Last Picture Show: Small and Seasonal Theaters Face Digital Transition

By Rob Scott
September 4, 2012

The struggle for seasonal and small mom-and-pop theaters to survive may become more challenging as the industry completes its transition to digital.
“20th Century Fox promises to phase out film by the end of next year, and the others are expected to follow,” reports The New York Times.
John Fithian, president of the National Association of Theater Owners, notes that 30,000 screens have been converted to Digital Cinema, while 10,000 remain in different stages of transition.
For a small cinema, the $75,000 cost of a digital projector can exceed an entire year’s profits, making it difficult to convince banks to provide a loan.
Some independent exhibitors are taking donations from patrons for upgrades, considering a retro approach to keep 35mm film alive, or closing their doors. Others are waiting on possible state grants and considering whether to sign a joint financing agreement.
“Devised through negotiations between the national theater owners group and the major studios, these Virtual Print Fee agreements entail per-movie payments from distributors for running their movies,” explains NYT. “For distributors, these givebacks are more affordable than striking film prints, and for theaters that qualify (because of limited grosses, many seasonal ones don’t), these payments can help pay off bank loans or leases.”
However, the agreements include constraints such as what films can be shown and how often.

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