Deluxe Digital Cinema, the London-based operation, is launching a Europe-wide fibre-based movie delivery service for distributors and exhibitors, in association with Hewlett-Packard. The network aims to link up most of Europe's sites to this network, using local partners where viable for digital cinema content services, bringing local content into the equation. One such partner is Éclair in France. The aim is to link together 8,000 cinema sites in Europe, with a target of 6,000 sites within 24 months beginning with UK and France, both of which have aggressive fibre roll-out plans. Scandinavia is also well advanced down this track (using 'average advertised speeds' metric), as are Netherlands, Belgium and Germany, according to IHS Screen Digest's Broadband Intelligence service. Hewlett-Packard will be the technology provider and provide field engineering and support teams. The network will be able to deliver a file up to 500GB, and is working on an average connection speed of 50MbpS. Larger files can be delivered but will take longer. This file size encompasses the majority of films. An average 2D film is around 150-200GB in size. Larger films will include those in 3D, HFR, or 4K titles. File sizes have been getting bigger due to these technology advances, despite an expectation that they would drop some years ago.
We have written much on this subject recently, and there has been much activity around electronic distribution in the past two years. A common theme in our commentary is that the hard drive system of delivering movies to cinemas is being entrenched in the market, as the price is being driven down by the major labs and service providers, in response to distributor pressure. This then means that new technologies and services can't match the prices being achieved by hard drive replication and couriers. The group's starting point was that the service couldn't be more expensive than the current hard drive delivery operations, which the link-up with HP helped to achieve. What is also important is that the network also offers the potential for price reductions, which are equally as important over the longer term for the main customers i.e. studios. Deluxe seem to have achieved a low price service with the functionality desired, leveraging the buying power of HP with telcos to achieve this price. Fibre does not depend on volume for cost reductions, and is piggybacking on the improved nature of fibre-based networks being installed by telcos and others.
The development of electronic distribution so far, outside of the North American DCDC project, has been piecemeal to an extent, notwithstanding the single market approach of Norway's Movie Transit network, and cross-border development has been somewhat lacking due to the fragmented and complex nature of European and Asian cinema markets. There has been progress of satellite within individual countries, such as Arqiva in UK and Smartjog in France, but this Europe-wide project changes the game for this sector as a whole and does offer larger distributors a single port of call for distributing their content. One of the keywords in this business is simplicity of operation, as the content side is becoming more complex (multiple language versions, sound versions, technology versions) and this definitely fits into that strategic logic.
Therefore, this service is probably the most significant announcement so far in European electronic distribution and a lot rides on it. If it is attractive to distributors and exhibitors, pricewise, and works at a technology level, then it proves fibre is a real solution for long term delivery of DCPs into cinemas. By the same token, if it doesn't work, it is back to the drawing board for fibre-based distribution. The Europe-wide nature of the network means that the digital delivery network is going to compete with all the existing and putative services operating around Europe, such as Arqiva, Smartjog, Dsat, Gofilex, Movie Transit, Flix, and others.
It will be interesting to see how the service deals with alternative content, which to date have been almost exclusively distributed by satellite when broadcast live. The service will cope fine with DCP events, as it will simply replicate the replacement of hard drives, but live events by fibre have not taken off yet, although they have been tried. Ways round this could include time-shifting, but the networks may also be fast enough to cope in some areas. According to our recent research, outside of the UK where live events are in the majority, recorded events dominate by volume, but live events are priced at a premium.