Features





The crowd has spoken: Independent theatres turn to public to fund digital conversions

Nov 5, 2012

-By Sarah Sluis


filmjournal/photos/stylus/1365728-Crowd_Feature_Md.jpg
For small theatres across the nation, the conversion to digital projection has involved hard choices. Do they take out a substantial loan from the bank—if they can even get one? Is it possible to make a VPF (virtual print fee) deal work for a small theatre with just one or two screens? With 35mm prints already in scarce supply, and digital-only in the near future, theatres are now making choices against a ticking clock. Some theatres are turning to a choice once seen in the American small-town classic It’s a Wonderful Life. On the brink of ruin, George Bailey receives donations from everyone in the town, a lifetime of favors called in all at once. In modern terms, that’s called crowdsourcing, and sites like Kickstarter are helping small theatres, including ones in Maine, Washington, Illinois and Colorado, raise money for their digital conversions.

A year after Demetrios Kouvalis painstakingly renovated and reopened the theatre once run by his father, he realized he needed to go digital. The Patio Theater (patiotheater.net) in Park Ridge, Illinois, is a true movie palace. The 43-foot-wide screen seats 1,000 in the main auditorium alone. He decided to use Kickstarter to fund the conversion, setting a goal of $50,000. Sixty days later, he ended up with $54,079 from 804 backers. “The whole cost is $70,000, but I didn’t want to overreach it,” Kouvalis says of the number. “I’m in Chicago, so I thought I would be able to get a good amount of attention in a densely populated area.” In fact, his theatre was the subject of a media onslaught. Three local news stations covered his story, and he received national attention via an article in the Huffington Post. “You can see a correlation between media recognition and how many people donated. I would post updates on Facebook, or be on the radio, and see small spikes” in Kickstarter donations, he explains.

With Kickstarter, people receive different gifts for each level of pledging, a format familiar to those toting canvas bags from their favorite public radio station. For the Patio Theater’s campaign, a $10 donation got backers a large popcorn and pop, along with recognition on their website. On the high end, gifts include t-shirts, having your name engraved on a plaque, a tour of the theatre, or the ability to host a private screening for a group of friends. “It was interesting to come up with pledges that didn’t break my bank,” Kouvalis says. Essentially, donors are “pre-paying up-front,” so it’s important not to give away high-cost items that will hurt the theatre down the road. Kouvalis was surprised at how much the average person gave. “Before I started, I thought I might get 10,000 backers who donated $5, but I ended up with an average of $65 a pledge with 804 backers.”

Theatres in tiny communities may have better luck soliciting larger donations. Both The Rose Theatre (rosetheatre.com) in Port Townsend, Washington, and the Harbor Theatre (harbortheatre.net) in Boothbay, Maine, received donations that extended into the four figures. The Harbor theatre, which raised $44,500, received “a $5,000 donation, one $10,000 donation,” according to owner Jason Sheckley. Most people, however, gave somewhere in the $100 range. The Rose Theatre raised $200,000 in less than two months, in part because owner Rocky Friedman had donation markers that were considerably pricier than a free movie ticket, like $500 for your name on a theatre seat. However, Friedman says most people gave in the $25 to $100 range. He also had an option for people to tack a dollar onto their ticket price at the box office. It was important to Friedman to give his customers ways big and small to contribute to the campaign. Besides selling designated seats and stars, he also tied donations to creative (but free) privileges, like introducing the movie.

To kick off the fundraising campaign, Friedman took out a full-page ad in the local paper celebrating the theatre’s 20th anniversary and explaining the industry’s conversion to digital. He followed that up with smaller weekly ads that each featured a different testimonial. “I was adamant that it was important to keep the fundraising campaign in front of the public every week. There is no shortage of worthy causes, so it was important to remind people.” He also kept a chart in the front window, listing which seats had been sold. A slide in the pre-show presentation recognized donors, and the campaign was mentioned in the live introduction before the movie. All the theatre owners report positive responses from the community, but a bit of grumbling may occur out of earshot. Friedman heard that some people raised eyebrows at the idea of a for-profit business seeking donations, but “I also assumed some people would be shocked that a for-profit business was raising money.”

Community support, including that of fellow local businesses, was critical for Ben Mozer’s Kickstarter campaign for The Lyric Cinema Café (lyriccinemacafe.com) in Fort Collins, Colorado. He was able to secure billboards all over town, including near a busy bus stop, by bartering with a local outdoor ad company, Next Media. “It was basically free—I traded him gift certificates for it,” Mozer says of the deal. Be Local Northern Colorado, a nonprofit that supports local businesses, threw a “Plaid Mob” event at the theatre. The one-day events encourage people to mob a small business on a set day for deals and to give the business an influx of money. Attendees were greeted by computers set up in the lobby of the theatre, ready for customers to buy special Kickstarter deals.

Mozer also knows his customers well. He keeps separate e-mail lists, allowing him to create custom messages for groups ranging from French-language movie lovers to stay-at-home parents who bring their kids to cartoons. Targeted messaging would make sure customers knew their foreign films or kid-friendly content was at stake. He called in favors wherever he could, and had his employees do the same. “Save the Lyric” art was created by the boyfriend of one of his employees who was enrolled in graphic-design school, for example. A long list of “thank yous” on the Lyric website includes everything from a t-shirt printer that donated the cost of labor to a farmer’s market that gave Mozer booth space to promote the theatre’s campaign.

Social media also helped Mozer and his staff keep the campaign in front of those most likely to donate: the theatre’s fans on Facebook and Twitter followers. “From the moment you decide to have the campaign until it stops, you need 24/7 promotion. You have to promote the crap out of it all the time,” Mozer says, echoing the words of Friedman. “It’s a true test of how good a promoter you are.” The efforts paid off, as 2,324 people donated a total of $158,692. One regret? For a number of pledges at the $50-and-above level, donors were gifted with a jingle written for them by the Lyric staff. That means that the staff now has to write over 400 jingles, each incorporating personal information about the donor.

Kickstarter does have its drawbacks. Five percent of the total amount goes to Kickstarter, and another three to five percent goes to Amazon Payments for a processing fee. Donors are rewarded with items that cost money, like t-shirts, popcorn and soda, or private screenings, all of which can affect the bottom line. The biggest caveat, though, is that if a Kickstarter campaign falls short of its goal within the 60-day timeframe, all of the money is returned to the donors. The theatre owner gets nothing. Although Sheckley, the owner of the Harbor Theatre, started his campaign on Kickstarter, it never gained the kind of traction he was getting from people walking into the theatre and writing checks or giving cash. His Kickstarter project was never fully funded; however, the $44,500 he received directly from his customers will be enough to fund the conversion.

Friedman also did not use Kickstarter. People donated in person or donated online through PayPal, and he raised $200,000 in seven weeks. He installed Barco digital projection in his two auditoriums this June. “I had a hard time getting rid of the 35mm, but my sentimentality disappeared quite quickly. Everything is 100% positive,” Friedman relays. He’s also received many compliments on the sound. Although he did add Dolby Digital 7.1 sound, as well as a small subwoofer in one theatre, he’s convinced that the difference is because “the digital source material is cleaner and not susceptible to damage like 35mm prints.”

Kickstarter, with its trendy, innovative reputation, is well-known across the nation, but most donors will be personally connected to the community and theatres they donate to. Sheckley thought that Kickstarter would help his theatre’s cause go viral, and pull in donations from outside the community, but that didn’t happen. Mozer reports some geographic outliers, like a donation from somewhere in Scandinavia, but most are close to home. “Survey fans and town before you set your goal,” Kouvalis advises. “Grasp the loyalty of fans, if they’re going to pull through, come up with incentives that don’t break the bank, and sell your theatre as much as possible.”

For a variety of reasons, virtual print fees or bank loans weren’t a good fit for any of these theatres, which have one or two screens each. “It was a seven-year commitment, and I have a lease for five years on the space,” Sheckley says of the VPF agreement he looked over. He was also concerned that the current problems he has finding 35mm prints would not be helped by participating in the deal. “My booker indicated if I had a VPF I would be less likely to get a new print” because of a reluctance to pay out on fees for his low-grossing theatre, a problem that NATO has said it is actively working on fixing. VPFs pay out according to how new a film is. Weeks one through three are “new releases,” so getting a movie on the more expensive week three, for example, can pose problems for intermediate-run theatres or theatres in smaller markets. They may get passed over or not get the film the exact week they want because of where it falls in the VPF payout cycle.

Friedman’s theatre, The Rose, plays lots of indie content. He says one of his distributors was relieved when he said he was not going to go with a VPF deal, fearful that they would have either been required to make payouts or unable to work with the theatre anymore due to exclusivity contracts.

VPFs didn’t suit the needs of Kouvalis’ theatre. “For a single screen, you pretty much lose all creativity with the VPF. They tell you what movie to play when, and how long,” he argues. His theatre can’t afford to pick a bad film for even a week, so multiple weeks with a poor film would be devastating. Kouvalis’ only other option was to go to a bank, and they “aren’t too friendly these days,” he wryly observes. The Lyric still has a bank loan from when the theatre originally opened, making additional credit impossible. For Mozer, though, the hardest part would be giving up a percentage of his gross in exchange for leasing the equipment. “I can’t afford a percentage of my sales—I would go out of business,” he explains.

The NATO-formed Cinema Buying Group (CPG) was designed with the independents in mind, but very few of the theatres that converted were old-fashioned single or twin screens. The integrator for the group, Cinedigm, recently announced it converted 3,000 screens, but only 68 of those converted screens were in single-screen or twin theatres. Both the Lyric Cinema Café and the Harbor Theatre may not have been helped by VPFs, but they do have hope on the equipment front. In the first fiscal quarter of next year, lower-cost projectors should be available, so they are waiting to install equipment until the next generation arrives. Kouvalis’ movie palace has both a gigantic screen and a projector booth that’s 143 feet from the screen, so he needs the kind of powerful projector that won’t be available for a discount. He’s going with the Christie 2220 Solaria 3001 projector.

Thanks to Kickstarter and crowdsourcing funds, four theatres are surviving the digital transition. Digital projection, they hope, will not only save their businesses, but help them flourish. “I’m trying to encourage local filmmakers in the area to start pumping out the content,” Mozer says. Local films could bring in more customers, and “pull the control away the studio.” With no conversion costs, “it’s my hope that this digital thing will make local films viable.”

Kouvalis feels that with a digital projector, he will be able to diversify content even with a single screen. “My library is going to expand many times. I can have more options, and show old movies, new independents done digitally, and host events for outside groups. I have more options to make money rather than sticking with one movie a week.” In anticipation of his digital install this winter, he is forming the Patio Theater Film Society, which will show classic movies on the weekends. That way, he can show more than one movie in a single week. The Lyric Cinema Café, the Harbor, Rose and Patio theatres, with their single and twin screens, are the kind of cinemas that haven’t been built for decades. But they’ve held on. The Rose Theatre has been back in operation for 20 years; the Patio Theater, one year. Now that their communities have voted with their wallets, giving them the technology they need to survive, these businesses seem more likely than ever to not only survive, but thrive as independent theatres.

The Results So Far

Lyric Cinema Café

2,324 backers
$158,692 (+$13,000 in direct donations)

Harbor Theatre
146 backers
$44,500

Rose Theatre
500 backers
$200,000

Patio Theater
804 backers
$54,079


The crowd has spoken: Independent theatres turn to public to fund digital conversions

Nov 5, 2012

-By Sarah Sluis


filmjournal/photos/stylus/1365728-Crowd_Feature_Md.jpg

For small theatres across the nation, the conversion to digital projection has involved hard choices. Do they take out a substantial loan from the bank—if they can even get one? Is it possible to make a VPF (virtual print fee) deal work for a small theatre with just one or two screens? With 35mm prints already in scarce supply, and digital-only in the near future, theatres are now making choices against a ticking clock. Some theatres are turning to a choice once seen in the American small-town classic It’s a Wonderful Life. On the brink of ruin, George Bailey receives donations from everyone in the town, a lifetime of favors called in all at once. In modern terms, that’s called crowdsourcing, and sites like Kickstarter are helping small theatres, including ones in Maine, Washington, Illinois and Colorado, raise money for their digital conversions.

A year after Demetrios Kouvalis painstakingly renovated and reopened the theatre once run by his father, he realized he needed to go digital. The Patio Theater (patiotheater.net) in Park Ridge, Illinois, is a true movie palace. The 43-foot-wide screen seats 1,000 in the main auditorium alone. He decided to use Kickstarter to fund the conversion, setting a goal of $50,000. Sixty days later, he ended up with $54,079 from 804 backers. “The whole cost is $70,000, but I didn’t want to overreach it,” Kouvalis says of the number. “I’m in Chicago, so I thought I would be able to get a good amount of attention in a densely populated area.” In fact, his theatre was the subject of a media onslaught. Three local news stations covered his story, and he received national attention via an article in the Huffington Post. “You can see a correlation between media recognition and how many people donated. I would post updates on Facebook, or be on the radio, and see small spikes” in Kickstarter donations, he explains.

With Kickstarter, people receive different gifts for each level of pledging, a format familiar to those toting canvas bags from their favorite public radio station. For the Patio Theater’s campaign, a $10 donation got backers a large popcorn and pop, along with recognition on their website. On the high end, gifts include t-shirts, having your name engraved on a plaque, a tour of the theatre, or the ability to host a private screening for a group of friends. “It was interesting to come up with pledges that didn’t break my bank,” Kouvalis says. Essentially, donors are “pre-paying up-front,” so it’s important not to give away high-cost items that will hurt the theatre down the road. Kouvalis was surprised at how much the average person gave. “Before I started, I thought I might get 10,000 backers who donated $5, but I ended up with an average of $65 a pledge with 804 backers.”

Theatres in tiny communities may have better luck soliciting larger donations. Both The Rose Theatre (rosetheatre.com) in Port Townsend, Washington, and the Harbor Theatre (harbortheatre.net) in Boothbay, Maine, received donations that extended into the four figures. The Harbor theatre, which raised $44,500, received “a $5,000 donation, one $10,000 donation,” according to owner Jason Sheckley. Most people, however, gave somewhere in the $100 range. The Rose Theatre raised $200,000 in less than two months, in part because owner Rocky Friedman had donation markers that were considerably pricier than a free movie ticket, like $500 for your name on a theatre seat. However, Friedman says most people gave in the $25 to $100 range. He also had an option for people to tack a dollar onto their ticket price at the box office. It was important to Friedman to give his customers ways big and small to contribute to the campaign. Besides selling designated seats and stars, he also tied donations to creative (but free) privileges, like introducing the movie.

To kick off the fundraising campaign, Friedman took out a full-page ad in the local paper celebrating the theatre’s 20th anniversary and explaining the industry’s conversion to digital. He followed that up with smaller weekly ads that each featured a different testimonial. “I was adamant that it was important to keep the fundraising campaign in front of the public every week. There is no shortage of worthy causes, so it was important to remind people.” He also kept a chart in the front window, listing which seats had been sold. A slide in the pre-show presentation recognized donors, and the campaign was mentioned in the live introduction before the movie. All the theatre owners report positive responses from the community, but a bit of grumbling may occur out of earshot. Friedman heard that some people raised eyebrows at the idea of a for-profit business seeking donations, but “I also assumed some people would be shocked that a for-profit business was raising money.”

Community support, including that of fellow local businesses, was critical for Ben Mozer’s Kickstarter campaign for The Lyric Cinema Café (lyriccinemacafe.com) in Fort Collins, Colorado. He was able to secure billboards all over town, including near a busy bus stop, by bartering with a local outdoor ad company, Next Media. “It was basically free—I traded him gift certificates for it,” Mozer says of the deal. Be Local Northern Colorado, a nonprofit that supports local businesses, threw a “Plaid Mob” event at the theatre. The one-day events encourage people to mob a small business on a set day for deals and to give the business an influx of money. Attendees were greeted by computers set up in the lobby of the theatre, ready for customers to buy special Kickstarter deals.

Mozer also knows his customers well. He keeps separate e-mail lists, allowing him to create custom messages for groups ranging from French-language movie lovers to stay-at-home parents who bring their kids to cartoons. Targeted messaging would make sure customers knew their foreign films or kid-friendly content was at stake. He called in favors wherever he could, and had his employees do the same. “Save the Lyric” art was created by the boyfriend of one of his employees who was enrolled in graphic-design school, for example. A long list of “thank yous” on the Lyric website includes everything from a t-shirt printer that donated the cost of labor to a farmer’s market that gave Mozer booth space to promote the theatre’s campaign.

Social media also helped Mozer and his staff keep the campaign in front of those most likely to donate: the theatre’s fans on Facebook and Twitter followers. “From the moment you decide to have the campaign until it stops, you need 24/7 promotion. You have to promote the crap out of it all the time,” Mozer says, echoing the words of Friedman. “It’s a true test of how good a promoter you are.” The efforts paid off, as 2,324 people donated a total of $158,692. One regret? For a number of pledges at the $50-and-above level, donors were gifted with a jingle written for them by the Lyric staff. That means that the staff now has to write over 400 jingles, each incorporating personal information about the donor.

Kickstarter does have its drawbacks. Five percent of the total amount goes to Kickstarter, and another three to five percent goes to Amazon Payments for a processing fee. Donors are rewarded with items that cost money, like t-shirts, popcorn and soda, or private screenings, all of which can affect the bottom line. The biggest caveat, though, is that if a Kickstarter campaign falls short of its goal within the 60-day timeframe, all of the money is returned to the donors. The theatre owner gets nothing. Although Sheckley, the owner of the Harbor Theatre, started his campaign on Kickstarter, it never gained the kind of traction he was getting from people walking into the theatre and writing checks or giving cash. His Kickstarter project was never fully funded; however, the $44,500 he received directly from his customers will be enough to fund the conversion.

Friedman also did not use Kickstarter. People donated in person or donated online through PayPal, and he raised $200,000 in seven weeks. He installed Barco digital projection in his two auditoriums this June. “I had a hard time getting rid of the 35mm, but my sentimentality disappeared quite quickly. Everything is 100% positive,” Friedman relays. He’s also received many compliments on the sound. Although he did add Dolby Digital 7.1 sound, as well as a small subwoofer in one theatre, he’s convinced that the difference is because “the digital source material is cleaner and not susceptible to damage like 35mm prints.”

Kickstarter, with its trendy, innovative reputation, is well-known across the nation, but most donors will be personally connected to the community and theatres they donate to. Sheckley thought that Kickstarter would help his theatre’s cause go viral, and pull in donations from outside the community, but that didn’t happen. Mozer reports some geographic outliers, like a donation from somewhere in Scandinavia, but most are close to home. “Survey fans and town before you set your goal,” Kouvalis advises. “Grasp the loyalty of fans, if they’re going to pull through, come up with incentives that don’t break the bank, and sell your theatre as much as possible.”

For a variety of reasons, virtual print fees or bank loans weren’t a good fit for any of these theatres, which have one or two screens each. “It was a seven-year commitment, and I have a lease for five years on the space,” Sheckley says of the VPF agreement he looked over. He was also concerned that the current problems he has finding 35mm prints would not be helped by participating in the deal. “My booker indicated if I had a VPF I would be less likely to get a new print” because of a reluctance to pay out on fees for his low-grossing theatre, a problem that NATO has said it is actively working on fixing. VPFs pay out according to how new a film is. Weeks one through three are “new releases,” so getting a movie on the more expensive week three, for example, can pose problems for intermediate-run theatres or theatres in smaller markets. They may get passed over or not get the film the exact week they want because of where it falls in the VPF payout cycle.

Friedman’s theatre, The Rose, plays lots of indie content. He says one of his distributors was relieved when he said he was not going to go with a VPF deal, fearful that they would have either been required to make payouts or unable to work with the theatre anymore due to exclusivity contracts.

VPFs didn’t suit the needs of Kouvalis’ theatre. “For a single screen, you pretty much lose all creativity with the VPF. They tell you what movie to play when, and how long,” he argues. His theatre can’t afford to pick a bad film for even a week, so multiple weeks with a poor film would be devastating. Kouvalis’ only other option was to go to a bank, and they “aren’t too friendly these days,” he wryly observes. The Lyric still has a bank loan from when the theatre originally opened, making additional credit impossible. For Mozer, though, the hardest part would be giving up a percentage of his gross in exchange for leasing the equipment. “I can’t afford a percentage of my sales—I would go out of business,” he explains.

The NATO-formed Cinema Buying Group (CPG) was designed with the independents in mind, but very few of the theatres that converted were old-fashioned single or twin screens. The integrator for the group, Cinedigm, recently announced it converted 3,000 screens, but only 68 of those converted screens were in single-screen or twin theatres. Both the Lyric Cinema Café and the Harbor Theatre may not have been helped by VPFs, but they do have hope on the equipment front. In the first fiscal quarter of next year, lower-cost projectors should be available, so they are waiting to install equipment until the next generation arrives. Kouvalis’ movie palace has both a gigantic screen and a projector booth that’s 143 feet from the screen, so he needs the kind of powerful projector that won’t be available for a discount. He’s going with the Christie 2220 Solaria 3001 projector.

Thanks to Kickstarter and crowdsourcing funds, four theatres are surviving the digital transition. Digital projection, they hope, will not only save their businesses, but help them flourish. “I’m trying to encourage local filmmakers in the area to start pumping out the content,” Mozer says. Local films could bring in more customers, and “pull the control away the studio.” With no conversion costs, “it’s my hope that this digital thing will make local films viable.”

Kouvalis feels that with a digital projector, he will be able to diversify content even with a single screen. “My library is going to expand many times. I can have more options, and show old movies, new independents done digitally, and host events for outside groups. I have more options to make money rather than sticking with one movie a week.” In anticipation of his digital install this winter, he is forming the Patio Theater Film Society, which will show classic movies on the weekends. That way, he can show more than one movie in a single week. The Lyric Cinema Café, the Harbor, Rose and Patio theatres, with their single and twin screens, are the kind of cinemas that haven’t been built for decades. But they’ve held on. The Rose Theatre has been back in operation for 20 years; the Patio Theater, one year. Now that their communities have voted with their wallets, giving them the technology they need to survive, these businesses seem more likely than ever to not only survive, but thrive as independent theatres.

The Results So Far

Lyric Cinema Café

2,324 backers
$158,692 (+$13,000 in direct donations)

Harbor Theatre
146 backers
$44,500

Rose Theatre
500 backers
$200,000

Patio Theater
804 backers
$54,079
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