Market Insight

Cinedigm plays key role in shaping International deployment deals

January 18, 2012

Charlotte Jones Charlotte Jones Associate Director/Principal Analyst, Cinema, OMDIA

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Cinedigm, the leading digital cinema facilitator in North America, has signed its first international agreement with ICAA (Independent Cinemas Association of Australia) to cover digital cinema deployments of member cinemas in Australia and New Zealand (NZ). The agreement is at a preliminary stage and so far includes provision for virtual print fee (VPF) contracts, plus other technical and support resources such as TMS equipment. ICAA will manage coordination with local installation entities. The deal hinges on a final definitive agreement between Cinedigm and ICAA members.

ICAA represents 500 screens in approximately 110 sites and is a key stepping stone for Cinedigm in building an international presence after securing the bulk of d-cinema deployments of non-DCIP circuits in its North American regional base. The inclusion of VPF contracts for independent venues in Australia and NZ is vital for full digital roll-out, through financial as well as content support in digital format. As one of the early pioneers in striking VPF deals and managing a similar consortium of independent exhibitors in North America, namely CBG, Cinedigm is well positoned to deliver this role. New agreement follows previous partner Omnilab, which decided to step down. The 500 screen strong ICAA is also a bulk deal for Cinedigm, equivalent to size of a top 25 exhibitor in the global screen rankings.

The development immediately follows a similar preliminary deal between Beyond All, LLC  in conjunction with Cinedigm and MKPE Consulting with a consortium of 15 exhibitors comprising 1,000 screens in Brazil. Cinedigm, in conjunction with local d-cinema distributor Beyond All, LLC, will provide technical services as well as further support through its digital cinema software products. Both Cinedigm and MKPE will also work with the exhibitors to create the necessary business and system infrastructures to manage and maintain the network. The agreement to provide VPF management and deployment services is at the letter of intent stage and includes input from local film agency ANCINE plus the Brazilian Development Bank. MKPE was behind similar VPF negotiations on behalf of DCinema Alliance (DCA) with four studios in the Philippines.

The letter of intent by the consortium to use the approved facilitator group will provide the necessary weight in the lead up to negotiations with the studios, as well as independent distributors, in Brazil. If finalised, the contracts will mark the first industry wide VPF deals in the Latin American region, which has so far experienced a dearth of such support.  The initiative shows how VPF deals are the key driver behind facilitating full digital roll out, following an initial push to convert partial sections of the screen base for 3D capacity. With the scarcity of VPFs not only in Brazil but the wider region, 3D screens continue to account for over 97 per cent of total d-screens in the Latin America zone. At end 2011, Cinepolis announced it would proceed to upgrade all screens using Barco projectors, although it had not publicised whether VPF deals were the key switch in its strategy.  However, without this contingency, the total costs borne by an exhibitor would be significantly larger. There are close to an estimated 27,000 d-cinema screens in North America at end 2011, equivalent to 64 per cent of total screens digitised, therefore a clear majority. As a result, the onus of established players has quickly turned to carving market share in both under-digitised and non-VPF territories. 

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