Hollywood’s Coming Attractions: What’s Wrong with a Digital Future?

In March 2002, the very month Fresno Filmworks was launched at the Fresno Art Museum, the major Hollywood studios began to lay the groundwork for an industry-wide conversion to digital exhibition. The “Big Six”—Twentieth Century Fox, Sony/Columbia, Disney/Buena Vista, Paramount, Warner Bros., and Universal—formed Digital Cinema Initiatives (DCI) to set the benchmarks that manufacturers and theaters would need to meet for 2K and 4K conversion.  If that sounds like monopolistic collusion, it should, but of course in the current market economy, such joint ventures set off few alarms.  That year only a few dozen theaters in the U.S. were equipped to screen Star Wars: Episode II—Attack of the Clones in the 1.3K digital format that George Lucas was then championing, so the studios had much planning and hectoring ahead of them.

After ten years, the studio-led conversion from analogue to digital projection is just about complete.  In its annual Theatrical Market Statistics for 2011, the Motion Picture Association of America (MPAA) reported that two thirds of the 42,000 screens in the U.S. and Canada were already digital or 3D digital and that the fastest growth had come just last year, doubling the number of digital screens since 2010.   Even the local Regal multiplexes joined the surge: the bulk of its 35mm projectors have been sold or scrapped, just a few spared for the rare analogue film that might come—at least for now.

As with previous changes in film exhibition—synchronized sound in the late 1920s and anamorphic widescreen in the 1950s—this most recent conversion has been driven by the studios (in their distribution role), not by theater owners.  Conversion is costly, $75,000 to $100,000 per screen.  In order to motivate cautious owners, including the major chains (AMC, Cinemark, and Regal), the Big Six established a plan to subsidize conversion that would lessen the financial risks for theaters.  Since 2008, Virtual Print Fee (VPF) contracts have passed on savings the studios are already enjoying—$800 per booking, according to David Halbfinger of the New York Times (12 March 2008), paid to the companies that have supplied the new equipment to exhibitors.

The VPF plan, however, is not a permanent incentive for theaters.  Twentieth Century Fox made news last November when it sent out letters to exhibitors around the country announcing not only that it would soon be eliminating VPF agreements (meaning future conversion costs would be borne by the theaters themselves) but more ominously that Fox would no longer be offering 35mm prints for theatrical release.   Many insiders understood the letter as a not-so-veiled threat: “we [at Fox] strongly advise those exhibitors that have not done so to take immediate steps to convert their theaters to digital projection systems . . . for those theaters that wish to continue to license Twentieth Century Fox and Fox Searchlight motion picture product. . . .”  In other words, convert now or be prepared to lose out.   To show that it means business, Fox has already ended its distribution of 35mm prints to some of its Asian markets, this according to Pamela McClintock of The Hollywood Reporter (24 April 2012).   It won’t be long before the other major distributors follow suit.

Not surprisingly, profitability rather than art (or even entertainment value) has driven this digital conversion.  Decades ago, the major studios determined that distribution—not production or exhibition—was the role that would insure their survival.  The blockbusters of the 1970s signaled a shift in how the studios would market their product.  Before Jaws and Star Wars, platforming (now what’s known as limited releasing) was the norm: a film would be released in the big markets of New York and LA, with prints circulated to smaller cities and towns weeks or months after their opening.  Even for major films, only a few hundred prints were needed for that approach to distribution.   Since the 1970s, wide releases have become wider and wider, and the cost of striking and shipping so many prints has grown exponentially.  At its widest release, Star Wars played at 1,750 theaters nationwide—an unimpressive number by today’s standards.  The Avengers opened in the U.S. in more than 4,300 theaters, and the film was already playing overseas in thousands more (Box Office Mojo).  The cost of striking that number of prints (even at a conservative estimate of $1,500 per print) would run well over $10 million, especially with the megaplexes that would need two or more prints for its screens.  Add shipping expenses, and you can see just how costly the analogue format would be with Hollywood’s prevailing marketing strategy.

What’s wrong with cost cutting in such a risky business or in reducing the studios’ environmental footprint?  In many ways, nothing.  Since the digital intermediate process is part of post-production for nearly all feature films produced in the U.S. today, even those not dependent on CGI, what’s the point of transferring them back to analogue form, filmmakers and distributors are asking.  Digital Cinema Packages (DCPs), the hard drives delivered to theaters, can be shipped at a fraction of what it costs to deliver 35mm prints.  Then, too, DCPs can be re-used after one theatrical run for the digital files of the newest wide release, eliminating the waste of thousands of soon-to-be useless prints struck for opening weekend.  And, as David Bordwell, Professor Emeritus of Film Studies at University of Wisconsin-Madison, describes in his latest study of Hollywood, Pandora’s Digital Box (2012), once a DCP is uploaded to a theater’s server with the distributor’s security key, the projection room needs no staff; managers can monitor their auditoriums from their offices, or even from a coffee shop across town.  The projection rooms can hum along just fine by themselves, certainly no union projectionist needed.  And for the studios, perhaps best of all, control over their product is increased: not only can information about each screening be sent to remote monitoring systems, but a DCP can only be played on a designated projector with a designated server and only for a predetermined period before a new security key is needed.

What will happen to independent theaters, especially art houses, as the conversion continues?  Many, especially those that offer a mix of mainstream and art-house programming, have already converted, the conversion either self-financed or through a VPF agreement.  Others, predicts David Bordwell, will close, especially those in smaller communities.  For some independent theater owners, VPF agreements may seem like a Faustian bargain: yes, they provide the means to finance the new equipment, but the cost is more than monetary.  Not only are theaters subjected to third-party monitoring of many day-to-day aspects of house management, from screening times to the selection of trailers, but, if the owners had hoped to continue with analogue on some of their screens, they will find they must take DCP format whenever it’s available.  And, if a theater chooses to run a film from one of the small independent distributors, that distributor must pay the VPF, even though it was not a signatory to the agreement.  While the major studios may talk about superior screening experiences of digital projection, according to Bordwell conversion is really about controlling the theatrical marketplace.

The transition from analogue to digital format for new releases is also having consequences for repertory art houses.  The studios have little interest in maintaining dual libraries.  Not only are worn prints not being replaced, but others are simply not being licensed to exhibitors.  Earlier this year, when booking The Maltese Falcon for our Filmworks Classics, I was dissuaded from licensing it in 35mm: Blu-ray would be the optimal format, I was told by Warner Bros.  And if you think this is just the case for a tiny outfit like Filmworks, you’d be wrong.   The same is happening at repertory houses across the country, writes Bryant Frazer for StudioDaily (23 Jan. 2012), even the “See It Big” series at The Museum of the Moving Image in New York.

Many of the small independent distributors—New Yorker Films, Kino, and Zeitgeist, perhaps the most stalwart—are continuing their commitment to celluloid, even for revivals like this summer’s re-release from New Yorker of Jacques Rivette’s Céline and Julie Go Boating.  The larger art-house distributors, however, subsidiaries of the Majors—Sony Pictures Classics (Sony), Fox Searchlight (Twentieth Century Fox), and Focus Features (Universal)—are sure to go the way of their parent companies.  How long analogue can hold out against digital, even for specialty films, is uncertain.  But for as long as it does, Fresno Filmworks will be projecting celluloid on the screen at the Tower Theatre.