Economic Downturn Slows the Digital Rollout in Europe

Digital-cinema progress in Europe, much like in the Americas and Asia, has slowed considerably due to the worldwide economic downturn. Although the total is approaching 1,600 digital screens, up from around 1,300 in mid-2008, growth is falling short of previous industry predictions.

During 2008, a number of wide-scale conversion initiatives came from Europe, but most were put on hold when the credit markets collapsed. With only a few circuit-wide 2D conversions in progress, most recent installations have been on a single-screen basis and largely driven by 3D. Premium prices on 3D tickets provide a relatively fast and sure route to recouping the initial investment. In fact, 3D may be the single reason there is any forward movement during this period of economic turmoil. For the remainder of 2009 and onwards, 3D continues to look bright as studios and producers disclose their upcoming slates of tentpole 3D movies. Europe saw 16 major 3D releases in 2008 and expects 20 or more by 2010.

Most European exhibitors have moved from questioning the value of digital to figuring out how to secure the financing to move forward with deployments. In addition to tight credit, other issues are slowing progress: Virtual Print Fee (VPF) agreements are often complicated because of the many parties involved, and there are remaining uncertainties around the future requirements of fully compliant equipment.

Unlike in the U.S., where virtually all the major distributors began supplying DCI packages in parallel with 35mm prints, allowing many U.S. exhibitors to convert entire multiplexes, European exhibitors, who play titles from a broad range of local and foreign distributors, find that they must retain the ability to play 35mm in the majority of their auditoriums. In effect, European exhibitors must take smaller and more cautious steps towards digital transition, at least until the financing is available and there is an ample supply of digital titles.

Most European deployments continue to be dominated by the two major digital-cinema providers: the U.K.’s Arts Alliance Media (AAM) and Belgium’s XDC. Both are providing end-to-end management of digital deployments, including financing, overseeing system integration, supplying digital content and providing support services. In addition, there are a number of regional, country-specific or exhibitor-specific initiatives in progress, such as Ireland Digital Cinema Limited, the Ymagis initiative in France, and Norway’s government-backed conversion.

United Kingdom
In the U.K., three of the major exhibitors have announced significant deployments with up to 450 3D screens between them. To promote understanding of digital’s impact on their industry, the U.K.’s primary trade body, the Cinema Exhibitors Association, has just completed a nationwide Digital Cinema Roadshow talking to over 250 professionals within the exhibition community.

Based in London, Arts Alliance Media has installed over 600 digital screens across Europe, including the U.K., France, the Netherlands, Norway and Spain. AAM was the first European digital-cinema provider to sign VPF deals with studios and exhibitors, and is currently engaged in discussions to roll out more digital screens across Europe.

AAM has also secured 43 million euros of funding from pan-European services company Econocom and other private investors, together with a long-term strategic partnership agreement with Arqiva Satellite & Media for the satellite distribution of films and alternative-content live events into European cinemas.

The AAM/Arqiva partnership agreement sets forth an action plan for the development of a content-delivery platform and network for film distribution via secure satellite. Beginning in October 2008, AAM and Arqiva have successfully distributed digital-cinema files via satellite direct to the library servers in the cinemas, without any operator intervention. AAM and Arqiva have also been working together recently on the live HD transmissions of opera and ballet performances from the Royal Opera House and other leading venues to cinemas across Europe.

Dolby Laboratories also partnered with Arqiva and entered the satellite distribution business by launching Dolby Direct Distribution Services -- a pan-European satellite content-delivery network for digital cinemas. The service uses Arqiva’s satellite infrastructure to distribute feature movies, trailers and advertising content direct to their participating cinemas throughout Europe. Dolby Direct Distribution Services will eliminate the physical delivery and manual upload of digital content onto individual cinema servers. The new services, coupled with their JPEG 2000 compression and two-pass encoding system, will lower file sizes, making efficient use of satellite as a highly effective delivery platform.

The Empire Leicester Square is Europe’s first auditorium to utilize the new Dolby 3D Digital Cinema large-screen solution. Empire boasts one of the largest screens in the U.K., and the Dolby large-screen solution combined with Barco’s twin-projector setup allows exhibitors to put high-quality 3D on non-silver screens up to 21 meters wide.

Also in the U.K., the Cineworld Group selected Doremi Cinema to supply servers for their planned rollout, which will double their digital screen count. Overall, Doremi has over 1,200 European cinemas equipped with their servers. Vue Entertainment announced a commitment to add 200 RealD 3D screens to its circuit. In addition, Odeon and UCI Cinemas -- Europe’s largest cinema operator -- plans to add 111 screens across Europe using a combination of Doremi and Qube Servers.

In Ireland, Digital Cinema Limited (DCL), the country-wide digital-cinema provider, has already installed 54 systems using a combination of Barco and NEC projectors and servers from Doremi and Digicine (from digital-cinema pioneer Avica). DCL is in negotiation with a number of Hollywood studios and plans to announce the details of its country-wide deployment initiative at Cinema Expo 2009. One of Ireland’s leading exhibitors, Irish Multiplex Cinemas (IMC) also announced that it has added RealD 3D capabilities to each of its multiplex locations for a total of 14 RealD 3D-enabled screens.

Western Europe
In France, AAM is finishing off their 400-screen VPF-funded deployment with CGR Cinemas, based in La Rochelle. Additionally, CGR has announced their intention to add RealD 3D capabilities to each of its 33 locations for a total of 200 RealD 3D screens. The result will be the largest 3D circuit in France. Installation of CGR’s 3D deployment is expected to be complete by mid-year, with four to six RealD-equipped screens at each CGR Cinemas location.

Belgium based XDC continues to move forward with over 500 digital screens equipped and six studio-supported VPF deals from Warner Bros., Paramount, Universal, Walt Disney, Fox and Sony Pictures. They are actively completing installations in Austria with Cineplexx, with 76 screens already installed and a target of 120 screens operating by the end of 2009. XDC has also been providing alternative-content platform services for DDCinema, More2Screen, D&E Entertainment and Emerging Pictures. At Cinema Expo, XDC will present its new CineStore Plaza TMS.

Ymagis, based in Paris, has concluded VPF agreements with Universal Pictures, Paramount, Disney and Fox and will pay their customers digital print fees under a long-term agreement. For starters, Cineville, a subsidiary of Soredic, an exhibition and booking group based in Rennes, have agreed to equip 103 screens, with the first expected in mid-2009. In total, Ymagis has signed agreements with around 25 French exhibitors representing around 300 screens, and is expanding their program to include exhibitors in Belgium, Switzerland and Spain.

In Spain, AAM and Yelmo Cines, one of Spain’s largest exhibition chains with 370 screens, have announced an agreement to equip 18 new screens in 18 different sites with 3D and satellite capabilities. The deal follows AAM installation of digital projection equipment in five screens at Yelmo’s Isla Azul complex in Madrid last summer, bringing the total to 23 screens in the next few months. AAM is working closely with its local integrator partner, Suministros Kelonik, Spain’s leading equipment installer. Yelmo has selected Christie projectors, Doremi servers and XpanD 3D for the deployment.

In Portugal, XDC and ZON Lusomundo, the largest cinema chain, signed an agreement for the deployment of 180 DCI-compliant systems. The rollout, financed by XDC’s studio-supported VPF program, includes 100 screens completed by the end of 2009. XDC will install Barco projectors along with their family of CineStore servers and theatre management systems (TMS) at each complex.

In the Netherlands, AAM, has reached an exclusive agreement with the Amsterdam Booking Company B.V. (ABC), a buying group representing Dutch independent cinemas, to supply and integrate digital cinema in 68 screens within 20 cinemas. ABC programs cinemas throughout the Netherlands and has a market share of 10% in the Dutch market. The deal also covers the installation of a professional satellite network for the transmission of live events and encrypted content. According to the agreement, AAM will create a fully DCI-compliant cinema and satellite network with AAM providing service and maintenance of all systems, including projectors and servers, central storage servers and TMS. ABC and AAM have jointly selected Christie projectors and Doremi servers for the deployment. FTT Filmtronics will carry out the installations and provide maintenance and local support. Satellite equipment will be provided by Arqiva.

Norway and Scandinavia
In Norway, a country-wide 410-screen changeover has begun. Leading the effort is the government’s trade association Film & Kino, which is in the process of finalizing agreements with the major distributors. With studio incentives in hand, Film & Kino expects to choose its hardware partners in early fall 2009, with actual deployments beginning in the fourth quarter and completed by no later than 2011. There are approximately 60 digital screens in Norway at the moment, with around 15 being 3D using both XpanD and Dolby 3D equipment.

Norway’s leading digital-cinema provider, Unique Digital, has made progress both in Norway as well as in the rest of Scandinavia, with over 50 digital screens installed all using their own screen-advertising systems. Unique Digital is also deploying their innovative “RosettaBridge” TMS system, which manages the servers, projectors and automation as well as screen advertising, all with real-time multiple user access. The Unique TMS system and software seamlessly integrate screen advertising and feature playback into one hands-free system that operates in accordance with the contractual obligations between the sales-house and the exhibitor as well as the advertiser. Full integration of screen-advertising management is important to European cinemas, as advertising accounts for much of their bottom line. The Unique TMS is hardware-independent and can accommodate different hardware configurations within a single multiplex without complications.

In Sweden, while a larger rollout is being contemplated, the leading cinema chain, SF-Bio, is installing nine screens with RealD 3D for Bolt. Norway and the rest of Scandinavia is also an emerging market for Sony 4K projectors and servers, with 10 currently installed and another 15 expected shortly.

Russia and Eastern Europe
According to Nevafilm, the leading Russian digital-cinema provider, as of June 2009 there were 112 sites in 47 cities operating 144 digital screens in Russia, a remarkable increase considering the first digital systems began operating in Russia only two years ago. Even more significant is that almost all the new digital screens are 3D. Nevafilm has also introduced Nevafilm Emotion, a new department specializing in theatrical distribution of alternative content, special events and live broadcasts in cinemas—the first of its kind in the country.

In Eastern Europe, Palace Cinemas announced the addition of 12 3D digital screens at its sites in the Czech Republic, Slovakia and Hungary. Eleven of the sites will use the MasterImage 3D technology, while the Palace West End in Budapest will use the RealD system. The Barco projectors and XDC servers were provided through XDC and installed by Film-Ton-Technik (FTT). Xtreme Theaters in the Czech Republic is also deploying 3D using the XpanD system and being installed by XCData Ltd., in theatres in Prague, Louny, Sokolov and Dobrany.

By Bill Mead, Film Journal International