Arts Alliance Media Eyes D-cinema Breakthrough

The conversion of the world's cinemas to digital equipment was always much more than a simple upgrade of theatre equipment. The industry had been built on a single standard - 35mm film - and, for all its glaring inefficiencies, it worked in its own way. What digital cinema proposes is far more challenging as well as considerably more exciting. For the first time in history, there is the potential to make film programming fast and responsive to customer demand. There are new forms of content that can renew the business.

But the potentially revolutionary nature of change requires buy-in, risk taking and, of course, financial investment from the most conservative end of the business - exhibition. Arts Alliance Media's founder Thomas Hoegh recognised the potential of D-cinema change long before the creation of the necessary elements to turn it into business reality such as a universally-accepted common standards and shared payment model. Being an early adopter brought advantages and Arts Alliance Media (AAM) was able to establish its place as a major force in the UK and European market quickly. But the problem of being ahead of the game, is that it can involve a good deal of waiting for the world to catch up.

AAM had a separate problem too. It was operating in Europe with a fragmented collection of widely varied territories, each with its own approaches and policies. D-cinema was running into the multi-speed Europe that holds back to much progress in the industry and means the US can always move faster.

False starts
After a grinding period of debates that often descended into the most esoteric bickering, there were reasons for optimism a couple of years ago. The DCI set of standards governing the interoperability, security and quality of D-cinema was finally though sometimes grudgingly accepted.

A new cost-sharing model that - the virtual print fee - was also looking like the only realistic financing option even if it was not met with universal enthusiasm. Some governments were also playing a positive role, notably the creation of the UK's digital screen network in which AAM played a critical role.

AAM won studio support for its VPF-based plans yet still exhibitors in Europe kept their hands in their pockets. Some of the bigger chains have been hoping the studios will come in with a better deal, other smaller ones are legitimately concerned they will be left behind in the switch and are waiting, possibly in vain, for government support.

The deadlock appeared to be broken when , AAM finally signed a high-profile exhibitor deal with French chain Circuit George Raymond (CGR) at the end of 2007. But the floodgates remained steadfastly shut. The entrance of new competition, such as XDC, which announced its plans this year, was also reckoned by many commentators to herald a big push, introducing choice into the VPF model. But the impasse remained.

The breakthrough deal?
Even AAM's deal with CGR seemed to be progressing slowly until this month when it received a $56m (Euros 43m) boost with the signing of a financing agreements with European services company Econocom and a separate deal with various private investors. The Econocom money will allow the completion of the CGR 400-screen digital rollout. The rest will go to a necessary expansion of the business to meet a clear set of ambitions.

"This is the breakthrough we have been waiting for," chairman and founder Thomas Hoegh told ScreenDaily. "This is the first major chain (in Europe) to see the VPF-powered installation completed. These contracts can now be seen to work."

He added:"The most significant thing is that the contracts work and if they work now in this economic environment, then they will work in any environment."

Hoegh believes that the fact that a bona fide deal has been completed might make a big impact, proving that deals can be done.

Advanced the timeframe
The question then is whether the ponderous nature of European rollout has now or can be decisively changed. AAM's belief that we are now turning a corner is tempered to an extent by the fact that it has spent so long seemingly on the brink of the big deal that would break the deadlock. But announcements have been thin on the ground. To be fair, the same is true of rivals.

The company wisely is not over-promising on specifics despite rumours of at least one major deal at an advanced stage. Hoegh is certain that the CGR deal will have got the business thinking about making the shift sooner rather than later.

"There are chains looking very specifically at this deal to see if we can pull it off."

Timing is a critical issue. There are a number of factors with the potential to drive forward the D-cinema timetable. Most obviously is the availability of quality product, particularly 3D. The Hollywood majors have made a big investment in 3D next year yet at the moment there are few screens on which the film can be shown. The move has also allowed at least a temporary shift in the agenda from a long-running debate about whether the current payment models could take along smaller cinemas - though that issue will be amplified over the coming year.

Accentuating the positive
The payment issue has distracted attention from what D-cinema can bring to exhibition. AAM, for example, has been among the pioneers of live opera. Delivering those benefits, however, has meant a tighter focus on what the busines can deliver. Chief executive Howard Kiedaisch spells out a vision of a wide-ranging D-cinema service in which AAM plays key roles in the provision of content, financing installation and supporting customer services.

The new influx of money will allow the business to grow around that strategy, taking on new employees. That new finance certainly looks like a vote of confidence. To focus all its energy on D-cinema, the company has jettisoned one of the components of the business which at one time looked like a core service - the Vizumi download service. But there remains some convincing to do. Kiedaisch wants the company to make a strong mark not only in the UK and France but further afield. Intriguingly, he wants there to be an understanding that there is a place for every size of cinema in the big tent. Details are not clear but it certainly means looking beyond the current VPF deal.

"No cinema is too small and no country too remote," seems to be the new mantra.

This is not simple altruism. AAM needs to take along a critical mass of screens into a D-cinema future in which it can take a leading role. It has however decided that the time is right to force the pace.

By Michael Gubbins, ScreenDaily