Financial
- Costs- around £50k per screen plus finance and other costs
- Major distributors unwilling to accept any lower standard
- No or minimal support
- Current funding mechanism(Virtual print fee) is complex and very difficult to access for small,individual operators
- General banking and economic environment
The VPF explained
- The VPF is a sum of money paid to a cinema when a film is played on a VPF supported system on the release date of the film (a 'turn')
- So, if a cinema plays enough first run films over the funding period, say 10 years, then it covers off about 75/80% of the equiptment and finance costs
- A good proposition for major, commercial operators e.g. a national circuit
- But, what about the smaller cinemas who play second run, or repertory-types programmes!
The digital funding partnership solution
- A 'co-operative' of some 400 screens covering all types of independently owned cinemas
- Collectively and in aggregate have sufficient first run programming (turns) to enter into VPF deals on the same basis as major circuits
- DFP acts as a 'quasi circuit' and has a fully financed deal with a third party whereby that party will receive sufficient VPFs to pay back all relevant costs
- The strategic beauty is that all cinemas benefit and none lose
- Scheme supported and backed by all studios, major UK circuits, BFI and Minister of culture.
- Competition for equipment and technical expertise for physical instillations
- Space and facilities required in projection booth (e.g. aircon, power, ADSL connectivity, Portholes, etc..)
- Training and 'mind-set' issues
- Loading and playing out content
- Security, unlock keys for encrypted content...etc...
- Basically a complete new way of operating
Maintaining the model
- Todays business plans are built around existing and historical distribution practices
- This needs to remain as the predominant methodology for at least 8/10 years to allow cinemas the time to recoup their outlay and take full ownership of the equipment
- New practices e.g. early VOD, restricted copies, may challenge the model and make life very difficult for a number of the cinemas over the period
- So, conversion is just the first step into what may be an uncertain world.
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