Digital Cinemas Put The Squeeze On Theatrical Distribution
Ira Deutchman, founder of Emerging Pictures writing as NYIndieGuy, calls out an article in Bloomberg Business Week that analyzes the threat to digital projection in cinemas. Ira should know. Emerging Pictures has organized a network of 115 cinemas, mostly art house locations, to which he can distributed films digitally via the internet. The projection version is streamed to a specially configured computer in the theater which the file is stored and from which the presentations are exhibited. Some of his theaters can receive very high bandwidth transmissions via cable or fiber or satellite, which makes possible the Emerging Pictures Live Opera programming.
So when Ira points to an article that says that Hollywood is demanding that theaters spend $70,000 per screen to equip for digital screening — a move that will save Hollywood more than $1 billion per year according to the Bloomberg Business Week article — without any of that saving going to restore the twisted economics of running a theater. As Bloomberg reports, one theater chain owner predicts the loss of several thousand screens in the next couple of years.
The impact is hard on independent films, which we know to expect. The studios have set up intermediaries to manage the transition to digital projection, and these intermediaries are charging fees to play on digital screens they manage. The head of distribution at Magnolia Films, says that they will need to pay the same fees as a Hollywood blockbuster to get through to the screen for presentation, a fee that smaller films cannot afford. He says: “We have to look at every engagement to determine if it’s going to make money [to cover the fee] before we play it.”
How long will it take and how many assaults will independent films have to suffer? From the move by Netflix into streaming television episodes, to the minimal license fees paid by the cable programmers, to the squeeze on distribution in theaters — the market is consistently and inexorably moving to make smaller audience projects even more of a distribution tragedy than they are now! And this is what happened to the DVD distribution business over the last 18 months: the channel got frightened, cut back, closed out the retailers, cut the availability, which made decent physical distribution of smaller titles a thing of the past. These inexorable economics are now focusing on theatrical exhibition.
It doesn’t have to be this way. But that seems to be the kind of trend some of the major players would like to see.