Progress at Last

Until recently, the European digital rollout was similar to watching a glacier in motion. At times, there seems to be no forward movement. Only when viewed over time and from a distance was there any apparent progress. However, in the past year, we have seen announcements from two major European-based digital-cinema providers that they are now able to offer exhibitors Hollywood-supported incentives covering up to 15,000 screens. These new business plans provide the European market with a solid foundation for future growth.

Last fall, London-based Arts Alliance Media (AAM) was the first to offer European exhibitors a funding package that includes incentives for up to 7,000 screens from four major Hollywood distributors. With the studio deal in hand, AAM has been busy expanding their footprint outside the U.K. with the November 2007 announcement of a 400-screen commitment from CGR Cinemas in France and also in Norway working with the country-wide changeover.

Belgium-based XDC, Europe’s first digital-cinema provider, announced this past May that it has also secured incentives from Warner Bros., Paramount, 20th Century Fox and Walt Disney Studios covering up to 8,000 screens. XDC also announced it expects to complete similar negotiations with Sony and Universal in the near future. Serge Plasch, XDC’s CEO said: “We are very happy to announce these milestone agreements which offer European exhibitors a viable business model to convert their screens to digital cinema. The support of Warner Bros., Paramount, Fox and Disney is a key factor for XDC and will allow us to keep our momentum in Europe, where XDC along with over 120 staunch pioneer customers have shown that commercial digital cinema works.”

The new XDC plan, along with the ongoing AAM plan, provides the long-needed boost to get digital cinema moving in the European market. Both plans offer studio incentives that will lower initial costs for the exhibitors, include integration and support services, and provide exhibitors with a flow of digital titles and exciting new content.

Currently, there are slightly more than 900 DCI-capable systems installed in European screens. During the past year, France, Belgium, Norway and Russia have increased their number of DCI-capable systems. In a few other countries such as Spain, Portugal, Italy and Greece, exhibitors have added 3D-enabled systems on a screen-by-screen basis primarily to play those titles available in 3D. Until the studio incentives are in place, exhibitors in these markets seem willing only to convert selected screens when immediate box-office returns are expected.

United Kingdom
In the spring of 2007, AAM completed the U.K. Film Council digital-cinema rollout of 240 screens. In addition to managing the UKFC’s Digital Screen Network, AAM has been completing trials with Odeon Cinemas at their nine-screen multiplex at Surrey Quays and has upped its offering to its exhibition partners. AAM is currently showing the La Scala opera series in the U.K. and in Norway—a series of seven operas from La Scala and also Venice and Florence at 29 sites across the U.K. and seven screens in Norway.

AAM also just signed a deal with Opus Arte (the production company of the Royal Opera House) to show their content in cinemas across Europe starting in September 2008. The schedule has yet to be finalized, but will include both live and recorded content from the Royal Opera House, and also other opera houses across Europe. The season will have both opera and ballet. This will be the first time ballet will be shown in cinemas.

In the fall of 2007, Real D finalized an agreement with Odeon Cinemas (now including UCI) to install up to 500 of their 3D cinema systems in theatres across Europe. So far, approximately half of Odeon’s estimated 50 digital screens have been equipped with Real D 3D systems. Odeon expects to continue their digital rollout over the next two years with plans to equip approximately one-third of Odeon’s screens with Real D 3D systems.

In November 2007, AAM announced a commitment from CGR to install digital in all of CGR’s 400 screens over the next few years. France currently has around 65 digital systems installed, with around 20 being the result of last fall’s announced deal between AAM and CGR theatres. CGR has also committed to use DLP Cinema projectors from Christie and servers from Doremi.

Recently, AAM installed France’s first all-digital multiplex with 12 screens at CGR’s La Rochelle Multiplex. Additionally, AAM has completed single-screen installations at CGR sites in the cities of Blagnac, Brignais, La Meziere, Lattes, Niort, Villenave d’Ornon and Torcy. Gwendal Auffret, AAM’s managing director of digital cinema, said, “La Rochelle is a benchmark for the digital-cinema transition in France and in Europe. Thanks to CGR, the French cinema industry has now a great opportunity to witness and understand the operations of a fully digital cinema. We look forward to the next phase of our rollout with such a great, innovative partner.” AAM’s target is to get the first 100 CGR systems installed by the end of 2008.

Norway has arguably the world’s most organized digital transition plan in progress, thanks to government support and coordination provided by Film&Kino, an industry organization owned by the local municipalities who are the primary owners and operators of the cinemas and with close connections to Norway’s ministry of culture. Currently with 40 DCI-grade systems, Norway is completing its initial beta deployments with two competing consortiums that are providing the systems integration and supplying the digital-cinema packages (DCPs).

Approximately half of the systems have been installed by the NORDIC (Norway's Digital Interoperability in Cinemas) consortium formed by Unique Digital—Norway’s largest cinema-advertising network, the Norwegian University of Science and Technology, and Telnor—the Norwegian telecommunications giant. Approximately 16 systems have been installed by Nordic Digital Alliance, which is made up of several local partners and U.K.’s Arts Alliance Media.

The current trials have used projectors from Christie, Barco, NEC and Sony and servers from Dolby, Doremi and Kodak. Seven of Norway’s 40 systems have been equipped with XpanD’s (formerly NuVision) 3D system. Film&Kino, along with technical support from one or both of the major Norwegian integrators, is planning to convert the entire country, with completion expected by late 2010. Film&Kino is currently in discussions with the Hollywood studios to provide virtual print fee (VPF) incentives to support the Norwegian rollout.

Russia has experienced a dramatic rebirth in its cinema industry, considering that in the early 1990s there were virtually no commercial theatres open. The first modern multiplexes began in 1996. Since then, the number has grown to over 1,500 screens in operation. Digital cinema began with a single installation in late 2006, and as of May 2008 there were 47 commercial digital screens at 38 sites.

Digital cinema in Russia is driven primarily by 3D. Since there has been no studio or government funding of systems, all have been purchased by the exhibitors, who have found that the popularity of 3D titles has supported a 70% price increase over the standard ticket. Approximately two-thirds of the screens are equipped with either the XpanD or the Dolby 3D systems.

Nine digital screens in Russia are operated by independent exhibitors, while the remaining cinemas are operated by nationwide circuits. The largest exhibitor is Cinema Park with 14 digital screens, with at least one at each of its 11 multiplexes, including nine equipped with 3D. By mid-summer 2008, Cinema Park plans to have two digital screens at each site, bringing their total to 22. The Russian installations have used DLP Cinema projectors from all the vendors and servers from both Dolby and Doremi.

Growth in Russia is expected to continue with around 60 digital screens by mid-year and over 100 by the end of the year. Running in parallel to the increasing number of digital screens is an increasing flow of digital releases. So far, over 50 digital titles have been released in Russia, including six in 3D and 11 from Russian productions. Nevafilm Digital is the local expert largely responsible for overseeing digital-cinema mastering and managing the delivery of the security keys used in Russia.

Picking Up Speed
The new deployment plans go a long way in providing European exhibitors with the funding mechanisms they need to move forward with essential deployment of the base-level digital-cinema systems needed for the strong slate of digital 3D titles expected in 2009 and onwards. Now, with two major European digital-cinema providers offering their exhibitor partners attractive financial deals backed by Hollywood studios, the forecast is for a fairly rapid increase in digital screens in 2008 and 2009.

Digital cinema screens by country:
United Kingdom 279
Germany 145
Belgium 65
France 61
Russia 46
Italy 41
Norway 40
Spain 39
Ireland 36
Austria 33
Netherlands 31
Portugal 26
Switzerland 14
Luxembourg 13
Bulgaria 8
Denmark 4
Greece 4
Iceland 4
Poland 4
South Africa 4
Sweden 3
Turkey 2
Czech Republic 1
Finland 1
Hungary 1

Total: 905 screens

By Bill Mead, FilmJournal International