Dusty T.
Vice President of Sales at Datasat Digital Entertainment (Formerly DTS Digital Cinema)
Digital Cinema - What are the true benefits to the exhibitors?
I have been involved on the technologies side for a number of years and consulting with a couple exhibitors for their digital transition. I am, however, finding it difficult to recommend digital equipment(outside advertising systems) for the small 10- to 50-auditorium organizations I speak to.
I am interested to see how everyone breaks down the cost vs. benefits for the small single-site(or 1-3 site) exhibitors.
Answers (7)
Digital Exhibition is a marketing tool to draw the consumer into the theatre. Before Digital is in every cinema screen, digital will be a calling card and there is some exciting new product which is about to be released in digital only. In addition, the major studios and the indie distributors are expecting to pay a weekly digital fee to play digital film verson film prints. And once the digital systems are paid for, the upkeep/updating is inexpensive.
Randy G. also suggests this expert on this topic:
I believe if used properly, digital cinema can be used effectively to draw visitors from one theater over to a smaller one, but personally I'm not the most qualified to make a case from an exhibitors standpoint. However, from my own viewpoint, there's something I've seen which is an interesting observation that contradicts what Randy also just answered.
What I've seen as a problem with a local theater near me is that they just don't know to market or how to take advantage of the digital aspect of it. They have just 1 DLP screen and are otherwise a large chain, but it’s still a good example. A lot of people who go to the theater don't even know what the difference means and aren't even considering why they are buying tickets to that showing. I've heard countless "what does DLP mean?" questions all the time at the box office.
On the contrary, another nearby theater that is far smaller (has the same number of screens) but has far less attendees just upgraded all of their auds, every last one, to digital, yet they're still not drawing crowds. People don't understand what digital is, why it's better, or why it's worth changing. I think the key is once you work on implementing digital equipment, what you need to do next is develop a strong marketing strategy. The theater needs to show what the difference is and get people on the street that may not know why digital is better to understand and realize. It's marketing that difference to the general public that in turn makes digital cinema beneficial to exhibitors. The problem is all too often everyone assumes that the public knows what digital is and why it’s better, and that’s really not the case at all. Hardly anyone knows.
Digital Cinema certainly offers advantages to all stakeholders including exhibitors and audiences. These advantages include perfect picture and sound, show after show, and greatly increased flexibility with advertising and other pre-show material. The only downside is the cost of conversion.
Now that there are various Integrators such as Access IT, Technicolor, DCIP and CBG coming up with Virtual Print Fee (a fee from the distributor for every feature played digitally in a multiplex) based solutions to greatly reduce the outflow from exhibitors, it would be foolish not to take advantage and upgrade, at least as part of the early majority when the deals are likely to be good.
Digital Cinema is inevitable. So the real question is how to manage the transition best for your needs and get the best deal for yourself.
Also, I feel that unless all of the screen in a multiplex are upgraded to digital, some of the advantages are diluted.
A local multiplex chain in India coined a different term for digital cinema, "RDX" or the Read Digital eXperience and sold this very successfully to consumers with a campaign of billboards around town pointing out each of the advantages of digital cinema to viewers. Now, they are always the first choice of movie viewers and newer properties coming up aren't drawing anywhere near the same crowds!
Michael S.
Associate Director, Science and Technology Council, The Academy of Motion Picture Arts and Sciences
The answer for a single site exhibitor must be very different than for a Regal Entertainment Group (by example). I would suggest that there would need to be a particular reason such as a series of special events that could ever justify the ownership/rental, installation and upkeep costs of DCI type DC equipment. If an art house cinema has an agreement to show special HD video events, than maybe it could work. Non-traditional releases or events may be the only sensible reason to invest the money and headaches required to transistion a small mom n' pop theatre.
As an ex-QuVis person, you must be well aware of the complex nature of a technology that is still evolving. SMPTE DC28 notwithstanding, I would think we are in for a 3rd and 4th generation of hardware/ software that will eventually be known as 'real' DC. Alternativly, you could suggest waiting until the existing 2K boxes and and projectors are available for pennies on the dollar. They are pretty good machines.
Randy R.
Senior IT Analyst
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I'm speaking as someone that's been a filmmaker and is a big fan of film - a person who's aware of the business side, but can appreciate some of the commercial complexity for studios or content providers and exhibitors.
Digital Cinema isn't quite like some of the earlier new film technologies that had a clear benefit for the consumer. The difference between silent and sound movies; Academy frame black and white movies and color, widescreen epics with stereophonic sound; or surround technologies is something that's very obvious to the customer - they know they're getting a new experience when they go to the theater.
Smaller exhibitors seem to have the most to gain with digital projection. They can offer event or other special programming with digital projection and offer it to niche audiences that larger chains can't really do. The Met opera broadcasts are a good example.
An exhibitor can use it to build their brand - they can strengthen an impression in a community that they're more willing to cater to different tastes and set themselves apart from the multiplexes offering the same major releases each week.
Consumers can't really see much of a difference between film and digital - perhaps the sound is a little better and there are no scratches or film grain is minimized, but it's not a fundamental shift in the way a movie is viewed the same way that sound versus silent movies or Academy frame versus Cinemascope might be.
For most cinemas, it seems the real benefits would be in the time and bother saved in setting up and maintaining prints for shows. Even there, the cost savings may be minimal since just about every theater has gone to platters and don't have staff projectionists to pay.
some good answers here, especially from Michael Sterling. I don't think anyone's highlighted the flexibility that a digital system puts in the exhibitor's hands thus allowing them to offer "alternative content" in addition to their staple of movies.
Whether it's wrestling, car racing any other popular sport, the main show can be that can be combined with themed (and money making) additions to the plain old show (such beers and dogs a la tailgate for football coverage as an example).
The opportunity for smaller operators such as the ones you describe in your question could be to identify hotspots of fans for not-so-mainstream sports that can be syndicated for a not-so-mainstream price.
There ARE some great, even classic answers here, addressing branding, product and competitive differentiation, and more. Senthil even offers us a new, great tagline. How happy will Mr. 24 screen Cineplex manager be when the local Rialto’s marquis reads, “Join US for the Real Digital eXperience”
We need to consider “WIIFT - What’s in it for them? Does the ticket-buying customer appreciate the benefits of digital? We hope so, although inconsistent delivery (if you will) challenges efforts to quantify this. Will they pay a higher price for a digital cinema experience? Data so far says, “No”, at least not in the N. America, Japan, or the EU. Will they pay a higher price for a 3D digital cinema experience? It appears so. How much will they pay for digital alternative content? What’s the content? Can exhibitor’s conversion to dcinema be funded by sales and customer loyalty?
Will the local Rialto receive the same conversion subsidy from the studio/distributor, AKA “Virtual Print Fee” or VPF as Regal or any other big chain? VPF rates are one the best-kept secrets in the business, so heck no. This also helps hold them as a second or later run house, right where the big guys want them.
Dusty, without an ROI response to your question, your prospect better be an early adopter, willing to try some of these great ideas while funding his own deployment. Should they launch now? Julian Levin, FOX Digital, is attributed as telling attendees of Screen International’s recent annual conference, of an example of how VPF could pay off an installation in 9 years. He’s also attributed as noting VPF may not be around forever, echoing Fiona Dean’s (Arts Alliance Media) comments at CinemaExpo. I don’t have his numbers, but after 9 years, not one bit of that VPF-funded dcinema gear will be current technology, and I anticipate not much of it will be working.
I’m not the pessimist I express here, Senthil Kumar and just a few others are as committed as I am to the inevitable breakout and success of Digital Cinema. I think the best bet for the local independent exhibitor, or the small technology manufacturer, is establishing their brand, positively differentiating themselves, and trying to lead, not follow the competition.
