No surprise, both Regal and Cinemark redeployed digital projectors in January to new theatre locations equipped with silver screens. If you recall, both Regal and Cinemark installed hundreds of silver screens last year in time for Disney’s Bolt, but with the delay in DCIP’s financing plans, no digital projectors were purchased. The redeployment increases the 3-D screen count by about 70 screens per circuit, or about 140 screens in total. This, plus new 3-D projector purchases by other circuits up the total number of 3-D screens in the US to around 1700.
In regards to financing, no progress has been reported on the DCIP front. No additional VPF agreements have been signed. One Regal executive recently said that only 5 studios would be needed to move forward with financing. (This is up from 4 studios.) But a Warners Bros executive reports that all 6 major studios will need to be on board for financing to move forward. In addition, there is friction among the studios for disclosing each others terms. The Most Favored Nations clause (known as MFN, although the sections are usually titled “most favored terms”) requires a studio to get the best deal offered to any other entity. In terms of strategy, MFNs made it safe for those with the least negotiating power to sign early. But the studios with the most negotiating power, Sony and Warner Bros, have yet to sign. Assuming these studios require a lower VPF, then it would likely upset the economics of DCIP’s rollout. Worse, the policies of some studios may not allow an integrator to share the terms of its deals, placing the integrator in a legal bind when signing another’s agreement with MFN clause. Effectively, such requirements could force the renegotiation of all prior MFN agreements signed. Once again, it appears true that the last 10% requires 90% of the work.
If deal making wasn’t tough enough, internal problems are popping up at DCIP. It appears that even if DCIP’s financing was ready, it’s poorly prepared for managing its chartered scale of rollout and VPF collection process. This brings to front the question of whether or not DCIP has the right management in place to carry out its long term business. Given that an entire industry is counting on its ability to successfully execute, it’s an important question to ask.