PARIS, France and BURBANK, Calif—Nov 10, 2005
Thomson Secures Wide-Ranging Hollywood Studio Support For Significant Digital Cinema Rollout
DreamWorks, Sony Pictures, Universal Pictures and Warner Bros. Sign Agreements to Utilize Digital Projection Systems from Technicolor Digital Cinema in 5,000 Screens in the United States and Canada; Twentieth Century Fox, New Line Cinema and Weinstein Comp
Thomson (Euronext 18453;
NYSE: TMS) today announced that its Services division has reached digital cinema
usage agreements with DreamWorks, Sony Pictures, Universal Pictures, and Warner
Bros. to accelerate the deployment of digital cinema systems in North America.
In addition, the company is in late stage negotiations with Twentieth Century
Fox, New Line Cinema, and The Weinstein Company, and expects these studios to be
part of the initial deployment.
Under the separate, long-term agreements, each of the studios has agreed to
distribute content digitally throughout the United States and Canada, and pay a
virtual print fee for screens equipped with Technicolor Digital Cinema systems,
beginning as early as the first quarter of 2006. Studio support for Technicolor
Digital Cinema covers an initial rollout of complete digital projection systems
in up to 5,000 DCI-compliant screens over the next 3-4 years. It is the
strategic intention of Thomson to deploy at least 15,000 digitally-equipped
screens in the United States and Canada, through the initial rollout and
additional phases, over the next 10 years.
The studios included in this announcement have accounted for over $5.4 billion
of the $7.2 billion total year-to-date box office revenue in North America in
2005. Thomson is currently in negotiations with other film studios to expand the
range of its non-exclusive content agreements. Thomson is also in ongoing
discussions with regional and national exhibition chains to finalize plans to
begin the deployment of digital cinema installations in early 2006.
Today’s agreements support Thomson’s strategic intent to strengthen its leading
role in the services associated with end-to-end digital content preparation,
distribution, and exhibition. Thomson’s intended role includes the management of
the rollout of digital cinema projection systems covered by this announcement,
plus postproduction services, network services, including distribution, and the
supply of equipment.
“Thomson’s digital cinema plan is a clear example of our customers’ trust in our
ability to deliver the services they need today and in the future,” said Frank
Dangeard, Chairman and Chief Executive Officer of Thomson. “We believe that
managing this transition requires a technology shift for the entire industry, a
move which Thomson is best-placed to handle. These agreements also support
Thomson’s strategy of expanding its client base and being a leading service
provider to the entertainment industry. Having worked for several years with
Hollywood to craft the right launch for digital cinema at the right time, we are
also uniquely positioned to support the movie industry in other parts of the
world in achieving this shift.”
“We are pleased to be part of the Technicolor Digital Cinema rollout,” said Jim
Tharp, Head of Distribution at DreamWorks. “The Technicolor business model makes
the transition to digital cinema economically sensible. In addition, we believe
that theatre owners and the movie-going audience will enjoy the vibrant picture
and sound available through digital distribution as each subsequent showing will
look as good as the first.”
“This is a significant development in the evolution to digital distribution of
our motion pictures,” said Jeff Blake, Vice Chairman of Sony Pictures
Entertainment and Chairman of worldwide marketing and distribution for Columbia
Tri-Star Motion Picture Group. “The Technicolor Digital Cinema business model
was compelling, and this agreement ensures that our content will be displayed
with the quality and reliability we require, and consumers demand.”
“In our continued effort to be proactive in the transition to digital cinema,
Universal is pleased to have entered into this agreement along with other studio
partners,” said Nikki Rocco, President of Distribution, Universal Pictures. “As
digital technology in theatres continues to evolve, we see only great benefits
to the movie-going public.”
“Technicolor has been a trusted service provider to Hollywood for many years and
their expertise in both film and digital cinema is unmatched in the industry,”
said Chris Cookson, President, Warner Bros. Technical Operations & Chief
Technology Officer, Warner Bros. Entertainment “We are excited to pursue the
next phase of the long-awaited rollout of digital cinema.”
“We are impressed with the thoroughness of the Technicolor Digital Cinema
business plan and are very interested in exploring the future role it could play
for the studios, exhibitors, and the movie-going public,” said David Tuckerman,
President, New Line Cinema Distribution. “We look forward to being a part of
this venture as Technicolor initiates its digital cinema rollout early next
year.”
Bob and Harvey Weinstein, co-chairmen of The Weinstein Company, jointly said,
“The development of digital cinema and the broad-based industry support for the
Technicolor Digital Cinema plan is good news for filmmakers as it will expand
our creative flexibility and exhibition options. We have selected Thomson to be
our partner in film, post production and DVD services and we look forward to
finalizing our digital cinema agreement in time for the initial deployment.”
Business Model and Financing
Under the business model for the digital cinema rollout, the studios will
continue to book films directly with exhibitors, and if a booked screen is
equipped with a Technicolor Digital Cinema system, the studio will pay Thomson a
virtual print fee for usage of the digital equipment. Current estimates of the
total cost of installed digital cinema systems are in the $90,000 – 100,000
range per screen.
The business model has been structured to allow the rollout to be financed from
a variety of sources, including equipment vendors and financial partners. With
today’s agreements in place, Thomson can now focus on sourcing the optimal
financing structure for this rollout.
This announcement comes shortly after the publication of the Digital Cinema
Initiatives LLC (DCI) industry specifications for digital cinema. The
Technicolor Digital Cinema plan will be technology agnostic, allowing both
exhibitors and studios to benefit from the best available technology, including
both 2K and 4K projection.
This plan provides an industry-wide digital cinema framework addressing all
aspects of the much-anticipated digital cinema rollout: full output long-term
content commitments by multiple Hollywood film studios; the widespread
deployment of digital projection systems with exhibitors, and a broad industry
commitment for the installation, operation, and financing of those systems
through a proven, experienced service provider.
By launching a program with a plan to convert at least 15,000 screens in the
United States and Canada, Thomson further believes it will have the scale to
support all interested exhibitors in a move to digital cinema, from large chains
through independents. In response to exhibitor and studio requests, Thomson will
start its rollout with a “beta test” to prove DCI equipment operates in a
commercial environment at the very high level which all parties require.
Today’s announcement demonstrates Thomson’s commitment to enabling the
transition to digital forms of distribution for its customers. Thomson will
manage revenues flow from both physical/analog environment as of today (print
fees and distribution charges), and from the digital cinema environment (virtual
print fees and distribution charges). Thomson estimates that the opportunities
from the market for digital cinema services are at least as great as from
today’s $1.5 billion global film print and distribution market.