-By Bill Mead, Digital Cinema Editor

In the past year, digital cinema in Europe has been through a transformation, going from a near-dead stop to full-swing adoption. It’s been driven by a “perfect storm” of important factors: a stronger business outlook, the firming up of the studio Virtual Print Fee deals, the partial resolution of the 4K question with Series 2 projectors and, of course, 3D.

3D is everywhere and going downstream into consumer markets fast. The great news for European exhibitors is that they are seen as leading the way in building the 3D awareness trend by providing the uniquely better entertainment first. This has been good for ticket and concessions sales, as a recent report from the European Audiovisual Observatory estimated that gross box office for the European Union increased by 12% year-on-year to a new record high largely thanks to premium prices for 3D screenings.

Recent reports detail the rapid increase in digital screens, particularly those equipped with 3D. At the end of 2009, there were just over 4,500 digital installations in the European market, of which 75% were 3D-enabled. This represents a tripling of installations since January 2008, and a fivefold increase in 3D. The percentage of 3D varies from a conservative 50% in Western Europe to 100% in the Eastern European countries.

In the first half of 2010, all indications are that growth has increased, with an estimated 8,000 European digital screens, most equipped for 3D. The only apparent restraint on growth in screens currently is the hardware pipeline limiting the supply of projectors, servers, screens and related equipment.

While the hardware might be hard to get, it seems money is not an issue. In March, London-based Arts Alliance Media (AAM) signed a deal for €50 million in funding from private investors to support the rollout over the next two years. Belgium-based XDC has begun utilizing a €100 million credit facility to finance their rollout.

For the AAM deal, Sankaty Advisors will provide a combination of senior and mezzanine debt for deployments. Arts Alliance Media currently has deals in place in seven European territories with commitments for over 1,500 screens. The company’s strategic partnership with Arqiva Satellite & Media allows exhibitors to benefit from satellite delivery of alternative-content events and features as well.

In Belgium, the XDC loan has been structured by BNP Paribas Fortis with the participation of the European Investment Bank (EIB) and KBC Bank. The funds will initially be used for Belgian exhibitors and later expanded to Germany, Spain, Poland, Hungary, the Czech Republic and Slovakia.

France, which 18 months ago was stalled and lagging behind other major countries, has made a sudden reversal and now leads Europe with an estimated 1,100 installations. In fact, France has become Ground Zero for digital cinema, with XDC, AAM and Ymagis competitively going after the European exhibitors. XDC originally established a foothold in the French market with a number of pilot systems. Competition heated up in 2006 when AAM announced their VPF program and a 400-screen deal with CGR Theatres. More recently, Paris-based startup Ymagis began offering digital-cinema-related services and secured similar VPF agreements with Hollywood. Ymagis intends to deploy up to 5,500 systems throughout France, Germany, Benelux, Spain and Italy. Ymagis has signed agreements with UGC, Cinéville, CapCinéma and Mk2 representing around 1,150 screens including 840 screens in France, with the rest in Spain, Belgium, Germany and Italy.

Server manufacturer Doremi reports reaching over 1,000 installations in France by the end of the Cannes Film Festival and is now at 95% French market penetration, in addition to supplying over 600 servers for the UGC rollout with Ymagis. By end of June, 90 UGC screens will operate, with the entire circuit completed by summer 2011. Doremi has also started to supply Sensio 3D decoding and an alternative-content streamer which allows Doremi-equipped cinemas to receive multicast transmissions without additional wiring and distribution.

AAM has opened a digital content services facility in Paris, to complement their facility in London. The lab provides French clients the same comprehensive mastering and distribution (including via satellite) services as the London base, which has been operating for five years, and has handled over 700 titles to date, and shipped over 15,000 digital prints. The French facility, installed in Arts Alliance Media’s Paris office at the Cinema des Cineastes, also has access to two fully equipped digital-cinema screens where AAM staff and clients can quality-control content, including 3D content.

At the recent Cannes Film Festival, where projector manufacturer Christie served as technical partner, a record 22 theatres were set up with Christie DLP Cinema projectors. Ridley Scott's Robin Hood opened Cannes with its world premiere on a Christie CP2230. In addition, XpanD partnered to provide 3D for the Cannes screenings.

Again, Barco was the exclusive projector supplier for the 60th-anniversary Berlinale. The Berlin International Film Festival takes place Feb. 11-21 in various venues throughout Berlin. 2009 has been the best year ever for Barco's digital-cinema business, with a significant growth of more than 100%. By the end of 2009, Barco had reached a total install base of 6,500 projectors worldwide. In Europe and the Middle East, strategic partnerships with key players such as Arts Alliance Media, Cinemeccanica, DCL, Kinoton, XDC, Ymagis and many other parties have resulted in a solid 55% European market share.

In Germany, XDC closed the first major VPF deal with Kieft-Group for 150 digital screens in Germany, Switzerland and the Czech Republic. The contractor for this project is Film-Ton-Technik Hannsdieter Rüttgers GmbH (FTT) of Düsseldorf. As the first circuit in the German-speaking countries, Kieft & Kieft + Partner group entered into a VPF agreement to deploy 150 digital screens in Germany, Switzerland and the Czech Republic. The decision for XDC was boosted by the fact that FTT had already installed digital-cinema equipment including 3D at several sites of Kieft group e.g. in Hildesheim, Iserlohn and Schwerin, as well as Prague, Plzen and Lugano last year. While broad adoption has been stalled by debates over governmental funding issues, Kieft & Kieft + Partner group stepped up to be the first in a VPF-based program.

Christie and FTT entered into an agreement for 300 Christie projectors for German and other countries in Central and Eastern Europe, where FTT operates. All Solaria Series projectors are planned to be in use by mid-2011, a third of them for 3D screenings. Likewise, projector manufacturer NEC and German systems integrator Cine Project GmbH entered a joint agreement leading to the purchase of several hundred of NEC's new Series 2 projectors.

Last fall, Sony announced the sale of 56 “Cinealta 4K” Projectors with RealD 3D to CinemaxX with rollout across Germany. They had installed 56 systems by the end of 2009.

Kinoton, the Munich-based projector company which works in association with Barco, installed several large-scale 3D screens at the Cineplex Marburg and the Cinedom Koeln for the theatrical release of Avatar. The dual-projector Kinoton features two coupled DCP 30 L projectors with 6,500-watt bulbs and Dolby 3D on a 17 x 7 meter (51 x 21 ft.) screen. A Dolby 3D server provides the projectors with content. A second dual 3D installation featuring the same equipment was installed in the largest auditorium of the Cinedom Koeln, a renowned 14-screen multiplex in Cologne.

Hollywood Megaplex, one of the leading exhibitors in Austria, and XDC have agreed on the deployment of 40 digital-cinema systems in four cinemas. Under the terms of the agreement with XDC, Hollywood Megaplex will install DCI-compliant systems and implement an integrated and networked solution in each complex with TMS and central library using XDC’s CineStore® Plaza. A content-delivery network will also be implemented by XDC in order to allow distributors to deliver films directly by satellite and/or broadband connection to the cinemas, as well as to give the opportunity to Hollywood Megaplex to perform live 2D and 3D transmissions.

In the U.K., Apollo Cinemas in April opened Europe’s first all-digital, all-3D multiplex at St. Catherine’s Walk, Carmarthen, Wales, as part of their ongoing commitment to equip the chain with Sony 4K projectors with RealD 3D. Apollo’s site is bringing 3D to Carmarthenshire for the very first time and creating a world-class digital cinema for its guests. In addition to six Sony 4K Digital screens displaying RealD 3D, the new multiplex will also have a fully licensed bar and concession area.

Apollo Cinemas has also committed to equip their entire cinema circuit with Arqiva’s digital satellite system. This will enable Arqiva to electronically deliver DCPs and live events to all of Apollo’s sites around the U.K. The first performance streamed live via satellite for Apollo was the Bolshoi Ballet’s La Flame de Paris from Moscow in April 2010.

Arqiva and XDC have agreed to share networks. Under a non-exclusive agreement, Arqiva will deliver Digital Cinema Packages and live events to exhibitors in XDC's network, while XDC will also be able to transmit content to all cinemas connected to the Arqiva Digital Cinema network. Arqiva is also providing events rights-holder SuperVision Media with satellite distribution services via Arqiva’s digital-cinema platform. This supports SuperVision Media's distribution and commercialization of live sports and entertainment events into digitally enabled cinemas in Europe and around the world.

MasterImage 3D, LLC has expanded its operations with the opening of its European office located in the U.K.’s legendary Pinewood Studios. Cinema technology veterans Brian Kercher and Andrew Lee will lead efforts to serve MasterImage’s growing base of systems across Europe.

In Ireland, local provider Digital Finance Ltd. (DFL) of Tipperary announced VPF agreements with Disney, Paramount, Fox and Universal. DFL is underway with the installation of state-of-the art digital projection equipment in both Ireland and the U.K., with 65 screens already deployed. With the commitment of Hollywood studios to support this rollout, exhibitors throughout these territories have a unique opportunity to transition to digital cinema.

In Norway, a nationwide conversion plan years in the making has moved forward by selecting the providers for their national digital-cinema system. The cinemas are municipally owned and collectively bound together by Film & Kino, a Norwegian governmental exhibitor association that looks after their well-being. In 2009, Film & Kino announced it had secured VPF agreements with five Hollywood studios and was ready to accept bids to equip all Norway, divided into ten contract zones assigned along both regional and organizational lines. The total value is estimated at €37 million. Equipment vendors and integrators were selected following an intensive bid process involving technical, commercial and support criteria set out by Film & Kino. Each screen gets a DCI-compliant system, consisting of projector, server and management software. Exhibitors can choose to upgrade their systems to include 3D, satellite and 4K.

Among the bidders was the Nordic Digital Alliance/AAM consortium (NDA). AAM built up NDA’s service and support operation which has installed 19 digital screens in Norway to date. Since 2006 it has worked with the Film & Kino in trials.

This February, NDA was awarded the large West region. NDA will have responsibility for installing 76 screens across 56 different cinemas from Sokndal in the south to Rindal in the North, and including all five screens of the prestigious Haugesund Kino.

Getting the bulk of the order was Unique Cinema Systems (UCS) of Bergen, which was awarded the other nine regions representing more than 300 screens. UCS will provide each cinema a complete package of local support from their regional offices in Bergen, Lier, Trondheim and Tromsø, provided by a team of experienced technicians utilizing a dedicated suite of network-monitoring tools, theatre-management software and NOC services.

UCS essentially started the digital screen-advertising revolution in Europe in 2002, leading the conversion of all Norwegian screens for digital advertising. UCS’s advertising-management software has been installed by many of Europe's leading screen contractors in Sweden, Finland, Belgium, Great Britain, Ireland and Portugal. In 2006, UCS created Unique Digital to focus on DCI-level theatre conversions and headed an extensive interoperability trial called the NORDIC project. Since then, Unique Digital has developed a suite of leading software solutions for the management of digital content including a full-featured TMS (Rosetta) and advertising back-office system (Accord). To date, Unique has installed over 1,500 screens with its software and equipment.

Recently, Sony Pictures officially joined with Film & Kino’s VPF program by agreeing to make certain financial contributions to Film & Kino for a limited time to promote digital deployment in Norway. “This is a great success for the Film & Kino team, Norway, and its moviegoing audience,” said acting director Roar Svartberg of Film & Kino. “We have managed to make deals with the six major Hollywood studios and at the same time provide exhibitors with innovative digital technologies, while respecting the traditional relationships between exhibitors and distributors.”

In the Netherlands, last February Jogchem’s Theaters B.V. (known as JT Bioscopen) and XDC agreed to deploy in all of JT’s 60 screens in The Netherlands. The agreement between JT Bioscopen and XDC includes the rollout of DCI-compliant projection systems co-financed by the Virtual Print Fee model. Rollout is scheduled to begin in the first half of 2010. In addition, Euroscoop and XDC agreed to deploy 61 digital screens in Belgium and The Netherlands. Also, Euroscoop, a circuit with locations in Belgium and The Netherlands, agreed to deploy digital systems in 61 screens.

At the end of 2009, Russia had over 350 digital complexes with virtually all 3D, out of around 2,100 modern screens. More than 100 new digital 3D screens opened for Avatar. The primary reason for growth was the plethora of 3D releases (19 in 2009), with each major 3D release generating a wave of new screen openings. In 2010, the number is expected to be around 570 screens.

Also on the move in Europe is IMAX, as they signs deals in Russia, Croatia and elsewhere. In Russia, the giant-screen company inked an agreement with leading Russian retail and entertainment developer SBS to install an IMAX theatre in the city of Krasnodar under the developer's Seven Stars Cinemas brand name. In Croatia, they announced an agreement with Blitz-Cinestar, the nation’s leading commercial theatre operator, to build a new standalone IMAX theatre as part of the new Cinestar Arena 10-screen multiplex in Zagreb, Croatia. The new digital IMAX theatre is scheduled to open in December 2010, as the first IMAX location in Croatia.