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by Michael Hurley
January 2, 2014 2:46 PM
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Studios Abandon Film, Small Theaters Struggle -- And There's a Happy Ending

The Colonial Theater in Belfast, Maine. Rachel Barenblat/Flickr

In February 2012, Michael Hurley, who owns the Colonial Theatre in Belfast, Maine as well as the Temple Theatre in Houlton, Maine, wrote about the imminent threat independent theaters around the country were facing because they couldn't afford to convert to digital. He predicted that the industry-imposed transition from 35-millimeter film to digital would cause the death of 1,000 independently owned theaters. Since that time (as of July 2013) 35,712 screens (out of a total of 39,838 screens) in the United States have been converted to digital (14,430 of which are 3D capable), according to according to the National Association of Theatre Owners (NATO), of which Hurley is a member. "It appears that a perfect storm of events may bring about the end film around the end of 2014 due to either a worldwide lack of film stock and/or the closing of processing labs. Studios are weighing carefully the cost to make and distribute film vs. the revenue from those limited prints," reports NATO.

While some small, independently owned theaters continue to struggle to make the industry-imposed transition from 35-millimeter film to digital, it hasn't been the disaster Hurley had predicted. The transition to digital hasn't been easy, but it won't be the death of small theaters. In fact, it might ultimately, help them, Hurley writes in his follow-up story below.

Almost two years ago I wrote, "We're About to Lose 1,000 Small Theaters That Can't Convert to Digital. Does It Matter?” No one flat-out accused me of being alarmist because the situation was just that serious. Serious enough that I felt the need to (metaphorically) yell "fire" in a theater in order to get people to focus on the impact on smaller theaters of the switch from film to digital.

Nearly two years later; the
conversion from 35 mm to digital cinema and is still happening at top speed, but now the light at the end of the tunnel is in sight. And one thing's for sure: that light will not be shining through 35 mm film, but that's okay.

Theaters large and small have converted with and without the virtual print fee (VPF) assisting in their theater new equipment purchase. The VPF was the studios kicking back a portion of the enormous savings they realize between the cost of providing a digital print on a reusable hard drive for +/- 100.00 compared to the immediately declining quality and value of a 35 mm print for +/- 1500.00. With all that money they saved, they chipped in with a VPF to help pay a portion of the digital equipment costs for theaters. There are no new VPF agreements being made, the ones that were entered will run for 6-7 years, and each day that goes by gets us closer to the day there will be none.

The VPF created a support floor for higher priced equipment. Theaters were buying equipment with the studios' money. When they stopped offering VPFs: Surprise!...the prices dropped by 25%. That's nearly the only good news for those who did not sign on for a VPF.

What's going on today with print availability is that as the conversion continued, each theater that converted meant one less 35 mm print was needed. The conversion and corresponding lack of need for a 35 MM print happens and increases each and every week and the need for 35 MM film prints has declined to a point where manufacturing of film stock and the transportation of film prints have been knocked back to near novelty status.

The raw reality is that at this point the theaters that have not converted are more than likely the lowest grossing and usually small town theaters. The studios now make ever fewer and fewer 35 mm prints and a low grossing theater's  ability to get a 35 mm print "coming off" another theater becomes slimmer and slimmer. There just aren't that many out there. The grosses go down and the spiral is downward.

"Gravity" opened with less than a few hundred 35 MM prints nationally. Some theaters that were unable to "open" "Gravity"  still got a digital print on week two while the unconverted waited weeks hoping for a 35 MM print. Some films no longer have any 35 MM prints at all. 

You might think the independent filmmakers and distributors were going to save these theaters by soldiering on and fighting the digital wave? The truth is that indies too love digital cinema. Maybe they do not like VPFs, so much but many of the very smallest distributors never made a VPF deal anyway. Digital technology has made it much cheaper to make great films and easier to distribute them as well.

There is a bright side to all this.  It is now much easier it is for a theater to get a digital print (vs. 35mm) from a film distributor.  Especially if they do not have a VPF. There is nothing a distributor loves more than to hear a booker for a theater say "They have no VPF and are self-financed." You can feel them perk right up. It costs them next to nothing to send a print to a theater. That isn't exactly money for nothing but it is very new for now.

Yes, many theaters have closed. But many have been reopened. Some have gone away forever. But some have been reborn with startling vitality.

But how many theaters did we really lose? That snuffing out, the extermination of beloved theaters a la Cinema Paradiso, we can all understand. But it is hard to find an exact number of small theaters that have closed because they couldn't afford to make the transition to digital. Yes, many theaters have closed. But many have been reopened. Some have gone away forever. But some have been reborn with startling vitality. Old beat up theaters met sad ends as tired owners walked away. But doing so often cleared all the old debt and made it possible for a new owner to take over, convert, and light up the screens. While owners may have gone under or away, the theaters are still there.

For new dreamers who have always wanted to open a movie theater, it's actually easier and less expensive and less complicated today than it was in the past and new small theaters are popping up.

If you Google movie theater closes you'll find far less news than if you search for movie theater reopens. No one is really keeping track of how many have closed for certain and forever because you just can't tell. When one door closes another door opens. And "Theater Reopens" is a much happier story than when one closes -- and we all love a happy ending.

In many cases, theaters have found patrons and communities ready to help them pay for the conversion and stories abound of successful fund raising conversion drives. Considering how many of these theaters are "for profit," it is something heretofore unseen in the world of business. People do love their small-town movie theaters.

While there is room for discussion on how many theaters have closed, there is no such debate about digital cinema. Ask any theater owner or operator "would you go back to 35 MM?" and no one raises their hand. 

Certainly there are the technophobe purists, but just thinking about carrying the bulky film cans with their 50 pounds of film chewing into your hands is enough to make a projectionist shake his head. The picture is clearer and it’s ALWAYS perfect. The required sound upgrades means that movies sound better than they ever did as well. There’s never "ghosting" when images blur from frames dragging. And the dreaded "brain wrap" when film would wrap around the platter system? Those days are gone.

Theater owners and projectionists (a distinct breed still very much in existence) all agree: As long as digital cinema works, it works far better than 35 MM. There's less opportunity for things to go wrong. But when digital cinema doesn't work? It works far worse than 35 MM system. Back then you had a chance to fix the thing. Now it's all about your tech people, service providers, and off site monitoring. When digital systems go down, it's a hard crash.

This has always been a small-town story. Major market theaters never really had a problem. Your local 12- or 18-plex makes more than enough and had the ability to jump on the VPF. The thousands of theaters in places that are the backbone of small town life we celebrate in some of our favorite films live for movies.

People do love their small town movie theaters. Remaining still are the many hundreds of small theaters that are even now climbing to the rail like Jack and Rose in "Titanic." They are running out of options and this winter will be the end or near end of 35 mm prints. There may be a few last prints around but not enough to endure missing big pictures and losing business. As NATO said with a remarkable cold shrug of indifference, "Convert or die." That time has now come. “Convert or Die!” sounds like the title of a movie now playing at a small town theater near you.

We still don't know how this movie ends. Let's hope it's a happy ending.

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4 Comments

  • Mike Hurley | January 3, 2014 3:41 PMReply

    I learn something new every day. There are some VPF deals left. Talk to major theatre equipment dealers like Boston Light and Sound, Sonic, ACE, Strong Tech Services, or fellow theatre owners and you'll find a few options still available.

  • Mike Hurley | January 3, 2014 12:41 PMReply

    One point is that Paramount recently announced they would no longer be issuing any new films in 35 MM film so the chips have begun to fall.

    To Desmond's point: why should theatre owners have paid for new projectors just so distributors could save 1400.00 per print? The VPF was a fair way, not extended to enough smaller theatres, but still pretty fair, for the enormous savings on the print side to help pay the enormous costs to theatres to realize those savings. Theatre owners were just fine with 35 MM and would have happily stayed with film. The entire conversion to digital was driven by the enormous per print savings and very secondarily the technology benefits.

  • Demond | January 2, 2014 3:51 PMReply

    The VPF Agreement is essentially a Tax Forcing Filmmakers & Distributors to pay the Bill for Theaters having to convert to Digital. (Through From The Theater Owner's Perspective, it's a Voucher.)

  • John Davies | January 2, 2014 3:46 PMReply

    The interesting thing with conversions here in little old New Zealand has been the impact where VPF is in place in small single cinema towns is that it has reduced the diversity of offerings. Small distributors like me can't justify aVPF on a small film in a small town so increasingly towns that had what we called electronic cinemas using blu ready quality digital files to show small films on the big screen and then convert to VPF funded DCP now don't show the arose style films for their audiences, a real downer for everyone involved except the major studios who gain even more session times for their bigger films.