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punching a ticket to oblivion? 27 Sep 2011 20:09 #37100

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Chicago Tribune
Are small theaters punching a ticket to oblivion?
Price of technological tide may swamp some second-run, drive-in and small theaters as movie studios phase out film prints in favor of cost-effective digital distribution. It will cost them, either way.

September 26, 2011|Michael Phillips | Movie critic

GALVA, Ill. — One hundred and sixty miles southwest of Chicago, a man has planted a pair of reconditioned 20-by-48-foot drive-in movie screens in what used to be a cornfield.

I went out there the other night, to Galva Autovue Drive-in (admission: $3 for anyone older than 3), owned and operated by a full-time factory worker, mellow drive-in fanatic and Peoria native named Justin West. "Cool" doesn't begin to describe it. The Autovue was one of the great outdoor filmgoing experiences of my life. Beautiful late-summer weather. The Big Dipper tipping high above the screen showing "Captain America: The First Avenger." A concession stand in a steel building serving Sprecher's root beer, "cheesy tots" and excellent popcorn. A slow cooker filled with melted butter, inches from the cash register. It was enough to make a nostalgist weep buttery tears of joy.

But a question kept nagging at the experience: How much longer will something like this be around?

It's not just drive-ins I'm talking about. I mean movie theaters, outdoor or indoor, showing films on actual 35 mm film, on big platters, instead of being projected digitally. West finds himself faced with an expensive decision. Right now it costs about $75,000 per screen to convert to digital projection. That's $150,000 (lower if he waits a couple of years for used equipment) for a weather-dependent outdoor theater open four or five months out of the year, in a town of 2,589 at the last census.

So does he pony up or, in a year or two or three, call it a day?

"I don't know," West says.

This weekend, Friday and Saturday, West closes up shop for the season with "Spy Kids 4" and "I Don't Know How She Does It."

"This place," West says, "has paid for itself, though it hasn't really given me anything else. But I enjoy it." He loved drive-ins as a kid. When he left Peoria for college in the early 1980s and returned four years later, his favorite drive-ins were already gone. The Autovue keeps the dream and the tradition alive, he says.

But "this conversion to digital the film companies are forcing on the theaters — I know it's going to save them a lot of money …" West says, his voice trailing off. Bucking every entertainment trend on the planet, West opened the Autovue in 2005. "Ever since I opened I've had people come up to me in one of the projection booths and ask: 'Where are the DVD players?' They don't have a clue how this works!" He chuckles, ruefully. West thinks a lot about how the forced conversion from film to digital will zero out an untold number of small-town theaters, outdoor and indoor, along with various second-run houses in larger urban areas.

A figure commonly batted around: 75 percent of box-office revenue comes from 25 percent of the theaters. "So that means the other 75 percent can die off and the film companies won't be too worried about it," West says.

Change is coming

Average moviegoers don't know or care much about whether the film they're seeing is being projected digitally or on 35 mm film stock. Digital has been with us for several years now; the distinction is blurred. And the projection conditions vary widely from screen to screen, from multiplex to multiplex.

Still, "You don't have that graininess with digital," says Doug Knight, general manager of Knight's Action Park and Route 66 Twin Drive-In in Springfield, the state's only digital projection drive-in. (Illinois has 11 drive-ins still operating.) Knight claims his business is up around 15 to 20 percent since installing the digital projection system.

Higher up the food chain, you don't hear a peep about 35 mm, except in comparison to buggy-whip manufacturers in the early days of the automobile. Chris McGurk is in the catbird seat; as chief executive officer of Cinedigm Digital Cinema Corp., in Woodland Hills, Calif., he's making millions in the business of installing digital cinema equipment. Is there any incentive for the six major film studios, plus all the other film distributors, to continue striking film prints for exhibition?

"None whatsoever. None," he says. "The studios will save over a billion dollars a year in distribution costs. It took probably five, 10 years too long to even get to this point in digital conversion because this industry is very resistant to change … a lot of talent was suspicious of the new medium. Some people were, and are, wedded to film, the arguing being that it's 'richer,' it's this, it's that, it's the other thing. Which is not true."

Some numbers: Film distributors commonly spend $1,200-$1,300 to strike a single 35 mm print, plus shipping costs. Digital delivery of a new release, by contrast, is more like $100, according to Cinedigm's McGurk.

The studios have been steamrolling this one for several years while squabbling with exhibitors over the bill for the digital conversion tab. The industrywide conversion to digital has been financed by what's called a virtual print fee (VPF) formula. Digital projection equipment costs between $50,000 and $80,000 per screen on average. The majority of those costs will be repaid to the theater owners by the studios.

But it takes up to a decade. And the studios are saying that after September 2012 they won't be striking any new VPF deals. No deals, no subsidy.

The current 3-D wave, of uncertain duration, got its mojo from the enviable international success, in 2-D, but especially in digital 3-D, of James Cameron's "Avatar." That film's monumental appeal posed a tough question to exhibitors: Can you afford not to convert to digital, and miss out on the next "Avatar"?

Right now North America has about 39,000 movie screens. (Worldwide estimates run between 100,000 and 150,000.) Cinedigm has already handled the digital conversion on 10,000 of those North American screens. In all, 22,000 screens have gone digital. That's more than half, and that means 35 mm is going to have a very hard time hanging in there for very long, outside the realms of archives, academia and the most purist-driven of the revival and art houses.

You can hear the veiled pity coming through phone line when talking to Julian Levin, 20th Century Fox International executive vice president of digital exhibition and non-theatrical sales. The language of digital conversion is very much like the language of war, as when Levin talks about how "the pacing of deployment varies from month to month." Some overseas film markets, he notes, are already 100percent digital, including Hong Kong and Macau. Norway, he says, should be all-digital by the end of 2012. By early 2013, he estimates, Australia, Britain and South Korea should be there, or close.

And "by early 2014," he says, "the very big and lagging countries such as the U.S., Canada, Russia, France, Germany and Spain should be converted." Latin America, he adds, will take a little longer.

"There'll be some casualties," Levin says. "But a lot of the exhibitors have sat on the fence for years. And you can't stop technology from advancing."

The digital divide

There are other opinions on the look of a digitally "ingested" and projected feature versus the warm, tactile, wonky analog 35 mm image. "I don't like digital," mutters Dan Talbot, owner/operator of Lincoln Plaza Cinema in New York. First double bill he showed back in 1960? "Henry V" and "The Red Balloon." On film. Obviously.

"Digital's a very flat image. No sparkle," he says. And yet here he is, paying "about $50,000" to buy a digital projection system himself. He says he has no choice.

Ted Mundorff, head of the national Landmark Theatres chain, oversees Century Centre Cinema in Chicago and Renaissance Place in Highland Park among others. Landmark, which was put up for sale not long ago, has 297 screens in 21 U.S. markets.

He's sad about the prospect of converting to digital projection. "The efficiency of 35 mm for the exhibitor will never be surpassed by anything digital," he says. "When something breaks on a projector, usually you can get it up and running in a few minutes. And usually it's a $5 part. When something goes wrong in the digital realm, you have to call your IT department. And I don't know anyone who likes to call their IT department."

"My buddy put it best," says Chris Johnson of Classic Cinemas, which owns 99 screens in 12 Illinois theaters. The exhibitors, he says, "are like a gas station. The money isn't made at the pump. It's made at the well." But Johnson remains bullish about the exhibition game. And, he says, "the good thing about digital is that, in theory, it delivers a pristine image from viewing No. 1 to viewing No. 200. That's where digital shows its worth."

Still, says Michael Barker, co-head of Sony Pictures Classics and a chief supplier to the Landmark specialty chain, "I hate to imagine a world without some 35 mm in it. To be honest with you, I like both formats. In the best of all possible worlds the audience has access to both."

Bill Schopf, the man behind Chicago-based distribution company Music Box Films and owner of Music Box Theatre, agrees with Barker. But if Landmark converts to wholly digital projection, the distribution arm of Music Box will be required to provide digital-release packages sooner rather than later. It won't be cheap. Still, Schopf says, "We're going to be stuck in both worlds for some time. Music Box is leveraged pretty well, in that it's a distribution company along with an exhibitor. And we're going to get our films to our customers one way or the other."

Only the classics

Everything churning in the movie business affects everything else in the movie business. The only thing that doesn't seem to have changed much is the singularly time-warped experience of going to a drive-in. Throughout September, McHenry Outdoor Theater in McHenry turned its single screen over to a "Fall Throwback Series." The season ends this weekend with a singalong double bill of "Grease" and "The Rocky Horror Picture Show."

A few weeks ago I saw "E.T." there. The total number of cars, according to the nice lady at the box office, was 338. That's a strong number for the year 2011 — "especially considering half the people there probably have a copy of 'E.T.' at home," says Scott Dehn, general operations director of "C" You at the Movies, the company that owns the McHenry as well as various indoor theaters.

"Worst case scenario, and film does go out?" Dehn asks. "They maybe we end up playing classics all summer long. Those prints will always be there." Then again, "always" is a dangerous word to use when you're talking about a can of film.

And it's a misleading one, when so much of film history, dating to the era of flammable nitrate prints, has been consigned to the ashes of nevermore.

"It's sad," says Landmark's Mundorff. "But then if I could buy a good dial telephone, I'd do that too."

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