Enjoying the Promise: Exhibitors praise their DCDC connection

Features
Technology

“Candidly, I was concerned,” admits Ron Krueger II, president and chief operating officer of Southern Theatres, sharing his reaction the first time he heard from the Digital Cinema Distribution Coalition (DCDC). Tim Warner, executive vice-chairman at DCDC co-founding circuit Cinemark, also recalls “a lot of skepticism throughout the industry” regarding the delivery of films and other content via a network of satellite dishes on cinema roofs.

Aligned with our March focus on exhibition, Film Journal International follows up last month’s exclusive conversation with Randy Blotky, chief executive officer of DCDC, with more–and equally valuable–feedback from two key partners on the cinema side.

“I got into this, really, because of my overall relationships throughout the industry.” Tim Warner readily admits that, like many of the early skeptics, he too is not a technologist. “But if you think about it, satellites have been delivering mass communication for many other industries and for a long time. In fact, when you talk to the satellite and technology companies involved, they actually see this as a nothing deal.” The tricky part was, “you just had to put the different pieces together,” he feels. “Because of their technological background and in working with our theatre technology people, Randy and his DCDC team had to choose the best technology. And, from day one when we launched the network,” Warner affirms, “it has worked flawlessly.”

Technological considerations aside, for Ron Krueger the mere fact that Regal Cinemas, AMC Theatres and Cinemark were heavily involved as DCDC’s founding members–together with Universal Pictures and Warner Bros. on the distribution side–did raise a lot of questions. “Since they were driving the train,” he wondered whether “they were potentially getting preferential treatment in terms of placement, rollout and the like,” to name but a few of his understandable concerns.

Yet, alongside National Amusements’ Showcase Cinemas, Southern Theatres became one of the first chains to join DCDC by connecting its more than 430 screens at 36 locations–operating under the AmStar Cinemas, Movie Tavern and The Grand Theatre brands, as well as The Theatres at Canal Place located in the company hometown of New Orleans, Louisiana. So what made him change his mind? During his meeting with DCDC in Los Angeles, Krueger was able to “gain confidence” in the vision that Blotky had and shared with him. After Southern Theatres’ chief executive officer George Solomon “had a similar conversation with Tim Warner at Cinemark,” he continues, “it just made sense to us to hitch our wagon to that technology, knowing it was going to be the future of content delivery. After all, this was going to save us money on the shipping costs of getting hard drives back and forth.” And that was before the anticipated benefits of joining a genuine network of digital connectedness.

Giving Randy Blotky credit for doing “an excellent job explaining the network” in last month’s issue, Warner reminds our readers that “the primary motivation to build a network from a studio perspective was to dramatically lower the cost of film distribution. With satellite, the only way it becomes cost-efficient is if it is scalable. So this really needed to be done for the whole industry. As we came together, this has now also lowered exhibition’s distribution cost a little bit, but the big savings go to the studios.”

The broader discussion of what needed to be done dates back to the beginning of the digital conversion, when Cinemark was part of yet another industry-leading initiative. Before DCDC, there was Digital Cinema Implementation Partners (DCIP), Warner reminds us. “We realized there was going to be a lot of cost savings in digital once we put in satellite delivery. The first phase was getting digital deployed and then satellite delivery. The idea for the network was already generated as the industry converted to digital. It’s just that we had to get to digital first.”

Warner goes on to mention George Lucas sharing another influential thought during the Filmmakers’ Luncheon at CinemaCon 2011. “He said that once you have the digital platform in place, it was going to enable all other types of technology and things.” Besides satellite delivery, Warner mentions “your own premium large formats, sustainable 3D… I am sure there will be other innovations that come along. But for exhibitors, the big one is going to be alternative content, live content and gaming.”

In Warner’s view, “DCDC technology changes any one of our locations from a theatrical, pay-per-view platform…into a pay-per-view network. Because now you have one-point access to thousands of screens for content–be it film, live shows, alternative content, gaming. It totally revolutionizes access to the theatre.” That was one of the promises that digital projection was going to fulfill, Warner concurs. But, of course, physical hard drives were, and still are, being hauled around. “You always had to overcome these access barriers to exhibition, if you were a content provider or an advertiser.”

On that latter topic, both Krueger and Warner readily attest that much experience was gained using satellites as part of their cinema-advertising providers’ networks. Whereas spots had to be converted to 35mm stock and/or shipped around on disks and thumb drives in the not-so-distant past, NCM’s satellite network “took out all those barriers,” notes Warner, recalling the key advantage of connected scalability. “Theatres were able then to go out and compete with other advertising networks for sales.”

Pre-show spots and entertainment may soon utilize the DCDC infrastructure just as trailer delivery is doing already, Krueger foresees. “The prospect of consolidating all the dishes on our roofs is going to be an upside as well.” As of now, pre-show and main attraction remain on separate networks. “We have a good experience with the NCM program via satellite, and did not have any problems with it.” Nonetheless, he is “hopeful that all would come together,” including Fathom Events and the “chance to piggyback alternative content on that same system.”

For now, the special presentations that Southern Theatres hosts have gone down “without a hitch,” Krueger states. “Another aspect that we like a lot is that DCDC is open-book and offers an open architecture. They work with a plethora of third-party content providers beyond the studios… Randy and the team have done a great job with making some introductions to potentially put deals in place that bring more content on our screens.”

Would Warner agree that by putting a satellite on the roof, we open the doors downstairs to the future? “Yes. I’d like to describe it as one-point access, easy access. Now any provider can go to DCDC and have their content delivered to thousands of screens throughout the U.S.” But he also judiciously reminds us that it was digital cinema that kicked the door wide open in the first place. “With film, we were on an unsustainable model. And so this enhanced technology allows us to have a very sustainable low-cost model for all content and providers.”

“There is really no caution needed,” Krueger reassures anyone who is thinking about joining DCDC. “This is a unique arrangement where…you have historical foes, if you will, that have come together in sharing a lot of common ground to accomplish something wonderful that is beneficial to the entire industry.” And on top of that, “you don’t have to put anything out,” Krueger adds. “You are kind of scratching your head when you sign an agreement that requires no upfront cost for installation. So, not only are you reducing your costs by comparison to physical shipment of hard drives, there are also good opportunities for further revenue streams down the road by partnering with DCDC. It was almost too good to be true,” he chuckles.

In the case of digital cinema distribution via satellite, the deal turned out to be very true indeed.