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Sony Digital Cinema Reaches Out to Smaller Exhibitors

COW Library : Cinematography : Debra Kaufman : Sony Digital Cinema Reaches Out to Smaller Exhibitors
CreativeCOW presents Sony Digital Cinema Reaches Out to Smaller Exhibitors -- Cinematography Feature


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Sony Digital Cinema just unveiled a new VPF (Virtual Print Fee) that allows smaller exhibitors to make the Digital Cinema transition for a $5,000 initial payment and $1,000/month for the duration of the 10-year lease Sony has already made deals with AMC Theatres and Regal Cinemas as well as others, deploying 10,000 screens worldwide representing 86 exhibitors.

First, some history: Bringing Digital Cinema to the U.S.'s 36,000 screens was held up by the cost of the transition: motion picture exhibitors needed to acquire pricey digital projectors and other gear such as video server controls. The exhibitors balked at the expense, noting that the big studios would gain billions of dollars over the years, since they would no longer be required to strike film release prints.

The adoption of the VPF settled that dispute. As a financing mechanism for funding the purchase of Digital Cinema equipment, the distributor -- rather than the distributor -- pays a fee-per-booking, assuming upfront the bulk of the cost for the Digital Cinema transition. Motion picture studios subsidize not only the projectors, but also the library servers/networks, 10-year parts warranty, shipping costs and Theater Management Software.

Sony Digital Cinema's Tim Smith, Vice President of Business Developing and Planning
Sony Digital Cinema's Tim Smith, Vice President of Business Developing and Planning
From the beginning, Sony Digital Cinema, which offers direct purchase, exhibitor-managed financing and lease options, created an innovative financial structure for helping exhibitors upgrade to its 4K Digital Cinema projectors. "We offer a unique 10-year operating lease that requires a single payment," says Sony Digital Cinema's Tim Smith, Vice President of Business Developing and Planning. "Imagine a 10-year car lease with one payment. That one single payment is the basis for tax and depreciation, so it also has a tax benefit."

Sony Digital Cinema also has 10-year agreements with the content distributors by which, every time the studio releases a movie played by the projectors, it pays Sony a fee. "Based on the historical averages from NATO (National Association of Theatre Owners), the studios pay the other 90 percent over a ten year period, with Sony taking the risk of the financing mechanism," says Smith, who notes that most Digital Cinema upgrades are financed by capital leases. "The innovation is that it's an operating lease. When we get in front of CFOs, they understand the tax and depreciation benefits and it's an easy sale."

Sony Digital Cinema Solutions' package includes Sony's 4K projector, 2D lens, screen server/media block, Screen Management and Theater Management software, central server and storage network, 10-year parts warranty, 2-year labor warranty, 24/7 help desk, Cinewatch(TM) remote system monitoring), as well as shipping costs and installation. The labor warranty can also be extended to ten years as well as to provide preventative maintenance services.


Sony's 4K projector
Sony's 4K Projector


With the big exhibitors having made their Digital Cinema deals, it's now the smaller, family-run theatres facing the challenge. Sony Digital Cinema Solutions' recent announcement is an easier path to make what could be a very expensive switch. "Traditionally, we've collected that 10 percent of the exhibitor contribution as a single payment in advance," says Smith. "Given that we're dealing with much smaller exhibitors that may not have the full 10 percent available, we're offering them, upon credit approval, to place a $5,000 payment, and then we finance the balance of the least payment over 10 years at no additional interest cost. What this does is allow exhibitors to make the small payment that they would have had to pay up front over the life of the lease."

What will happen when the 10-year lease is up? "The assumption is that everyone will be able to pay very little to buy [the projector] at the end of 10 years," Smith says. "We can't set a price at the time of the lease that they'll be able to buy it at. But we tell people that Sony is not in the used equipment business and we have no interest in taking it back. We anticipate that the negotiation will be agreeable."

"What we want to do is offer options to exhibitors, whether they're large or small," he continues. "Given that the DCI standard is ongoing, some will want to leap to the new technologies that might be available. Some will hang on to the equipment they've got. An operating lease gives us tremendous flexibility for ongoing upgrades as well."

Sony Digital Cinema Solutions also announced Cinema Network Services, a new, turnkey system to manage an exhibitor's network, including redundancy testing, deployment of fallback mobile networks, and 24/7 performance monitoring remote diagnostics, technical support and help desk, with a single point of contact for any issues. Cinema Network Services is available for a monthly fee, not yet announced. Among the services provided will be firmware updates for projectors or updates to pre-show advertising; digital signage content updates, pricing changes or product revisions; point of sale tools with networking access for credit card authorization or box office data; and security networks to eliminate immediate risks.

In another announcement, Sony is showing off a new prototype technology called Entertainment Access Technology (elsewhere called Eye Glass), a new closed captioning technology for the hearing impaired. Unlike other technologies by which the patron points a mirror at the back wall where closed captioning is provided on an LED screen, Sony's new technology resides in a pair of glasses that can be worn over prescription glasses. A transmitter in the projection booth sends out a signal that enables closed captioning to appear at the bottom of the glasses. "No matter where you look on the screen, you're seeing the closed captioning right there," says Smith. "And it doesn't matter where you sit in the auditorium."


Entertainment Technology: allows closed captioning to appear at the bottom of these glasses
Entertainment Technology: allows closed captioning to appear at the bottom of these glasses


In the proof of concept stage, Sony's new technology is being tested by Regal Cinemas. "The experience is designed to be as equal as possible as that of patrons with normal hearing," says Smith. Sony is also working on a version of closed captioning glasses for 3D, likely to be a clip-on 3D filter.

As I described in Film Fades to Black, the momentum for movie theatres to upgrade to Digital Cinema has really picked up steam. With Sony Digital Cinema Solutions' path for smaller exhibitors, it seems that theatres outside of major markets will go digital sooner than expected. With regard to Sony's new closed captioning technology, Smith wonders if patrons who are not hard-of-hearing might want to use the glasses. Though that initially seemed far-fetched to me, I recalled a couple of Irish or Scottish movies I've seen where I could barely comprehend what was said. The glasses might also be a hit for real foreign language films. Sony's iGlass is an example of the ingenuity of manufacturers to come up with the extras that get people to leave their home theatres and go to the movies.









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