since they really needed to continue the digital cinema roll-out at CGR Cinémas in France. For a few months they had been stuck at a little over 100 (the press release says 125). One has suspected that they were left without a paddle by one of the big-shot banks which had gotten their wings clipped. (For some reason, they didn’t send out a press release about it.) But now they are saying that they have 20 million euros for completion.

20 million euros~!~!~! 300 systems~!~!~! Yet again, I am agok. The Arts Alliance Press Release went on and on about everything, but didn’t do the math. Let’s see. 20 million divided by 300 is 66,666. That is astoundingly close to the 65,000 per system that Cinedigm put forth in their press release last month as well. Except, of course, that the euro and the dollar are not trading at parity. Can that be the new cost/system number? Did we miss that press release…seems so recent that it was still over 100,000 per system.

(One hears that the Cinedigm financing came from vendors…one vendor? multiple? so, is the 9 million in trade and no cash? Who can tell? Please do~!)

Great. More research projects. Where are the products made and shipped from? Would that make a significant difference in the integrators price? Do EU taxes plus shipping make up for the difference? More on this later.

The release <http://investor.accessitx.com/releasedetail.cfm?ReleaseID=351951> says that the credit facility will be used to fund the launch of 137 systems for Premiere Cinema. Good for them and good luck to us all. But as much as 8.9 million dollars is, that is less than $65,000 per system; all of Cinedigm’s overhead for getting this loan and the next, all the overhead of site surveys, plus the paperwork and drawings which follow, the communications with each cinema, checking and ‘discussing’ with each cinema – making certain that the changes get done – power and air conditioning, new audio wiring, the famous telephone line and aDSL line which the cinema has to get installed, all of the technician time and the organization to get the techs and the equipment there on the right day…Oy~!

And, that doesn’t mention the equipment. Wow. $65,000 for less than 150 systems. Imagine the meeting at the vendor’s places after those requests are made. Cinedigm will be asking for prices that were probably talked about when 10,000 piece orders were contemplated. This will have to include the projector, the server, a central server no doubt and the Cinedigm Theater Management System. The freight bills alone will be significant. 

One presumes that 3D equipment is an additional expense borne by the cinema, along with such items a the BluRay devices (when will the first professional units show up?) and back-up satellite equipment, and matrix systems to put any signal on any projector. 

One presumes that Cinedigm will welcome the deal, regardless of how much it actually cost. Their profit is in the back-end, especially in the alternative entertainment which they are put together through their associated companies’ efforts. One notices a recent Turner Sports/NBA announcement on their site , promising live 3D NBA action on Saturday nights in 80 cinemas or 160 screens.
The XDC announcement is just as opaque, except that they are clear that the process is; get the VPF agreements, get some cinemas interested and signed or close to signed, then go to the bank with that deal in hand. Then, like Cinedigm, make an announcement about the money. A small difference between the two; Cinedigm says they have the money deal signed, XDC says that the ink on the paper is drying, but that the deal needs a few more approval steps. 

But the deal says that Fortis is keen on the deal and the more recent announcement from XDC is a deal for 180 sets of DCinema systems with the Portuguese chain Zon Lusomundo (an implication that the money came through), and 193 screens for the Cineplexx Chain in Austria.  (N.B.–contract value is 24 million euros, which is $32.4 million…over 3 times the $9.8 million value of the Cinedigm financing. Granted, these are not similar deals and no one knows what kind of back-end XDC has in the profits of the Cineplexx deal…though, they have been known for back-end profits on other deals. Still…)

Just a slightly tangential note on the banking situation that stands like a ghost behind all this. Fortis is a surprise player, only because they have been involved in a bit of a snag these last few months. Fortis was a Belgium/Netherlands bank, formed during a brief post-Napoleonic moment when these countries were joined. Fortis had recently bought the bank group ABN Amro, along with Spain’s Banco Santander and the Royal Bank of Scotland. They divided the assets and went their merry way. Now that some parts of the ponzi scheme known as modern banking have been exposed, it appears that Santander got the more stable bits and RBOS and Fortis got the adventurous but unstable bits. As Fortis started to buckle under the load, the Netherlands nationalized the Fortis Bank portion that was in Netherlands (for 26 billion euros) and the Paris bank BNP took over the Belge and Luxembourg parts of Fortis (for 14 billion euros.) 

All this took place during the week before 6 October, and the Fortis/XDC release is dated the 13th…and is now followed by the action in Portugal. So it looks like people kept their eye on the ball and made it happen regardless. This is in contrast to the DCIP/Hollywood Studios deal which was announced and then got lost in the financial malaise that is now the US. 
As a last side note, I am unable to wrap my head or enough time into figuring out the Bank of Scotland/Royal Bank of Scotland situation…and which one did the financing of some dcinema systems…all which seem to be stalled for the last few months. Both banks were in severe trouble and needed government help recently. The google record is confusing and without inside info, I am confused.

Some press articles said that they are both working on a seperate deal with DCIP. Sony, being a manufacturer and studio is in a different position than the others, so this is understandable. Warners, no one can figure out. The rightfully say that they have done as much anyone to get digital cinema evolving, but except for XDC, they haven’t signed a VPF deal.

The studios that are in this set of accords are Twentieth Century Fox, Walt Disney Motion Pictures, Paramount Pictures, Universal Studios and Lionsgate Films.

[Edit: Sony DCSS has announced a VPF deal with Fox, Paramount and Sony Pictures. The release doesn’t specify a number. It appears that Sony is offering their own financing package. And, there is another announcement from Kodak that they have a VPF package for 8,000 screens with Paramount.]

The financiers for the DCIP packages are J.P. Morgan, the investment banking arm of JPMorgan Chase and The Blackstone Group. GE Financial, with 80% ownership of Universal and the financier of the earlier largest deployment of DCinema systems (by AccessIT/Christie) was not mentioned.

What is mentioned in the press release is that these seperate long term agreements are for 20,000 screens in North America, while DCIP’s website establishes the partners with only 14,000. Cinemark does have 1,030 cinemas in Central and South America (11 of which have been deployed with DCinema systems according to Bill Mead’s article in Film Journal International.) What are the implications of adding 6,000 additional screens to the numbers? except that DCIP will offer its integration capabilities to other chains. The press release uses the phrasing “to nearly 20,000 movie theatre screens across North America, including…” the 3 partners.

NATO issued a release applauding the DCIP Agreement (which possibly should be referred to in the plural, since the DCIP release mentions ‘agreements’ and ‘seperate agreements’ several times…except in the heading.) NATO continued by expressing encouragement for “similar deal with smaller exhibitors.”

This confuses a previously understood situation, in that the smaller exhibitors were assisted by NATO in forming the Cinema Buying Group. This group then selected AccessIT as the vendor to equip and service their installations. AccessIT had 3 weeks previous announced agreements with Disney, Fox, Paramount, and Universal for 10,000 US and Canada screens worth of VPF. (A long term deal with Lion’s Gate was announced the following month.) Why is NATO encouraging a similar deal for small exhibitors when small exhibitors have access through AccessIT, who provide several layers of benefit to both the exhibitors and studios?

There are other interesting implications and questions that this deal brings up.

With 4,500 North American screens already installed and 14,000 going direct to the studios in this deal, and 8,000 going though AccessIT in the CBG deal, that’s 28,000 of approximately 41,000 screens in the US and Canada. Are the owners of these screens just waiting in the wings? If DCIP does there own supply and installation contracting, and if they complete their DCDC distribution infrastructure plans, is there enough business left over to keep AccessIT investors happy? to support other groups, for example Technicolor? Kodak? both of whom have a couple hundred systems installed. The significance of the additional 6,000 screens handled by DCIP must loom large in their plans.

And what of equipment manufacturers. Will a large sale like this promote the use of single vendors, or will several different brands of servers and projectors be used? The latter would promote interoperability point that NATO has detailed in their DCinema System Requirements.

One thing not mentioned in the press release is time of deployment. How many quality lenses can be crafted every month?

Nothwithstanding all this, such a major agreement is a welcome relief in an industry which has invested a lot of un-recouped engineering, exposition/marketing, and standards development effort, time and money.

The titans have sat at the table and made their deals. Now the exciting part of implementation can begin.