XDC Announces VPF Agreements with 6 Studios

XDC is the Belgium-based company created by the EVS group and operating in several European countries to act as integrator in the cinemas’ transition to digital technology, by proposing solutions that aim on the one hand to boost the availability of digital content and on the other to finance technological innovations. Many will recall the proposal made some years ago: the installation of an electronic or digital system on the basis of a sort of a monthly fee to be paid by the exhibitor.

XDC has recently started a new phase: at the closure of the Cannes Festival, the company announced that a non-exclusive agreement, along the lines of the Virtual Print Fee, had been reached with four studios to finance the adoption of DCI compliant digital systems on 8,000 European screens. A similar announcement followed a month later, concerning the agreement with Sony Pictures and Universal.

The six major US distributors agree on the one hand to make their digital content available for the European market and, on the other, to allow XDC a contribution proportional to the amount they will save by distributing their films in digital format instead of on 35mm.

Thanks to this mechanism, the cost of the digital transition would be shared approximately two thirds by distributors and one third by exhibitors.

We talk about this to Fabrice Testa, Vice President Sales & Business Development at XDC.

Let us consider your agreement from the point of view of European exhibitors interested in shifting to digital: how could their theatres become part of the “happy few”, that is the 8,000 screens (out of 30,000 operating in Europe) that are your objective?

According to the VPF model experimented in the United States, the studios’ contribution will be paid directly to XDC, which will act as intermediary, initially bearing the costs of purchasing the digital projection systems. The contribution will be calculated on the basis of the quantity of product from each major projected by every individual screen. Very pragmatically, I would therefore encourage those interested in taking part in the scheme to contact us: evaluations will be made case by case, in relation to the number of cinemas and screens to be converted to the new technology, their seating capacity and the number of tickets sold, as well as the market share represented by the films of each of the majors in question, of course. In principle, any theatre could “generate” this type of contribution, whatever the number of mainstream movies it projects: however, we have to be certain that the costs of the operation will be covered within the period of time established (10 years).

This confirms the opinion of those who believe that VPF is not the “universal panacea” for what is one of the major impediments to the digitalization of cinemas, i.e. how to redress the balance of costs between distribution and exhibition. What will happen to theatres that do not meet the VPF requisites?

It is clear that cinemas whose programming is based mainly on domestic or local films or in any case on those not distributed by the majors will hardly be able to benefit from the scheme. This is another reason why XDC has foreseen a leasing formula that will make it less of a financial burden for the cinemas themselves to purchase the equipment, whilst at the same time ensuring XDC’s technical assistance.