Building the Network
The experience of Nordisk Film Cinemas (DK)
by Jan Petersen

Nordisk Film Cinemas

Nordisk Film Cinemas was founded in 1915 as a subsidiary of Nordisk Film, the oldest movie production company still in operation, with divisions spanning all the areas of the movie’s life cycle: from production to post-production, from cinema and video distribution to exhibition and cinema advertising.
Nordisk Film is in turn part of the Egmont group, one of Scandinavia’s leading media groups which, with 3,500 employees and a yearly revenue of more than one billion euro, covers almost all parts of the media in a broad sense.
Nowadays Nordisk Film Cinemas is the largest cinema chain in Denmark: it counts 14 cinemas in 10 cities, 95 screens and approximately 16,000 seats, selling roughly 5 million tickets per year, with a market share of 42%.

Digital Cinema “History”

The “history” of digital cinema started in Nordisk Film in June 2004, with the decision to take on board this new technology to gain operational excellence and business experience.

We started installing the equipment in August 2004 with the first three screens, two in Copenhagen and one in Aarhus, which is the second largest city in Denmark. The three projectors were from Barco with EVS servers and the opening was with I, Robot followed by Shrek 2.

We created our own digital trailer on digital cinema, combined with flyers just to make the audience aware that what they were going to see actually was digital.
At the end of 2004, 7 feature films were digitally screened, including the first Danish digital release.
The fourth screen was installed in May 2005, just in time for Star Wars – Episode III, but unfortunately in 2005 we only had a total of 6 digital releases, in the meantime giving the audience the chance to get used to digital viewing.
The finalization of the DCI specifications was long awaited but also our original equipment obsolete earlier than expected because at the end of 2005 most studios were declaring that they would not be offering content in the old format anymore.

At the end of this year we therefore changed our servers and went into partnership with the company called Éclair Digital Cinema, which rented us the technical equipment.
They have provided us with the servers, they have had the responsibility of making sure that our servers are at all times as compatible as possible with DCI specs and this has been a big help because after three months we’re again operating with Doremi DCD-2000 servers, which are the only ones in operation fully compliant with JPEG2000.
In February 2006 Chicken Little was the first movie (in 3D) to be presented in the JPEG2000 format.

Lessons learned

What lessons have been learned?
As a “first mover”, it has been very difficult to obtain digitalized content. It looks as though it’s getting easier now. Most of the majors are now running up to at least big titles in digital and so far we have had confirmation for a lot of titles. It is starting to roll out.
When we first started out, our projectionist was hesitant, a little scared, using the new equipment, so that we quickly had to provide information, training and involvement to get these new machines running as stably as 35mm. When we look at the skills needed, what is most needed by technicians for digital cinema is IT, rather than traditional skills (for 35mm). We have thus given them some degree of technical training. I think that they are now really confident with the equipment and we can upgrade soon.
Up to now all the regular projectionist has had to do is to project feature films, however soon we will be talking about alternative content coming in on different tape machines, computers etc.: it’s a bit more difficult, it’s not just that the projectionist, turns up with an HD device, plugs in the cable and pushes start. You need to have special training as a projectionist in order for them to acquire those kinds of skills.

With regards the economics of this, you shouldn’t expect a healthy financial return on investment: just taking into account the extra revenue (i.e. alternative content) you would not be able to pay for the equipment; it’s impossible, at least with the limited lifetime of the equipment. Our investment is an investment in education, getting knowledge about the technology, and hopefully this will make it easier, cheaper and faster to start the full roll-out.

Digital cinema is very time-consuming. You have to talk to a lot of very different people: even though distributors are part of the American majors, their knowledge of digital cinema is not very profound. You have to build a network: you have to know who to talk to in the European network and you have to know who to talk to in the States. But if you really build up a network you can get the titles. I went to ShoWest, I talked to some of these contacts while I was there.. The result was that we got Ice Age 2 in digital as the only place outside the States because we talked to the right people, we have the right equipment and we therefore got the movie.
Building the network is essential.

Present state

Looking at the present state of affairs, first we have to keep as close to DCI compliance as possible: projectors, servers, the surrounding security systems, theatre management systems are ready, so they need to be implemented. Being DCI compliant as a theatre is not simple but not impossible either.

Business to business events, which are another form of alternative content, like business conferences, dvd releases etc., are increasing. But it takes a long time to get the market to understand that we do have the equipment and we are steadily improving to it and we now have two full time people for business to business events.
As this is what digital cinema is at present, we have to be aware that training is also needed to follow those operations through. We are talking about the projectionist who needs to be educated in using this type of equipment and handling alternative contents. It is thus education we are talking about for the roll-out.

Challenges for the future

When we look at the challenges for the future, I believe that a steady flow of content is coming. Not this year but some time next year I think all the majors will have a steady flow of content. I also believe that in 7 or 8 years we’ll have a steady flow of digital content from local productions. The post-production, the sources, the market are also ready for this because they are buying the equipment to do the mastering and so on. So local titles will come.

What we still need at least in Denmark is digital advertising and digital trailers.
We need both: we don’t want to be in a situation where we have digital advertising, but the trailers are 35mm and the feature film is in digital. We want the whole flow of advertising, trailers and feature films to be in digital. If we can do that, we can also obtain increased revenue from digital advertising compared to the traditional advertising in 35mm.
Handling the transition to digital is going to be a huge task; we have about 100 screens and to implement them, if I look at the time it will take for the connection and automation systems, sound systems etc., this is going to be a huge task. We shall need some kind of assistance in doing this if we are going to do it in a relatively short time.

As to theatre-wide systems, as we can see, in the future we shall have what we can call a movie library in each theatre where films are kept after coming from distribution. Until now this has been extremely expensive, but within a few years it will be possible also from an economical point of view. We can also see that digital theatre systems will connect to the ticket systems so that the moment you put a show in the ticket system the projection system knows, and it goes further to the screen. The ticket system has a performance time of 15 minutes and then the projection system, after 15 minutes, automatically screens the film. In this way you will always play the content that the ticket system wants.

Upgrades: for the next few years there will be a lot of upgrades. But we believe that in a few years the rate of upgrades will decrease and then come to an end.
What we really need is a business model: but who is going to pay for this? This is the key to the decision: we need someone from distribution and studios who can contribute to making this investment.