Digital cinema in India
The advantages of digital cinema include: piracy control; empowering the Government to get additional entertainment tax revenues; professional MIS systems and a back up of strong professional management teams.
Film prints cost about Rs 60-70,000 each. Thus only A-cities (large metropolitan areas) get the first releases. B and C cities receive the (worn out) prints after 5-8 weeks, placing pressure on exhibitors in those cities as audiences are aware of the release of the films in the A cities. The current model of distribution is thus not geared to extract value from the B & C centres as they do not participate in the first week phenomenon, leading to audience demand trailing off as the release is staggered. The exhibitors in these centres lose out as they are unable to realise the value from door collections as well as ancillary operations such as concessions and parking. The audience demand is instead met by piracy. According to Yash Chopra:
In fact, filmmaker Yash Chopra adds, â€œPiracy eats away more than 50 per cent of the business. Also, astute filmmakers have stopped releasing their films in the hinterland and even in states such as Assam and Orissa as well as countries such as Morocco and North Africa. If 95 per cent of the Hindi films donâ€™t make money, imagine how much piracy must be cannibalising… In the US, studios release 2,000 prints of each film and the opening weekends (not week) can earn more than $100 million.â€ (ScreenIndia )
Electronic movie distribution would benefit these centers. However, that is not the end of the story. To extract the maximum value from the real-estate exhibitors globally have adopted the model of maximum number of screens per cinema — multiplexes. This allows exhibitors to distribute the occupancy depending on the demand, i.e., for heavily advertised blockbusters they can use all the screens, else show different films to cater to audience segmentation. This means blockbuster releases in A-centres have to invest in more prints to have maximum occupancy at the same time. Thus number of screens X cost of print = cost of distribution (not including promotion costs). To add to this problem is the headache advancements in television technologies, particularly pay-per-view/video-on-demand and high quality home theatre equipment. This model of distribution has the ability to reach consumers in all centres (though most likely through a delayed-release model).
Thus, it is argued that an electronic distribution model can allow the movie distributor to distribute widely without the need for increasing its investment in prints, paving the path for an increase in revenue. India has a cinema screen ration of 12 screens for every 10 lakh (1 million) people (compared to 117 in the US). India has 12,900 theatres and there is scope for an additional 10,000 screens.
According to FICCI reports, the Indian film business is merely 0.67 per cent of the GDP (gross domestic product) as compared to 1.3 per cent in Thailand; 2.7 per cent in the US; 2 per cent in Brazil; and 1.1 per cent in S. Africa. The film business is expected to grow by 18 per cent p.a. every year and increase to Rs. 12,900 crore (Rs 129 billion) by 2009. The share of the organised production houses will increase to 55 per cent (from 20 per cent now) in five years. However, technology will drive the business in the new millennium.
UFO Moviez has converted 600 theatres in India, and plans to expand to over 2,000 for a total of 3,000 theatres worldwide by 2008. With a recent investment of $22 million from private equity firm 3i, the company intends to launch European operations with a target of 800 theatres. Other regions touted for expansion include Middle East, Africa, and South East Asia for the remaining 300 cinemas. UFO Moviez solution is based on e-cinema standard using MPEG4 technology, and is therefore not compatible with DCI specifications for d-cinema, as defined by the Studios.
Challenging the West
Raja Kanwar, vice-chairman of UFO Moviez slammed Hollywood’s standards for digital cinema (read here). He argued that they were “rigid, unrealistic”, and “not appropriate” to many territories including India. The battle is over DCI and d-cinema systems (Hollywood) vs e-cinema standards (UFO Moviez). Indian multiplex company Pyramid Saimira Theatres has entered into a deal with the Chinese government to launch a digital cinema chain with 7000 theatres in China. UFO plans to target 800 screens in Europe. Having personally witnessed the quality of UFO’s system, it is clear that Hollywood is imposing an unnecessarily complicated (and expensive) system on the world. DCI requires at least 2k projection with JPEG2000 servers. Given the number of cinemas requiring conversion, it is clear that the cheaper technology developed by UFO is a winner.