Money vs Independence

It used to be so easy you know, the film turned up on a Sunday morning (I’m going back a while) and you showed it, people came to watch and on Saturday night you put it back in the tin and sent it on its way. Sunday morning the cycle would repeat. Happy days, although the prints were terrible. They made a hissing noise when you wound them because of all the oil from the box floors they’d been dragged over. Anyone here remember V cuts? I thought not. It was a way of repairing sprocket holes without having to make a join. Boy is that ever a lost art. In fact film projection is going the way of the steam engine driver, something only a few die-hard part timers do at weekends.

Because now we live in a brave new digital world, which I have embraced wholeheartedly. However, I’m faced with another in a what seems like a long line of dilemmas.

Welcome to the world of VPF’s, and how exhibitors are trying to fund this technological Elysium. Because I’m either a visionary or financially reckless, I went wholly digital just a year ago.

I raised the money and I’m making the repayments myself. At this point anyone from Odeon reading this is probably rolling around on the floor laughing, or ROFLing as the hip kids say, because the studios are largely paying for their new kit through VPF’s.

VPF stands for Virtual Print Fee. It’s a bit complicated, so stay with me. 35mm prints are or were, expensive to make. In theory supplying a simple hard drive is far cheaper, so the studio is quids in. Imagine the difference between supplying 1500 prints of Harry Potter at around £500 – £750 each and putting out 1000 hard drives at £50 each. Warner Bros in the UK alone save about £1m*, multiply that by all the territories in the world and you can see why they are so keen for us to go digital.

Now, exhibitors rightly see this as unfair. Why should we shoulder the cost of all this new technology when the biggest cost benefit goes to the distributor?

Enter the VPF. Digital supplier gives kit to cinema, cinema pays about 30% of the value to the supplier. Finance company, via the supplier, pays the rest. Everything that plays on digital projector attracts a fee paid by the distributor. Fee goes into big pot to pay off finance.

The fee is broadly the cost of a 35mm print which they would have had to supply if the exhibitor was still on film. After eight years or so all the finance is paid off, studio stop paying and all cinemas are magically equipped with spangley new digital projectors.

Marvelous. Or not.

I have the opportunity to “back in” to a VPF scheme brilliantly put together by a consortium acting on behalf of mainly independent exhibitors. If all I ever played were mainstream films from the studios this would be a no brainer, but I don’t.

Non studio and smaller distributors are disadvantaged by the VPF and as such are reluctant to get involved. In the end they will have to if they want their films to play major circuit cinemas but more marginal bookings may well suffer.

To illustrate, I heard a story this week that gave me considerable pause. It could very well be apocryphal and I apologise to those who may know differently. There is a limited release film in the UK at the moment that is doing very well. The distributor, a studio, put it out on a very small number of prints, mostly digital I believe. Some cinemas have had trouble booking this film because the distributor is unwilling to risk the VPF in their situation. No VPF, no problem.

This could well be a new way of keeping cinemas out, instead of the old “we don’t have enough prints” routine or it could be a load of dingo’s kidneys. Either way it worries me.

We’re fortunate in being treated very well by the distributors, I get pretty much everything my own way. However, when there are battles it’s usually over limited release films. I’m not stupid I can see that if there are only 50 prints, Uckfield isn’t exactly in the top 50 must have sites in the UK on release. Unless it has the words King’s and Speech in the title.

Digital has made most of these battles on limited release pictures go away. Consider that I would also have to pay a fee for the live opera and ballet and it seems to me I could be walking into a nightmare.

My independence is the one thing I’ve got and I don’t want to lose it. So on the one hand it seems insane that I wouldn’t want to reduce my monthly payments by around 2.5K per month (!) but on the other hand in three years it will all be over and I can do whatever I want without answering to anyone. Surely that’s important too?

*My numbers may not be super accurate, but the proportions are correct.

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2 thoughts on “Money vs Independence

  1. Hi,
    Enjoy reading this sort of behind the scenes post, both technical and administrative. Please keep it up!

    Some things stood out, “Unless it has the words King’s and Speech in the title.” I know this was a major hit across the UK, but if I’m reading right your implying it was proportionally more so at the Picture House Uckfield. If true, any idea why? (is East Sussex full of monarchy lovers?!)

    Are all films delivered on Disk or are some downloaded from a secure server?

    Thanks
    Chris

    • King’s Speech is now our biggest film of all time. Our grosses were way and above what you would expect in a town this small. We sold over 20,000 tickets. It just fitted our demographic perfectly.

      If, like us, you have digital projection, films come on a common or garden computer style hard drive. Each film is around 60 – 100gb depending on the length. They are protected by about a million encrypted keys though and in a format your computer could not read.

      K

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