GroundBreaking European Digital Cinema Deal

Fox and Universal Pictures Signs Groundbreaking Deal With Arts Alliance Media Distribution Services

 

Source: Arts Alliance Media

Twentieth Century Fox, Universal Pictures and Arts Alliance Media have reached non-exclusive long term virtual print fee agreements for digital cinema deployment across Europe.

This has been one of the most contentious and challenging issues standing in the way of a widespread digital rollout in Europe. Although details are sketchy at this point, the agreement will apply to almost 7,000 screens over the next few years.

Under the terms of the agreements, which were announced last week at Cinema Expo in Amsterdam, Fox and Universal have committed to distribute feature film content digitally to Arts Alliance Media DCI-compliant digital cinema projection systems throughout Europe. Countries involve include the UK and Ireland, Germany, Austria, Switzerland, France, Spain, Italy, the Nordic region and the Benelux.

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http://www.digitalcinemainfo.com/artsalliancemedia_06_26_07.php

Qube Cinema earns acclaim at Lisbon Village Festival

Source: Qube Cinema

The Lisbon Village Festival, an annual movie festival held at Lisbon, Portugal is currently underway and filmmakers from not just Europe but even Canada and South Asia have entered their work in this festival. The Festival gains special importance as every one of these entries is being screened digitally. This called for a technology partner who provided end-to-end solutions in digital cinema. The organizers of Village International D-cinema Festival after much research went with Qube Cinema and their decision has won them the critical acclaim of all the participating film makers for two years in a row.

Film makers from across the world not only came with a variety of themes, they also brought their work in a variety of formats. All the films to be screened at the festival, from a variety of sources had to be mastered in record time without compromising on quality.  Using Qube’s powerful mastering system, the Village Festival mastered the content in MXF MPEG-2 and DCI JPEG2000 and the DCPs were sent to multiple locations of the festival to be played back on Qube XP servers at the different venues of the screening. Marco Espinheira, CEO - Lisbon Village Festival lauds Qube’s contribution when he says, “The flexibility and ease of operation features of the Qube XP servers allowed us to have a great show at multiple venues with controlled costs. Qube Cinema has helped the Village Festival to be one of a kind in the world by providing us with content that is in keeping with universally accepted standards of digital cinema which includes MXF MPEG-2 and DCI JPEG2000 formats.”

Qube’s association with the festival goes back to the very first time the festival was held last year. This year, over 30 short films and 3 full length features have been mastered and are being played back on Qube systems in both MPEG-2 and DCI JPEG2000 formats.  Nigel Dennis, Head - European Business Operations, Qube Cinema says, “In quite a short span of time we had to master many films. However, mastering the selected films using QubeMaster helped us meet the demands of the film makers and organizers without compromising the delivery schedules or the budgets. The response to the high quality of the content and screening has been immense.”

For more information please contact:

Nigel Dennis
Tel: +44 208 144 5661
Mob: +44 7878717548
Nigel@qubecinema.com
www.qubecinema.com

Christie Celebrates More Than 3,000 Digital Cinema Installations Worldwide

Source: Christie

Christie, a global leader in visual solutions for entertainment, business and industry, announced that it has installed more than 3,000 Digital Cinema systems worldwide, the first manufacturer to reach this important milestone.  The accomplishment confirms the company’s solid dominance in the Digital Cinema market, with nearly 80% of all installations around the world using Christie DLP Cinema projectors, making the projector a world standard.  With Christie on target to surpass 4,000 installations by the end of the year, the company’s success has exceeded all earlier industry expectations for the entire global market for Digital Cinema.

More than 2600 systems are installed throughout the USA as part of the groundbreaking AccessIT software & funding vehicle introduced in 2005.  Christie installations also span Africa, Asia, Austria, Brazil, Bulgaria, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, Norway, Philippines, South Korea, Spain,

Switzerland, and the United Kingdom.  Christie installations outside of North America have begun to accelerate positioning the company as the leading player in the global deployment of DLP Cinema systems worldwide.

To keep up with demand, Christie’s manufacturing facilities have boosted capacity by over 400% in the past year, delivering more than 400 DLP Cinema units per month while continuing to increase efficiency and raise productivity.  Christie has also been aggressively recruiting top technical and administrative staff that include electronics, mechanical and optical engineers, technicians and industry experts. It has also instituted comprehensive quality control programs continuing to meet the high standards of excellence upon which the company has built its reputation.

“Christie is fulfilling all of its current contracts and commitments and successfully ramping-up its deployment of digital systems by scaling manufacturing and services to meet the global needs of the market,” observed Jack Kline, president and COO, Christie USA.  “Our unparalleled success is based on more than three-quarters of a century of experience.  Quality and world-class support services remain our number one priorities as we work with exhibitors to help them make the digital transition seamlessly and revolutionize the movie-going experience.”

BAFTA Selects Dolby Digital Cinema System For Screening Theatre

Source: Dolby

Dolby Laboratories, Inc. has been selected by the British Academy of Film and Television Arts (BAFTA) to provide the Academy with a Dolby® Digital Cinema system. Now operational in BAFTA’s Princess Anne Theatre in London, the system will enable pristine digital screenings with highly reliable anti-piracy protection in one of the British film industry’s most revered and historic locations.

With a membership of nearly 6,500 experts from the film and television industry, BAFTA plays a key role in supporting filmmakers and recognizing their achievements. The new Dolby Digital Cinema system will be available for use in BAFTA’s varied program of movie screenings for members, as well as use for film company screenings and other corporate events. The system will be used with an existing 2K digital cinema projector.

BAFTA Foundation Trustee, Fellow, and former Chairman Sir Sydney Samuelson, CBE, said, “Our members and audiences expect the highest standards of movie presentation. Through its innovative work in film sound, Dolby has been a great partner of BAFTA, its members, and the British film industry over many years, and we’re delighted to have their support again in the transition to fully digital presentation.”

Jason Power, Director, Market Development at Dolby, commented, “In such a prestigious screening location, it’s vital that a digital cinema system offers not just fantastic quality, but also impeccable reliability and high levels of anti-piracy protection. The Dolby Digital Cinema system has been designed from the ground up to deliver the advanced performance needed in these exacting environments. For example, the system was recently recommended for FIPS Level 3 certification, a stringent DCI-required security measure that provides confidence that digital movie copies are protected from theft.”

Dolby’s long-standing relationships with exhibitors, filmmakers, and studios and a heritage of more than 40 years, show its commitment to making the moviegoing experience more dynamic and memorable. Digital cinema is the next generation of a great tradition that gives the cinemagoer high levels of presentation quality and reliability, both visually and aurally.

To learn more about Dolby Digital Cinema, please visit www.dolby.com/promo/digitalcinema.html.

http://www.digitalcinemainfo.com/dolby_06_26_07.php

Sathyam Cinemas selects Qube for all screens of its flagship multiplex at Chennai, India

Source: Qube Cinema

The Qube XP-D digital cinema server has been installed in all six screens at Sathyam Cinemas flagship multiplex in Chennai, making the complex completely digital with DCI compliant systems. Qube provides end-to-end solutions for digital cinema and the Qube XP-D server is built to conform to the requirements of the DCI Specification.

As one of India’s premium exhibitors, Sathyam Cinemas has always been alert to developments in digital cinema and ready to embrace new technologies. The flagship complex in Chennai has set a benchmark for cinema exhibition since its establishment in 1975. Sathyam Cinemas has always been at the forefront of technological developments in the Indian market and the recent upgrade of every screen in this complex to Qube XP-D servers and Barco DP-100 projectors is one more example of this commitment.

Kiran Reddy, Managing Director, Sathyam Cinemas says, “We are committed to bringing the highest quality in digital exhibition to our patrons, just as Qube Cinema is committed to providing technology that meets global standards in quality, flexibility and reliability. In this regard, just as every screen at Sathyam’s flagship location at Chennai is installed with DCI compliant servers and projectors today, we have decided that every one of our new builds will also be thus equipped; and that film projectors will be installed in just a few screens.”

With every screen at this location installed with the Qube XP-D DCI compliant server, Sathyam Cinemas can be now seen as the first cinema complex in Asia to be fully digital with DCI compliant equipment. Qube Cinema hopes this is the beginning of a large scale conversion to D-Cinema in the Indian market.

“We have had a long and mutually beneficial relationship with Sathyam Cinemas and are happy to be an important part of their pioneering initiative in the Indian market. Their role in showcasing DCI quality digital cinema to the Indian film community has been very significant and some of the top directors and cinematographers in the country have greatly appreciated the quality of D-Cinema, having seen both Indian and Hollywood content here. It is now certain that Indian exhibitors will embrace D-Cinema for their premium screens in key cities across the country”, says Senthil Kumar, Director, Qube Cinema, Inc.

For more information please contact:

Senthil Kumar, Director, Qube Cinema, Inc.
 +91 (44) 4204-1505
 senthil@qubecinema.com
 www.qubecinema.com

http://www.digitalcinemainfo.com/qubecinema_06_24_07.php

Academy of Canadian Cinema and Television appoints new CEO

Source: The Financial Express

Paul Gratton, Chair of The Academy of Canadian Cinema and Television (ACCT) today announced the appointment of Sara Morton as CEO. The search for a new CEO was undertaken in April 2007 following the resignation of Maria Topolovich who had held the position for over 25 years.

“Ms. Morton is the ideal candidate for this position: she has worked with broadcasters, is knowledgeable about regulatory matters, is an expert on tax credits and financing structures, has worked with boards, lobbied with stakeholders and managed staff,” said Gratton. “In fact, our search committee was unanimous in choosing Ms. Morton for this position and the Board of Directors of the ACCT looks forward to working with her on the many vital issues that challenge the Academy in the months and years ahead.” Ms. Morton has more than 15 years experience in both the public and private sectors in the film and television industry. After completing degrees in business and law she began her career as a media and entertainment lawyer with a Bay Street law firm, and participated in the financing of numerous Canadian film and television productions.

She left private practice to join the Ontario Film Development Corporation where, as Director, Tax Credits, she oversaw the implementation of Ontario’s tax credits for film, television, computer animation and interactive digital media in co-operation with Ontario’s Ministry of Finance. Subsequently, she was promoted to the position of Chief Operating Officer for the OFDC and played a key role in achieving the expansion of the organization’s mandate and funding that resulted in the creation of the Ontario Media Development Corporation.

Returning to the private sector, she worked as an independent consultant to some of Canada’s major broadcasters including Global Television, advising on its launch of seven digital specialty channels, and Bell Globemedia on regulatory and policy strategy matters.

Most recently, Ms. Morton worked in broadcast distribution with Bell ExpressVu, where she provided business, financial and strategic leadership for the acquisition of film and television content for Bell’s DTH, PPV, VOD and IPTV platforms.

Ms. Morton will assume her duties as of July 3, 2007. The Board of Directors of the Academy extends its thanks to mediaINTELLIGENCE.ca Inc. for their contribution to the success of The Academy’s search.

The Academy of Canadian Cinema & Television is a national non-profit professional association dedicated to promoting, recognizing and celebrating exceptional achievements in the Canadian film and television industries. Created in 1979 and today unifying more than 4,000 industry professionals across Canada, the Academy is a vital and integral force representing all areas of the film and television industry.

http://www.digitalcinemainfo.com/academyofcanadiancinema_06_26_07.php

“Sivaji – the Boss” achieves distinction as India’s first 4K DCP

Source: Qube Cinema

The release of Tamil movie Sivaji - the Boss, AVM Studios’ latest blockbuster, marks a milestone in the history of Indian cinema. The much-awaited film starring the undisputed superstar of Indian cinema, Mr Rajinikanth, makes history as the first Indian feature to have been mastered in 4K; and Qube takes the credit for having mastered the film in 4K DCI JPEG2000 using the powerful QubeMaster system.

Sivaji – the Boss has been in the news for several reasons. Produced by AVM Studios and directed by the renowned Indian director, Mr. Shankar, the movie opened to packed theatres. Shot in Super 35mm by renowned Cinematographer Mr. KV Anand, this was the first Indian film that was scanned, digitally graded and output in 4K resolution with the DI work being carried out at EFX, Chennai. Given the availability of the 4K DI data, Qube Cinema decided to produce a 4K DCI Compliant DCP for this feature. This 4K JPEG2000 DCP is being played on Qube XP-D servers in 2K resolution at multiple locations in India. The feature was also mastered in MPEG-2 format by Qube Cinema for playback in numerous E-Cinema screens across the country.

For more information please contact:

Senthil Kumar
Tel: +91 (44) 4204-1505
senthil@qubecinema.com
www.qubecinema.com

http://www.digitalcinemainfo.com/qubecinema_06_26_07.php

Digital Innovations Will Boost Film Spending, Reports PWHC

Source: Pricewaterhouse Coopers

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The global entertainment & media (E&M) industry is experiencing sustained growth and will increase at a 6.4% compound annual growth rate (CAGR) to $2 trillion in 2011, according to PricewaterhouseCoopers Global Entertainment and Media Outlook 2007-2011, released today.

Double-digit growth is expected for digital and mobile spending in each territory during the next five years rising to $153 billion by 2011. Spending related to the distribution of entertainment and media on convergent platforms (convergence of the home computer, wireless handset and television) is also growing at double-digit rates and will exceed 50% of global spending by 2011. Within the next five years, nearly half of the total industry growth is expected to be generated through online and wireless technologies and, during the same period, broadband households will grow by 300 million to 540 million subscribers and wireless subscribers will increase by 1.1 billion to 3.4 billion. The migration to digital formats is having an adverse impact on competing revenue streams while consumer-generated media is accelerating content fragmentation, the report says.

Jim O’Shaughnessy, Global Chairman, Entertainment & Media practice, PricewaterhouseCoopers, said:

“Content, distribution and technology companies need to aggressively seek out new relationships to accommodate the shift towards convergence. Furthermore, companies will need to test new business models to address increased fragmentation and intellectual property in a digital era. Deal activity across the entertainment and media sector is accelerating, driven by the migration to digital formats.”

Global advertising will increase at a 5.4% CAGR during the forecast period, rising to $531 billion in 2011 from $407 billion in 2006. Internet will remain the fastest-growing advertising medium, with a projected 18.3% compound annual increase to $73 billion in 2011. Advertising on the internet has truly come of age, and by 2011 will comprise 14% of the global advertising market. Out-of-home will be the second fastest growing advertising medium, with a projected 6.5% compound annual increase.

Key Drivers of Global E&M Industry

In every region, spending on convergent platforms will grow faster than other E&M platforms and will account for 72% of the total E&M growth during the next five years. Asia Pacific will be the fastest-growing convergent platform region with a projected 13.5% increase and double-digit growth is expected in Latin America as Internet and broadband penetration begins to gain momentum.

Economic expansion and a surging entertainment and media market are driving significant growth in Brazil, Russia, India and China (BRIC). Led by India and China, E&M spending in BRIC will continue to grow at double-digit annual rates during the next five years and will account for 24% of global E&M growth during the next five years. Spending for the BRIC countries will increase by a 14.7% compounded annually, expanding from $127 billion in 2006, to $251.5 billion in 2011. That gain will be nearly three times the projected 5.5% compound annual increase for the rest of the world.

Marcel Fenez, Global Managing Partner, Entertainment & Media practice, PricewaterhouseCoopers, added:

“The surge in broadband and wireless adoption is generating new digital revenue streams across multiple segments. Broadband growth is driving online advertising while the proliferation of next-generation wireless devices designed to play digital music, video games and receive TV programming is fuelling mobile distribution. For example, Asia Pacific spending on distribution of television programming on mobile phones is expected to reach $6.5 billion in 2011 from just $26 million in 2006.”

Regional Highlights

The US remains the largest but slowest growing E&M market, growing at a 5.3% compound annual growth rate reaching $754 billion in 2011. US spending on Internet advertising and access will surpass spending on newspaper publishing in 2009.

EMEA, the second largest market, will expand at a 5.5% CAGR to reach $617 billion in 2011. Led by Saudi Arabia/Pan Arab and South Africa, Middle East/Africa will continue to be the growth region, averaging 8.5% compounded annually during the forecast period. TV distribution, Internet advertising and access spending and video games will be the fastest growth segments for EMEA averaging double-digit compound annual increases during the next five years.

Asia Pacific will remain the fastest-growing region during the next five years, with the fastest economic growth and double digit increases in Internet, TV distribution, casino and other regulated gaming and video games. Spending in Asia Pacific will average 9.6% annual growth, the fastest of any region, increasing from $297 billion in 2006 to $470 billion in 2011. India will be the fastest growing during the next five years at 18.5% CAGR while China will continue to record double-digit annual gains that will average 16.8% CAGR.

Latin America’s E&M market, the second fastest growing region, is projected to rise at an 8.9% CAGR to $68 billion in 2011. Canada is projected to expand at a 5.6% CAGR to $47 billion in 2011, with double-digit growth projected for Internet and radio/out-of-home advertising.

Selected Segment Highlights From The Outlook – Internet, TV Distribution and Video Games To Be Fastest-Growing

Internet Advertising and Access Spending: The global Internet market rose 21.8%, the fastest-growing segment in 2006 and the fourth consecutive increase in excess of 20%. Advertising rose 37.9% and access spending increased 18.8%. The migration of Internet subscribers from dial-up to broadband is the principal driver. Cable operators and telephone companies have introduced triple play packages that combine broadband with television and telephone service. Globally, Internet advertising and access spending is expected to grow from $177 billion in 2006 to $332 billion in 2011, a 13.4% CAGR.

Television Distribution: The global television distribution market, the second fastest growing segment, increased by 9.4% in 2006, an improvement compared with the 6.5% increase in 2005. Aggressive roll-out of Internet protocol television from telephone companies is stimulating competition and fuelling subscriber growth. Cable operators are migrating their subscribers to digital platforms that not only boost monthly subscription revenues but also expand the market for video-on-demand. Mobile television is emerging as an important distribution channel, particularly in Asia Pacific, boosted by new service rollouts and enhanced wireless devices. Globally, the television distribution market will increase from $161 billion in 2006 to $251 billion in 2011, a 9.3% CAGR.

Video Games: The introduction of the new generation of video game consoles and the associated increase in video game software purchases for those consoles boosted spending by 14.3% in 2006. New Internet-enabled consoles and growing broadband penetration will spur growth in the online game market while next-generation wireless devices will drive demand for wireless games. Globally, video game spending is expected to rise from $32 billion in 2006 to $49 billion in 2011, a 9.1% CAGR.

Casino and Other Regulated Gaming: Casino and other regulated gaming rose by 8.5% in 2006, led by new casinos in Macao, Las Vegas and other regions. Casino revenues in Macao, which has become a major gaming destination centre, surpassed the Las Vegas Strip in 2006. New casinos and upgrades of existing casinos will boost casino revenues. Globally, spending will increase from $102 billion in 2006 to $144 billion in 2011, a 7.2% compound annual increase.

Television Networks (Broadcast and Cable): The TV network market rose 6.2% in 2006, comparable to the 6.3% gains in 2003 and 2005, but significantly less than the growth in 2004, which had been driven by the Summer Olympics advertising. Multi-channel advertising will be the fastest-growing sector in each region, buoyed by large increases in digital households. High-definition television (HDTV), new channels, and economic expansion will also boost advertising on free-to-air channels. Globally, spending will increase from $172 billion in 2006 to $228 billion in 2011 at a 5.8% CAGR.

Sports: Sports increased 12% in 2006, the largest increase during the past five years, buoyed by the FIFA World Cup, the Winter Olympics, and the return of the National Hockey League (NHL) in North America. Competition in the TV distribution market is fuelling demand for TV rights fees, leading to record deals. Spending in the sports segment is expected to increase from $96 billion in 2006 to $124 billion in 2011, at a 5.2% CAGR.

Filmed Entertainment: Filmed entertainment rebounded in 2006 with a 2.9% advance following a 2.6% decline in 2005. A strong slate of films boosted the box office market in each region while supporting the home video market. Digital download-to-own streaming services will generate incremental revenue in the United States and EMEA. Box office will be enhanced by digital cinemas in the United States, EMEA, and Asia Pacific and by modern theatres and more screens in Central and Eastern Europe, Asia Pacific, and Latin America. Globally, filmed entertainment spending will rise from $81 billion in 2006 to $103 billion in 2011 at a 4.9% CAGR.

Radio and out-of-home advertising: The radio and out-of-home market rose 4.5% in 2006, down from the 5.2% annual gains during 2004–05 although an improvement compared with the 2.7% annual gains during 2002–03. Out-of-home was the faster-growing component with a 6.3% increase while radio rose by only 3.6%. Out-of-home will be fuelled by digital billboards. Improved out-of-home audience measurement systems will attract advertisers, and the expansion of captive video networks will also fuel growth. Globally, the radio and out-of-home advertising segment is expected to increase from $69 billion in 2006 to $89 billion in 2011, a 5.2% CAGR.

The Outlook also includes in-depth global analyses and five-year market forecasts for six other industry segments, including: book publishing, business information, magazine publishing, newspaper publishing, recorded music and theme parks and amusement parks.

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3D Cinema: Exhibitors race to reap the rewards from the next big thing in film as this time around 3D is not a gimmick

Source: Screen Digest

Screen Digest today releases its latest report, ‘The Business Case for Digital 3D Cinema Exhibition‘. The report looks at the rationale for the roll-out of 3D screens and finds that early adopter exhibitors are already reaping very strong returns on their investments. Exhibitors who are not planning to equip their theatres with 3D screens run a serious risk of being left behind.

As the Hollywood Studios invest heavily in movies designed exclusively for 3D, the number of screens will need to increase dramatically from its current low base in order to support this new wave of 3D films.

The lure of premium content will drive rapid growth by exhibitors in the number of 3D-ready screens and in these early stages of the market, first adopters have already capitalized on the preferential box office returns from the first slate of movies. Nevertheless, questions still remain as to whether there is real value for exhibitors in continuing to invest in a large-scale rollout of 3D-ready screens.

The race to 3D
At the end of 2006 there were 258 digital 3D screens worldwide, but expansion has been rapid with each new release resulting in a mushrooming of screens. During the first six months of 2007, the number of screens worldwide has almost tripled to 750, with 85 percent of them in the US and much activity in Korea, Australia and Germany. With seven screens, the UK is second in Europe behind Germany, which boasts 22.

The rollout of 3D equipment (comprising 3D glasses, hardware, and if necessary, a silver screen) is highly concentrated among the leading multiplex operators, and the top five movie theatre chains in the US now control over 80 per cent of the market by screens. Globally there are now 41 cinema chains in 21 different territories that have equipped more than one digital 3D screen. By 2009 Screen Digest forecasts that there will be over 5,000 enabled digital 3D screens worldwide, equivalent to more than 5 per cent of modern cinema screens. Three quarters of these will be in the US.

3D equals 3x the revenue
Analysis of box office data from the first four digital 3D releases (Chicken Little, Monster House, Nightmare before Christmas 3D and Meet the Robinsons) has shown that digital 3D screens generate on average three times more revenue, driven by a 2.4 times higher attendance ratio per screen when compared with 2D screenings for the all important first weekend. Moreover, the introduction of flexible ticket pricing has opened up a new profit share structure in which exhibitors share the resulting ’surcharge’ revenue from higher ticket prices with the Studio, an incentive for both sides of the industry alike.

Break-even analysis
Screen Digest has produced financial analysis which suggests that exhibitors will require a regular supply of at least three 3D movies a year in order to see a return on their investment in the equipment.

Applying an average price premium of $2.00 per movie ticket, exhibitors could net over $50,000 profit per screen, once a critical benchmark of seven 3D releases is met per annum, and the costs for the 3D equipment have been deducted. The emergence of rival digital 3D systems, led by proprietary technology from Dolby/Infitec, will drive the market harder beginning 2008. RealD is currently the leading supplier of digital 3D equipment, accounting for just under 95 per cent of the market in the first half of 2007.

3D comes at a good time for the cinema industry
In recent years, cinema admissions in the key markets worldwide have stabilized as some movie-goers have chosen to stay at home. However, just as the technology gap between cinema and home cinema was getting smaller, the advent of digital 3D has enabled the cinema industry to raise the bar higher, and maintain its competitive edge.

Charlotte Jones, Screen Digest Analyst and author of the report says “Digital 3D has the potential to give the cinema industry a shot in the arm to counter flat admissions over recent years. Just as the gap between cinema and home cinema seemed to be getting smaller, the cinema industry has again proven that it can reinvent itself in the face of competition from other release windows. Superior box office returns from early digital 3D releases point towards a strong business case for a rapid roll-out of 3D screens.”

3D Cinema: Exhibitors race to reap the rewards from the next big thing in film as this time around 3D is not a gimmick

Source: Screen Digest

Screen Digest today releases its latest report, ‘The Business Case for Digital 3D Cinema Exhibition‘. The report looks at the rationale for the roll-out of 3D screens and finds that early adopter exhibitors are already reaping very strong returns on their investments. Exhibitors who are not planning to equip their theatres with 3D screens run a serious risk of being left behind.

As the Hollywood Studios invest heavily in movies designed exclusively for 3D, the number of screens will need to increase dramatically from its current low base in order to support this new wave of 3D films.

The lure of premium content will drive rapid growth by exhibitors in the number of 3D-ready screens and in these early stages of the market, first adopters have already capitalized on the preferential box office returns from the first slate of movies. Nevertheless, questions still remain as to whether there is real value for exhibitors in continuing to invest in a large-scale rollout of 3D-ready screens.

The race to 3D
At the end of 2006 there were 258 digital 3D screens worldwide, but expansion has been rapid with each new release resulting in a mushrooming of screens. During the first six months of 2007, the number of screens worldwide has almost tripled to 750, with 85 percent of them in the US and much activity in Korea, Australia and Germany. With seven screens, the UK is second in Europe behind Germany, which boasts 22.

The rollout of 3D equipment (comprising 3D glasses, hardware, and if necessary, a silver screen) is highly concentrated among the leading multiplex operators, and the top five movie theatre chains in the US now control over 80 per cent of the market by screens. Globally there are now 41 cinema chains in 21 different territories that have equipped more than one digital 3D screen. By 2009 Screen Digest forecasts that there will be over 5,000 enabled digital 3D screens worldwide, equivalent to more than 5 per cent of modern cinema screens. Three quarters of these will be in the US.

3D equals 3x the revenue
Analysis of box office data from the first four digital 3D releases (Chicken Little, Monster House, Nightmare before Christmas 3D and Meet the Robinsons) has shown that digital 3D screens generate on average three times more revenue, driven by a 2.4 times higher attendance ratio per screen when compared with 2D screenings for the all important first weekend. Moreover, the introduction of flexible ticket pricing has opened up a new profit share structure in which exhibitors share the resulting ’surcharge’ revenue from higher ticket prices with the Studio, an incentive for both sides of the industry alike.

Break-even analysis
Screen Digest has produced financial analysis which suggests that exhibitors will require a regular supply of at least three 3D movies a year in order to see a return on their investment in the equipment.

Applying an average price premium of $2.00 per movie ticket, exhibitors could net over $50,000 profit per screen, once a critical benchmark of seven 3D releases is met per annum, and the costs for the 3D equipment have been deducted. The emergence of rival digital 3D systems, led by proprietary technology from Dolby/Infitec, will drive the market harder beginning 2008. RealD is currently the leading supplier of digital 3D equipment, accounting for just under 95 per cent of the market in the first half of 2007.

3D comes at a good time for the cinema industry
In recent years, cinema admissions in the key markets worldwide have stabilized as some movie-goers have chosen to stay at home. However, just as the technology gap between cinema and home cinema was getting smaller, the advent of digital 3D has enabled the cinema industry to raise the bar higher, and maintain its competitive edge.

Charlotte Jones, Screen Digest Analyst and author of the report says “Digital 3D has the potential to give the cinema industry a shot in the arm to counter flat admissions over recent years. Just as the gap between cinema and home cinema seemed to be getting smaller, the cinema industry has again proven that it can reinvent itself in the face of competition from other release windows. Superior box office returns from early digital 3D releases point towards a strong business case for a rapid roll-out of 3D screens.”