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One thing to keep in mind here, There would be no VPF's at all without the direct involvement of NATO.

As the operator of second run discount theatres I will never qualify for VPFs so I can say that NATO hasnt done a thing for me.

I talked to my rep with one of the top 4 studios yesterday and this person told me that without a doubt a VPF qualified theater in that 2800+ range will be at a disadvantage for getting the marginal prints (2800-3100 range) to a similar grossing theater that is not getting a VPF. (NO tattle telling to NATO will help)

Since the big three formed DCIP to do their own VPF deals without NATO and since they account for approx. 48% of market share.....most of the others would have been able to do their own somehow. Remember that only 88 companies have done deals and we are less than a year for the deals to be done (meainng equipment installed). Of that 88, I bet only half really could not have done it on their own. 80% of total national gross could have done it on their own. So my best guess is that NATO/CBG will have helped 10%. Leeler is certainly in that group and should be very thankful for CBG. Which he is. Does not mean we all have to be......

I have decided that based on the best evidence available today that I will buy my own equipment at the last possible moment. Which looks like Sept of 2012. That is IF I am still in this business

Today I had a second rep of a top studio tell me the same thing: a theater receiving a vpf may not get a movie while a theater not getting a vpf does (assuming similar grossing theaters).

So does getting a vpf on the big movies a year enough to offset having to play movies longer or playing more move over???

If leaving +/- 800 theatres with 10,00 screens to die was always the plan then I guess we can all say "job well done." If there's a next step I'd like to hear what those may be. I do believe other options will emerge.

4thGen said: “One thing to keep in mind here, There would be no VPF's at all without the direct involvement of NATO.”

True, however…one other thing to keep in mind is if NATO had said to the studios that there will be no digital conversion unless all theatres are included in the VPF plans, and the membership backed them up, there would have been no conversion until the studios relented, or there would have been no conversion at all.

Remember that the studios were pushing for this conversion for quite a few years before the VPF program was established, and it went nowhere. Theatre owners were quite content with 35mm. It provided them with a adequate system to exhibit movies at a very reasonable cost. Most of the big chains were just emerging from bankruptcy and were in no position to finance such a large investment.

So why then did the large national chains begin to convert? The new digital system costs more to operate and maintain, and doesn’t last nearly as long as the old system, so even with the studios paying for the equipment through VPFs, the cost to exhibitors is still considerably higher then staying with 35mm. I don’t seem to recall theatre owners begging the studios for the change.

It seems to me that there has to be another answer. What could it be? How could the studios entice the big guys to make the change? What do the studios and the large chains have in common? They both want to make as much money as possible (don’t we all?). What could they both do to better their bottom line? How could the studios trim the fat and have more lean operations, or what could the chains do to bring more patrons to their theatres to offset the higher operating costs?

Maybe this is just a coincidence, but worth pondering. The studios serve possibly a thousand locations with many thousands of screens that bring them a very small percentage of their total film rental. These locations actually cost them money. Eliminating them would save a lot of money for the studios. It would also send the former patrons of those theatres to the remaining theatres owned by the large chains. How is this accomplished? Either the studios go to NATO, or the big chains go to NATO (or both) and devise a plan that will fund the conversion for the theatres that the studios still want to serve, and will eliminate the ones that they don’t.

It appears that the end result suggested here is actually happening. What we don’t know is whether it was actually purposely designed to meet that goal.

So NATO had a BIG hand in the DCIP??? Or was is soley or mostly the big three with 50% of the national box office being big enough to get the studios to pay VPFs. I have scanned a few press releases from 2007 & 2008 from DCIP and NATO is not mentioned at all.

So if anyone has any links to NATO getting credit please pass it along.

Roxy is right. At least 50% of the closed theaters revenue COULD go to another theater.

Remember when all but the smallest towns had a Woolworth store, an A&P, a Rexall and a Sears Catalog store?
The fact is, and it is a sad fact, most of the theatres that will pass away during the digital conversion aren’t truly viable businesses anyway even as 35 mm houses. They could be labors of love, but they’re not profitable businesses. The loss of small town movie theatres is part of the retail march that has been happening for decades.

There are many successful small town theatres that are converting to digital because they’re economically strong. Check posts on Film Tech posts for real life examples (like Mike Blakesley’s posts).
I’m not knocking these small towns theatres that are suffering; frequently the population isn’t there to support the grosses.
I’ve operated small town theatres that have closed and not been missed except by those with nostalgic memories. I know that small town theatres with the right demographics can still make money.

Roxy Said:

While I am not sure I subscribe to the theory that the studios deliberately set out to eliminate 10 to 20% of the low grossing screens, I do believe that the studios dont care if these screens do disappear and the office personnel will probably be especially glad when they are gone. Why do I say this? It comes from years of experiece as a second run discount operator.


1) The studios have never hid their disdain for second run discount. Second run discount has always been treated as sort of like the bastard child of the scion of a prominent family - while acknowledging the child's existence the family wishes it would just go away and disappear.

2) I can still remember being at a Showeast convention in the late 1980's and going out my way to meet the new account executive who had been by a certain studio to my operations. I was told (to my face) by this fellow (who delivered this speech with that of an impassioned believer) that by only charging $1.00 admission (my price at the time)that I was taking bread from his mouth! This fellow actually believed that if second run discount ceased to exist that all of my patrons would then instead go to the first runs at was then 6.00 a head.

I simply could not convince this fellow that my patrons would never pay (or were not financially able to pay) first run prices and if my segment of the market was eliminated these people would never go the movies at all (or very rarely). In other words I was giving the studios revenue that they would not have otherwise had.

This fellow and I continued our debate for the several years that he serviced my account. (They were always eager and willing to take my money).

3.) Over time I came to the understanding that what most concerned this fellow was not so much that I was second run discount but rather it was the overhead involved in servicing not just my account but all accounts both large and small. From the studios persepective it costs the same amount (in terms of paperwork, overhead, billing, shipping etc. on a per screen basis) to service low grossing theatres as it does to service very profitable ones. From this fellow's point of view, the cost savings to the distributors of eliminating the lower tier of grossing theatres would more than exceed the revenue generated by these screens. And from his personal point of view it would mean he would not have to work as hard and yet his P&L stats (from which his bonuses were calculated) would be higher.

4) In this day when studios (like everyone else) are trying to do more with less people (and Slap is right - the studios will eventually eliminate most sales staff) the idea of making more money and doing less work is certainly a motivating factor.

BOTTOM LINE: While I dont believe the studios are actively trying (or deliberatley set out) to close 10 to 20% of low grossing screens, they certainly will not care at all if these theatres fall by the wayside. AND any theatre operator which was not bright enough to recognize this reality and that they were going to be left to fend for themselves and if (for whatever reason) that theatre operator did not at least mentally start the financial planning for the inveitable 3 to 4 years ago, then in my opinion that operator has no one to blame but his or herself.

I'll blame myself! When I can't get film anymore, I'll go out of business! I don't give a rat's ass about, so why should anyone else care! Maybe someday. I'll buy a few acres & put a small pizza-ice cream- hamburger stand, that shows movies at night on a 30foot digital screen. I lease this place up here in north central Pennsy, & it's the boon docks around here! I live in South Jersey so our STARR*VUE Drive-In will be there, someday, maybe. We have a lot going on in our lives then just running a seasonal drive-in, hundreds of miles from our home. But if I can still get 35mm prints, on or off the break, I'll stay open. People come here for the food! We start a flea market next season. We'll sell a lot of breakfast & lunch! Thanks, the guy you love to hate, CRAZY BOB!