Earlier this year, when the cinemas were still operational, one of my friends who is a lawyer had filed a suit in the Delhi High Court against a Bollywood biopic that was produced by a large production house. The Production house had consulted her during the making of the movie but did not credit her for the same in the title card. She ultimately won the case and the Court directed the production house to add her name to the Credits in all the prints. While the addition was carried out in India, she asked me to check whether her name was added to the credits in the International prints. I was sure that it is logistically impossible to do this for a physical hard drive print, in the international market. I still headed to the cinema and met the manager who showed me the physical hard drive of the movie and mentioned the reason why any additions cannot be made to already censored movies due to logistical issues. This reminded me of the days when I saw the representatives of the movie distributors, who would carry film reels in their scooters from one theatre to another as one print was shared by many theatres prior to 2005, when Digital Cinema made its foray into India.
Sometime in the aftermath of the Y2K euphoria, a silent revolution in movie exhibition was taking place in the United States of America, today we know this medium as Digital Cinema.
Though the idea was mooted way back in 1972, by eminent Computer Scientist Nasir Ahmed, the high costs of storing and compressing data took another 26 years, before the first full length feature Digital Cinema was made in the year 1998 and exhibited in five theatres in the US with the help of Texas Instruments.
By the end of the year 2000, there were around 30 theatres in the world which had adapted this technology, however it took another 3 to 4 years and many technological improvements and enhancements for this technology to go Global.
As on this day, there are close to 200,000 digital screens worldwide, half of them in the Asia-Pacific region. India has close to 10000 screens, out of which 30% constitute multiplex screens and the rest being single screens.
While large multiplex chains have their own projection equipment, the economics of changing the projection equipment to digital ones was not economically viable for the single screens and smaller multiplex chains. To fill this gap, producers encouraged owners of these theatres to install digital projectors, for which the producers paid a Virtual Print Fee (VPF), which costed a fraction of the cost of film prints. Digital Service provider companies like Qube and UFO acquired these equipment either on their own or jointly with the theatre owners and installed them in these cinemas for which they charged a fee termed as a Virtual Print Fee from the producers. This Fee took care of cost of projector, periodical maintenance and upgrades, mastering, duplication and delivery of the Prints and Key Delivery Management. Virtual Print Fee is shared by the theatre owners and Digital Service Providers.
Digital medium is not only for the feature films, but also applicable to in-cinema advertising. The advertising revenue for Multiplexes is around 15% of their Gross Revenue.
Since 70% of screens depend on Digital Service providers (DSPs) for distribution of prints either physically or via satellite, they play a very significant role in the Indian movie industry. Their income is mainly from Virtual Print Fee and Advertisements.
Computerization and online ticket bookings to a large extent have made earnings more transparent. However still a lot of theatres depend on walk in customers and pre-printed tickets. There is a lot of room for illegal sale of tickets and leakage in revenue. DSPs have started installing a software called ‘icount’ where high resolution cameras are installed in the theatres. These capture the pictures of the audience and send it to a computer where Intelligent Machine Vision algorithms count the audience in each theatre. This visual count is later tabulated with the number of tickets sold and discrepancies are reported.
This also helps curtail unscheduled shows, illegal movie recordings and helps monitoring of different screens from a central location.
Since its been almost a decade or more since the producers are paying the VPF, they feel that they have been paying for these projectors beyond the cost of the equipment. The DSPs however argue that what they charge is hardly 15% of what a film print costs, whereas the international VPF is nearly 85% of the cost of film prints as there is a sunset clause (a clause that stops the producers from paying VPF once the cost of the equipment has been paid for). Due to this, the era of VPF is coming to an end in the UK markets by the end of 2020. Since the cost of VPF in India is still a fraction of that in the International markets, they may stay on for a while but will gradually reduce over a period of time.
The argument by DSPs is that their business model is typically like the Cab operators, where in if the passenger feels he has paid enough to own a car, he cannot ask for ownership transfer of the car.
With Samsung soon spreading its wings across the world with their ‘ONYX’ technology, projectors will soon become extinct and they may collaborate with DSPs on a revenue sharing basis once there is a sizeable market. These innovations have made cinemas go projector less after 120 years, thus making the future of Digital Cinema exciting.
Trivia: – The first commercially released feature film in digital format is “The Last Broadcast” which released in the year 1998 in the US.