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A Guide to Digital Conversion for Independent Cinema Operators

Digital-conversion

Today’s world is hard for the independent cinema operator. Just as with any business, it is easy for small operators to get lost in the crowd.  In cinema there are many large-scale corporations that can offer a more sophisticated offering at a lower cost.  However there is something on the horizon that could assist the small operator to provide a great cinema experience at relatively low cost: digital.

More and more cinemas are moving from old style 35mm projection to digital for numerous reasons. Digital provides a better film experience through cleaner, crisper images and sound. Digital is more flexible in terms of content.  It is only through digital that cinemas are able to offer 3D projection and finally the costs to operate a digital cinema are lower.

Understanding the Need

There is a compelling case for the conversion of a cinema from 35mm to digital projection.  There are some who claim that you cannot beat the experience of a good quality 35mm film, but in reality, you cannot guarantee that you will have a good quality print to show.  Prints can get damaged in transit, or in handling within the cinema and possibly were not of the very highest quality in the first place.  Digital by comparison provides a high standard each and every time.

A digital cinema does not have to stop at digital projection.  Digital can mean full integration within the complete Theatre Management System.  This means a complete suite of functionality that is way beyond what was possible with 35mm.  For example trailers and advertising can be queued up dynamically, masking systems adjusted and films started, all by the same person who sells the tickets and ice cream, via a touch pad screen!  The economics are fantastic.

Digital projection provides the ability for a whole new treasure trove of content to be shown in your venue.  Basically if something can be presented digitally, it can be presented in your cinema.  The possibilities include major opera performances, significant sporting events or social nights for local clubs and schools.  Just imagine the flexibility of being able to offer a replay of a local school’s end of year concert to a group of parents in an otherwise quiet time of the week.  Together with sales through the candy bar, this has the possibility of being a great revenue earner.

Film distributors also like digital projection because it significantly reduces their costs to provide content to cinemas.  This alone may mean that in a fairly short time, much content will not even be available on 35mm, even if the cinema operators want it.

The Cost

Of course, as an independent cinema owner, you will be wondering about the cost. Any conversion like this could be costly and you will need to be prepared for that. Generally, a digital conversion is not something that you will be able to pay for out of pocket. A number of different funding mechanisms are emerging in cinema markets throughout the world.  Several funding schemes have been developed whereby the major studios provide the up-front capital.  This is returned to them under a variable fee basis, where the ticket sales of the cinema determine the amount to be paid.  As an independent cinema operator, you should speak with your local distributors and local independent cinema association to learn whether such a scheme exists in your market.

A good business case can be made for digital conversion.  Therefore it may be possible to approach the traditional sources business finance such as banks to fund the project.  Alternatively other sources of private capital such as family, friends and business associates may be interested.

When thinking about the costs involved, it is crucial that you factor in those costs that you currently have with 35mm that will no longer be required.  This would include changes to your projection staff, front of house staff, the space requirements of the bio box and the costs of shipping cans of 35mm film around.  There could be a positive impact on your power bill as well.

Your Choices

There are many decisions to be made within the digital conversion process.  Some of those decisions will be guided by obvious things such as your budget and your time frame.  Other things to consider include:

  • What type of customer base do you have? You need to determine how much a digital conversion is going to matter to your current and future customers.  Will a broader range of content appeal to your customers?  Will they be interested in alternative content such as sporting events?
  • Do you have customers who will be interested in 3D? If you feel that you do, then it would be a good idea to go ahead and include a 3D adaptor with your digital conversion.  There are a number of different 3D formats, so your will need to weigh up very carefully which format you go with.
  • Will you be converting every screen? If you have a multi screen theatre, this can be a big expense. Many cinema owners choose to convert a few screens as a test to make sure the conversion works for them and then move to convert the whole complex at a later date.  This might also be a good strategy to manage your cash flows.
  • Do you want to offer all the extras? When it comes to things like 3D, THX sound and a Theatre Management System.  What about viewing the cinemas remotely?  How will this affect your staffing levels?  Where will the control points for the cinemas be located?

Digital conversion is undoubtedly the way of the future.  There are myriad benefits to digital including lower cost of operation and more flexible screening schedules.  However it does come at a cost and shouldn’t be undertaken lightly.  Digital conversion can allow even small operators the ability to offer a cinema experience that will rival even the largest competitors.