Reports | Theatres

The Digital Switch: Independent Theatres’ Next Big Hurdle

1 Aug , 2013  

Written by K. Correia | Posted by:

Independent theatres are finding ways to adapt to the digital conversion and keep their doors open to the community.

Technology has become the guiding point of society. Cellphones, televisions, tablets, etc., people crave things that are faster, clearer, and more cost effective. Film distribution has not escaped the technology wave. Instead, it has used it to cut back the costs of distribution.

Studios and/or distribution companies have rental contracts with movie theatres to screen their films. With 35mm prints, distribution companies would ship the film out to the respective theatre at about a cost of $1500 to $2000. With the digital evolution, however, distribution companies are able to reduce this cost to about 10% of the original shipping price.

Instead of shipping reels of film, companies are emailing out key codes to theatres. The theatre then enters the key code into a computer system that will unlock the film and allow them to screen it. Not only is this method more cost effective for the studio/distribution company, but it also gives them the capability to monitor when, by who, and how often a film is played. For theatres it offers less worry on wear and tear of the film, and is easier to manage.

However, digital films don’t run on 35mm projectors, which is forcing theatres to convert to the digital projection system, a system with an upfront cost of anywhere from $65,000 to $120,000. With studios announcing that they no longer plan on distributing films on 35mm, theatres are forced to make the choice of converting or closing their doors. Or as John Fithian, the president of the National Association of Theatre Owners (NATO) put it in 2011, “convert or die,” a blunt statement, but for many independent theatres and drive-ins, an accurate one.

Initially, studios set up system using third party administrators to collect a Virtual Print Fee (VPF). The administrator would install the projector and then the studio would be charged each time their film was shown. This fee would then circle back to the theatre to help offset the cost of the conversion to digital, which would save theatre owners about half the price.

However, many independent theatres do not qualify for the VPF subsidy as they do not screen enough first-run films. The relative newness of digital projectors also prevents theatres from purchasing second hand equipment, limiting their options for attaining a digital projection system. As a result many have turned to fundraising as a means of purchasing the required equipment.

One such theatre that employed the use of kickstarter to raise funds is beloved Brattle Theatre in Cambridge, MA. They raised $140,000 in contributions this year to help pay for renovations, which included the installation of a digital projection system. Although the Brattle doesn’t often screen big blockbuster films, which one may think digital is made for, many of the restoration films they do show are being released digitally as well.

The Coolidge Corner Theater in Brookline, MA raised its digital conversion funds from its client base. The Dedham Community Theatre is doing the same. Others, such as the Red River Theaters in Concord, NH looked to grants and community support of their “Go Digital or Go Dark” campaign to cover the cost of conversion.

Bringing together the community is what going to the theatre has always been is about. Prior to the digital conversion ultimatum, theatre owners faced the challenge of gathering an audience when big screen televisions and services such as Netflix and video-on-demand, which allows perspective patrons to watch films in the comfort of their own homes, came into being. Now with the conversion to digital, theatre owners are facing operating challenges from the distributors.

Many have asked whether or not it is worth making the switch to digital given the challenges from both ends of the chain. However, the realization that the true power of the theatre, the true attraction, is the communal vibe has pushed them forward. It reminds theatre patrons of times gone by, before television and video streaming services, to something simpler where one could gather with friends and family and experience something great. It’s like watching baseball; you can do it on television, but if you want to experience it, then you have to be at the ballpark.

Although some will not be able to make the switch, and some have already closed their doors, the need for theatres, especially independent ones, has not been eliminated. They have only grown in value as a place where people can come together to celebrate film and one another.