The Digital Switchover in the UK and the Impact on Independent Distribution

Alex StolzEstoril, 21st November 2008

• About 300 screens installed of c.3400 in UK.

• 240 as part of the UKFC Digital Screen Network but the intent of the network was not to assist a rollout, but rather widen choice of films.

• Growing awareness and urgency around the need for a digital switchover plan/solution

• A Virtual Print Fee (VPF) is the likely funding model

• At least one major exhibitor believed to be in discussions independently and directly with studios on a VPF model

• An industry working group has been meeting to discuss developments and options going forward

the story so far…

1. The smaller exhibitors

2. Distribution

3. The race against time

4. And… a possible solution

What are the major issues?

the smaller exhibitors

circuit cinemas screens %of total cinemas %total screens %total box office

Apollo 13 77 0.38% 2.27% 1.47%

nat amusements 19 190 2.68% 5.60% 6.93%

Cineworld 72 736 10.14% 21.71% 25.18%

Empire 17 153 2.39% 4.51% 4.74%

Odeon 111 843 15.63% 24.87% 27.70%

Vue 62 551 8.73% 16.25% 20.19%

subtotal 294 2,550 41.41% 75.22% 86.20%

independent totals 416 840 58.59% 24.78% 13.80%

grand total 710 3,390

Cinemas in the UK 2007

the smaller exhibitors

• Analysis carried out of independent cinemas / not viable to buy gear independently

• Between 200-300 cinemas may not generate enough VPFs to cover equipment

• Small market share - studios not compelled to assist other than for political reasons

Independent distribution

• Independent cinemas crucial for independent distribution

• VPF may not take into account independent release patterns

• Multiple aggregators / VPF deals could penalise specialised distribution

The race against time!

• 2009 key year for 3D studio product• Bolt (Disney, Feb), Monsters vs Aliens

(Paramount, April), Avatar (Fox, December)

• Pressure on studios for screens / commercial exhibs also want product

A potential solution

• One deal for all – no cinema left behind!

• Widest point of release used for VPF (not first run basis)

• Ordered and coordinated switchover to the benefit of all

• Protects non-saturation release patterns

A potential solution contd

• Requires all (or nearly all) of industry to take part

• No public funds required – the UK has none available!

To be continued….

alex.stolz@ukfilmcouncil.org.uk