Holding strong in 2008

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There have been a great deal of surprises in the 2008 calendar year—pleasant surprises, we might add. Although we have been enduring one of the worst economic crises in our history, the motion picture industry has stood up to it very well. So far, the old adage that we are recession-proof is proving true. Coming into 2008, no one would have predicted that the industry had any chance of matching up with box-office revenues from the prior year. But the roster of films delivered into the marketplace was up to the challenge and performed extraordinarily well.

The figures are in: The 2008 box office broke another record, tallying $9.63 billion, just ahead of the $9.62 billion collected in 2007. Pictures just performed incredibly well. The Dark Knight led the charge, and Iron Man became the sleeper of the season. Animated features rocked the house again with films like Kung Fu Panda, Madagascar: Escape 2 Africa, Wall-E and Dr. Seuss’ Horton Hears a Who. Indiana Jones and Hancock also played extremely well and “chick flicks” were hot with Sex and the City, Mamma Mia! and Twilight.
The initial rollout of 3D with nearly 2,000 screens worldwide proved to be very contagious, as 3D outperformed its 2D counterpart by as much as 3.7 times. The year started out with a bang with Hannah Montana, followed by Journey to the Center of the Earth and the current Bolt.

In 2008 we witnessed the closing of several independents including New Line, Picturehouse and Warner Independent, the downsizing of Paramount Vantage, and serious financial problems at several others. The industry was counting out the independents before a slew of pictures at the end of the year began to simmer at the box office. With films like Gus Van Sant’s Milk, Danny Boyle’s Slumdog Millionaire, Ron Howard’s Frost/Nixon, Summit’s Twilight, Miramax’s Doubt and Weinstein’s The Reader, independent and specialized film is alive and well. This is great for the industry and helped propel the 2008 box office.

Back in the summer and before the economy collapsed, signs were very positive for major deals to be struck with DCIP and the CBG as well as the second phase for Cinedigm (formerly AccessIT). The industry believed this was going to be the start of a major rollout of nearly 20,000 digital screens beginning in the third quarter and increasing as we moved forward. The collapse of the credit markets has put most of this activity on hold for the time being. Although the current mood of the digital marketplace is bleak, there have been several announcements that have been quite positive.

AccessIT formally changed its name to Cinedigm Digital Cinema Corp. and announced an $8.9 million credit facility for its Phase 2 program. The facility will fund the launch of Cinedigm’s first 137 Phase 2 conversions of Premiere Cinemas’ theatres to the company’s digital platform, in what is expected to be a 10,000-screen digital cinema deployment plan. Cinedigm has signed more than 500 screens to its Phase 2 and anticipates thousands more in the months ahead.

In a move that will accelerate the conversion of cinemas in Asia to digital technology, GDC reached separate non-exclusive agreements with 20th Century Fox, Paramount Pictures Intl. and Universal Pictures for digital-cinema deployment across the continent. The three studios will supply Asian exhibitors with feature film content digitally, as well as to make financial contributions towards the hardware cost of DCI-compliant equipment deployed by GDC. Phase one of the program covers 6,000 screens in various countries.



Arts Alliance Media, Europe’s leading provider of digital-cinema technology, deployment and content, signed agreements for 43 million euros of funding from pan-European services company Econocom and various private investors, together with a long-term strategic partnership agreement with Arqiva Satellite and Media for the satellite distribution of films and alternative content live events into European cinemas. Econocom will provide 20 million euros to complete CGR Cinemas’ digital deployment in France.

Next stop is ShoWest, and it is the industry’s hope that credit markets will open up to allow deployment in the member companies of DCIP so that positive announcements can be made at the Vegas convention. With the major commitments from the Hollywood studios to produce 3D films, it is imperative to reach a saturation point where two movies can open simultaneously. We just need a little faith and prayer to see this through.

Avoiding an Actors’ Strike
As we enter 2009 and look back at the previous year, we note several important happenings: Box office has stood up to the critics who dismissed 2009 as a down year. 3D has proven its effectiveness with moviegoers and shed its image as a gimmick. The Dark Knight became one of the few films to pass the billion-dollar mark. The digital-cinema rollout never did roll out. The economic crisis became the worst since the Depression. And a number of independent distribution companies were forced to close their doors.

The biggest challenge facing the industry now, in addition to the credit markets drying up, is the possible strike by the Screen Actors Guild. The Guild was scheduled to send out a strike authorization vote to its membership on Jan. 2, but postponed the ballot mailing until after an emergency national board meeting on Jan. 12-13. For a strike to occur, at least 75 percent of those voting would have to affirm the authorization, with the national board having the final say over a work stoppage.

Guild president Alan Rosenberg has warned that a “no” vote would hinder SAG in negotiations with the studios. Guild leaders believe that the authorization is necessary to push the studios to improve their final offer.

Nearly 130 stars have banded together and sent a letter to leaders of SAG saying that a strike would create more economic hardship and calling for SAG to unite with the other Hollywood guilds in three years when the current round of contracts expires. The unions have been hit hard this year, and with the economy where it is today this would be an additional blow to them.

The question is: Should SAG members authorize a strike during a recession? The overwhelming response ought to be “No.” The actions of the Guild and its leaders are not in the best interests of the industry at this time.

Let’s hope that in the spirit of the holidays and good will, the guilds will do the right thing.