselves forward as intermediaries
in Europe: XDC (which has, up to now, signed agreements for the
digitization of over 700 screens), AAM (a little over 500), Ymagis
(almost 200). Jean Mizrahi, CEO of Ymagis, believes that with VPF
80% or even 90% of the Old Continent’s screens can be digitized.
“Consequently,” he stated, “there is no need for
the State to substitute private players. I hope that the European
Union will make this situation clear.”
For the intermediaries to play their part, it is, in fact, essential
that credit from the banks should be accessible. In the present
financial crisis, it seems that the European Investment Bank is
willing to lend a hand: “We can assist those who come to us
with an economic plan. But it’s not our job to identify the
models,” stated Patrick Vanhoudt.
From left: Primitivo Rodriguez, President of SECIES
Elisabetta Brunella, Secretary General of MEDIA Salles
Antonio Carballo, Chief Editor of CineInforme
What are the prospects from
the public sector?
That the mere transposition of VPF, particularly if applied
“American style”, is not a feasible solution –
and not even to be hoped for – is an opinion shared by many
in Europe. For objective reasons on the one hand: just as exhibition
is fragmented, so – perhaps to an even greater extent –
is European distribution. And the more screens and content VPF includes,
the better it works. It is no coincidence that standard agreements
in the USA require that all the screens in a complex be digitized
and regard films by the majors, which control over 90% of the market.
What is more, there is widespread concern that the more oriented
cinemas are towards Hollywood movies, the more compatible they are
with VPF, to the detriment of domestic and European productions.
If we add that in Europe cinemas are considered important not only
because of their economic weight but also because of the social
and cultural role they play in society and on their territory, it
can be seen why there are many institutions that declare that digital
projection, instead of being an added opportunity for the world
of the cinema, becomes a technological divide that will separate
those who can afford the new technology from those who cannot.
Coming soon, the first scheme by the MEDIA Programme for
the financing of digital equipment
In Barcelona the European Commission, co-promoters of the
Conference, confirmed that the MEDIA Programme will be intervening
in support of digitization as a means of safeguarding cultural diversity
and in defence of theatres that would be “at risk” from
a purely commercial perspective. This was announced by Odile Quentin,
on behalf of the European Commission’s Directorate General
for Culture, under whose wing the MEDIA Programme has just returned
after a lengthy period with the Information Society. It was confirmed
by Aviva Silver, Head of the MEDIA Programme, who illustrated the
results of the public consultation launched on 16 October 2009,
and explained by Hughes Becquart who outlined the time-frame of
community action. A study will shortly be initiated making it possible
to establish the lump sums that the theatres will be able to obtain
from Brussels if they are selected on the basis of a call for proposals,
the launch of which is foreseen for summer 2010. Four million euros
are allotted for the first year: some may find this too little if
we consider that the cost of digitizing a screen is estimated at
around 70,000/100,000 euros, but it should be noted that it should
be noted that for the first time the MEDIA Programme’s support
for the circulation of European films also includes financing for
equipment, with the aim of ensuring the presence of films produced
by the Old Continent on digital screens, too.
At national level a variety
of situations and intervention policies
The Barcelona Conference provided a place for exchanging
views on the initiatives adopted in different European countries
on the issue of digitizing cinemas.
After the pioneering intervention of the United Kingdom, where the
money from the National Lottery and the project by the UK Film Council,
aiming at increasing the offer of “non-mainstream” products
throughout British territory, led to the digitization of 240 screens
– well differentiated in terms of type and position - known
as the Digital Screen Network, the Norwegian plan proves to be the
most organic, though less apt for transfer to other territories.
Norway – where the vast majority of theatres are municipally
owned – has chosen a route to digital that includes all of
its screens. For this reason an original formula of mixed VPF has
been elaborated, which sees participation not only by the distributors
(negotiations have been carried out directly with the majors) and
exhibitors, but also by a public institution, largely based on the
levy applied to the area of the cinema.
“Not one less” was the principle inspiring Finland,
too, where the intervention of the Ministry of Culture was directed
to digitizing both screens (around fifty, or about 15% of the country’s
total, in the initial phase already completed) and the whole of
the cinema chain. Practically all the country’s domestic productions
are regularly available in digital format in a country that sees
the combination of culture and technology as an engine of economic
and social growth.
An overall plan – based on the concept of mutual aid –
was conceived by the CNC in France. Turned down by the National
Authority on competition, the programme will probably be converted
into a selective scheme, targeting the cinemas that would find it
more difficult to gain access to purely commercial models. “It
is obvious that rapid action must be taken at this point. After
sitting on the wall, everyone has been in a rush since the release
of Avatar,” said Lionel Bertinet of the CNC, “We, too,
will try to act quickly in two ways: one with direct aid to the
cinemas and also through legislation. The objective is to involve
distribution in the financing of digital conversion, as well as
to guarantee transparency in the sector and free access to products.”
In Barcelona particular interest was aroused by the plan created
in Italy – one of the European countries with the largest
total of cinemas – in order to facilitate the digitization
of screens through tax credit measures.
The dynamism of the regions
can take advantage of community aid
A happy example of regional intervention was brought to
the Conference by Marta Materska-Samek who presented the network
of digital cinemas in Małopolska, the area stretching from
Cracovia south towards Slovakia. This project won the support of
the European Regional Development Fund, a decidedly rich source
of savings, to which an extremely wide variety of projects aspire.
As explained by Pierre Godin, on behalf of the European Commission’s
Directorate General of Regional Policy, the Fund cannot simply finance
the purchase of digital projectors.However, it can support projects
for area development – for example urban regeneration –
which revolve around the cinema.
Information and formation
to accompany the digital transition
Faced with the complexity of the challenges posed by digitization
– emerging both from the talks given and from the questions
and observations that participants made on PCs, thus enabling a
“virtual” debate – the need for training initiatives
is particularly strongly perceived. In fact, if there is one thing
that is clear to everyone, it is that digitization is a far more
complex phenomenon than the mere substitution of equipment. Rather
than purely technical competences, a new mentality is needed and
a new way of making and offering cinema.
Elisabetta Brunella
* MEDIA Salles statistics as at 1.01.2009
report 8,728 screens fitted with DLP Cinema or SXRD technology worldwide.
This article was published in Italian
in the “Giornale dello Spettacolo” no. 8, 23 April 2010
(Per
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