Norway Prepares Revolutionary Rollout
Norway is in the midst one of the cinema industry’s most interesting and extensively planned digital conversions. Film & Kino, the Norwegian government agency that oversees the country’s film, video and exhibition industries, is preparing to move forward by soliciting bids from digital-cinema providers for a full national rollout for the country’s 400-plus screens. With five Hollywood studio virtual print fee (VPF) deals in hand, and three years of preparation and testing completed, the nationwide changeover is scheduled to begin this fall with completion expected in the 2011 time frame.
Norway has an active cinema industry: With a population approaching five million, cinema admissions total approximately 12 million per year. Cinema is regarded as part of the cultural heritage and therefore receives a good deal of governmental attention and support. The country’s exhibition structure is unique: Although there are several small chains, most of the cinemas are individually owned and operated by local municipalities. Film & Kino’s exhibition division acts much as a cinema trade body looking out for the wellbeing of the industry by providing quality standards, technology support and training, all with the intent of maintaining the high quality of the cinemas and their presentations. Film & Kino derives their operating revenue from the Norwegian Cinema & Film Fund, which is maintained by a 2.5% tax on cinema admissions and other media sales.
Early in discussions about digital cinema, seeing that a global conversion away from 35mm film was inevitable, the technical group within Film & Kino stepped up with an aggressive plan to evaluate new digital technologies and chart a course for their future. In early 2006, Film & Kino approved funding for two parallel pilot projects to equip 36 cinemas in key locations with the latest DCI-grade digital equipment so they could gain firsthand experience.
The first pilot project was known simply as NORDIC (NORway's Digital Interoperability in Cinemas). NORDIC brought together Norway's leading experts in the field, including online ticketing portal Filmweb, the Norwegian University of Science and Technology, telecom Telenor, installation and service company Hjalmar Wilhelmsen, and digital-cinema advertising pioneer Unique Promotions/Unique Digital. Bergen-based Unique got off to an early start in 2001 by digitizing the screen-advertising industry, and has since expanded to include providing cinemas with DCI-level hardware with their own theatre-management systems, along with support services and related cinema-specific back-office software.
The second project receiving funding was the Nordic Digital Alliance (NDA). NDA is half-owned by the U.K.-based, pan-European digital-cinema provider Arts Alliance Media (AAM). The other half is owned locally by a consortium of local art-house cinemas, the Krstiansand Cinema, and Agder Energy SA, a Norwegian hydroelectric power company. For NDA, having AAM as a partner has been important with regards to their gaining international expertise in digital production, distribution and cinema operation. During the last three years, NDA has mastered and delivered copies with security keys for 22 titles to Norwegian cinemas. NDA has also provided AAM’s portfolio of alternative content ranging from opera and ballet to rock concerts to most of the equipped cinemas.
There are currently more than 55 digital screens in Norway. The original 36 are split between the original NORDIC and NDA pilot projects, with the others being individual investments made by the larger chains, primarily to get even more 3D systems in place to take advantage of the recent flow of Hollywood titles. The projection equipment used during the pilot phase was from essentially all key vendors: Barco, Christie, NEC and Sony, with servers from Doremi, Dolby, Kodak and others. The 3D systems are primarily from Dolby and XpanD and 12 screens are using the Sony SXRD 4K projector.
This past spring, with three years of successful field experience behind them, Film & Kino tackled the next big obstacle in digital cinema: how to pay for the systems. It is estimated the cost of the total conversion will be in excess of NOK 400 million, or around $64 million USD.
Although there has been concern over fluctuating interest and exchange rates, the current worldwide economic downturn has had little impact on the Norwegian rollout. With NOK 100 million ($16 million USD) in government funding already allocated from the Norwegian Cinema & Film Fund, all that was needed was to get the studio VPF agreements completed. The slowdown in deployments elsewhere may even have helped, as it provided more opportunity for Film & Kino to get the attention of the studios and distribution executives.
In June of this year, Film & Kino announced it had secured VPF-style agreements with Fox, UIP (the local distributor for Paramount and Universal in Norway), Disney and Warner Bros. The VPF funds, coupled with the government funding, allow Film & Kino to underwrite the entire cost of switching over the entire country’s 440 screens to state-of-the-art DCI-grade digital equipment. Approximately 40% of the funding is derived from the studio VPFs, with the remaining 60% from a combination of government funds and upfront deposits from the cinemas.
This September, Film & Kino will issue a formal tender offer -- i.e., a request for bids -- to any and all interested digital-cinema providers, for deployment of digital systems in all the remaining cinemas in Norway. Film & Kino has detailed performance specification and requirements for system integration, support, insurance, and system monitoring. The requirements call for the DCI-grade equipment to be installed by qualified professionals who can provide telephone support to cinemas seven days a week from nine a.m. until midnight. On-site technical support must be provided within four hours for cinemas in the three major cities and within 20 hours for those in rural areas. All systems must have around-the-clock electronic monitoring and remote diagnostics.
Internally, the Film & Kino tender offer is broken into ten subgroups -- or bidding zones -- assigned along both regional and organizational lines. There are separate contracts for each of the larger countrywide chains, and six contracts grouping independent cinemas within Norway’s primary regions. There are also separate contracts for mobile, or traveling, cinema systems that provide movies to smaller communities without permanent cinemas. Each sub-contract will be separately awarded based on careful evaluation from a group-level committee that includes local participants who understand the specific needs of cinemas in that group. Equipment will be selected based on price and quality. The responding providers will be given scores on their offerings in relation to the fixed weighting, and the winning provider will be selected for each group.
Film & Kino is providing the cinemas with a base-level 2D cinema system package consisting of a digital projector, server and operating software. Enhancements such as 3D and 4K can be optionally added at the cinema’s expense. Although the NORDIC and NDA groups operating the pilot projects are expected to be the primary responders, the tender offer is also open to other digital-cinema providers, so it is likely that other international full-service deployment entities such as Sony or XDC may respond.
After Film & Kino’s tender offer is issued, and responses are gathered and accepted, the full countrywide rollout will begin and is expected to continue until mid-2011. Then, in Norway, 35mm film will be a memory and only used in special situations such as film festivals. Although the size of the Norwegian market is small compared to others, Film & Kino’s innovative business model using a combination of public, private and studio funding has ensured that all of Norway’s cinemas, large and small, can move forward in one giant step.
By Bill Mead, FilmJournal
