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NAB 2008: The Report, Part 1

The Digital Cinema Summit Offers an International Update

In keeping with the fact that the largest number of international attendees ever made the trip to Las Vegas for the National Association of Broadcasters convention last month, the Digital Cinema Summit offered an update on the progress being made in four key regions: Italy, Russia, the UK and India.

Peter Buckingham, head of distribution and exhibition for the UK Film Council moderated the panel.

Buckingham said that there are 3,500 screens of screens in 600 theatres in the United Kingdom. Of that number, he said, 200 are DCI-compliant screens and of those 60 are capable of showing digital 3D. He said that, “3d is increasingly a locomotive” driving the push for digital.

But there are other drivers, and what he described as event marketing is key.

He gave the example of the success of old movies such as Henry the 5th and Goldfinger that have enjoyed a new life on 137 digital screens throughout the UK. The old movies are shown every Tuesday and have averaged 100 tickets per screen. Some have sold out, he said

Buckingham said that opera in the UK is also performing well in 50 UK cinemas.

Still, said Buckingham, the early returns are mixed. At this point, he said, digital costs more to distribute than film (although he conceded that will change) but a greater concern is that there “does not seem to be a lot of consumer demand for this concept.”

Senthill Kumar was the next speaker and he delivered a comprehensive overview of the cinema market in India. (I did not get Kumar’s company name or title at the event and have not been able to determine it since. For that, my apologies to him and to people reading this report.)

The main point that Kumar made was that it is a mistake to look at India as a single market. There are 21 different languages spoken on the Indian continent and the cinema market is divided largely along those language-defined lines.

Kumar said that there are approximately 1,100 released in India each year. Most movies are independently produced.

There are some 10,000 screens, mainly in single-screen or twin venues. There are approximately 1,350 multiplexes and about 1,500 DCI-compliant screens.

Most theatres are independently owned. Kumar stressed that this lack of a cohesive production-exhibition pipeline results in an ad hoc industry with more negatives than positives because virtually all business deals are done on a one-to-one basis. He cited an old industry joke that says in India there are 10,000 screens and 15,000 owners.

This independent spirit and tradition gives producers and theatre owners a strong incentive to pursue lower cost e-cinema technology, Kumar said. Especially when you consider that he estimated that the typical Indian theatre gets only 7-10 percent of its revenues from Hollywood films.

And there are arguments in favor of digital over film. According to Kumar, because the country is very hot and humid the carbon arc lamps in film projectors tend to malfunction more quickly than in more moderate climates and fungus on lenses is also an ongoing problem.

There are attempts underway to consolidate the industry. The two largest companies – UKO Movies and Scrabble – currently control 1,000 and 400 screens respectively. Other multiplexes are growing as well, Kumar said. Pyramid has 380 screens; Sathyam has 150 screens; Fame has 60 with plans to grow to 250; Cinemax has 40 screens. All of these companies plan a mix of 2K and MPEG e-cinema screens.

Alexander Rubin, CEO of Kinoproekt in Moscow, provided a fascinating description of the state of the cinema business in Russia, past and present.

Prior to the dissolution of the Soviet Union the movie industry was thriving. Rubin said that there were some 160,000 movie projectors throughout the USSR. Fifteen years ago, he said, and almost overnight the Soviet movie industry was gone.

In 1996 he said there were only between 9-12 screens in all of Russia. Ten years later that number had grown to 1,500 screens in 650 theatres and the industry continues a solid and steady period of growth.

There are currently 24 3D screens in Russia, Rubin said, and 3D is as popular there as it is in the rest of the world. He said that the most successful 3D movie to date has been Beowulf, which generated an astonishing $82,000 per 3D screen compared to $7,000 per 2D screen.

Rubin estimated that the Russian movie business would generate revenues by the end of 2008 of $800 million.

According to Rubin, Doremi is the leading digital cinema server supplier in Russia with 68 percent of the market; Dolby has the remaining 32 percent. Xpand dominates the 3D glasses business with 70 percent of the Russian market; Dolby has 30 percent; RealD currently has none.

Rubin said digital cinema has two main hurdles in Russia: the VPF model doesn’t work there and, at present, there isn’t enough 3D product.

Angelo D’Alessio, president of the CDG-Media Innovation Center, gave an overview of the Italian digital cinema landscape and called the situation there, “beautiful chaos and a beautiful window of opportunity.”

D’Allessio said the average theatre in Italy has 180 seats and an eight meter screen. He said that there are currently very few companies in the country that can do DCP mastering and called on Europe to develop a united strategic digital cinema plan for the entire continent.