1bn deal set to launch 3-D film business By Matthew Garrahan in Los Angeles
Published: August 13 2008 23:31 | Last updated: August 13 2008 23:31
A consortium of the biggest US cinema chains is closing in on a $1bn deal that will pave the way for a new generation of money-spinning 3-D movies, after securing provisional backing from three key Hollywood studios.
Walt Disney and Paramount Pictures are on the verge of signing a contract with Digital Cinema Implementation Partners, a consortium made up of the AMC, Regal and Cinemark chains, according to people familiar with the situation.
Century Fox was the first studio to back the plan, but its support was conditional on other studios signing up. DCIP needs a minimum of four studios on board before it launches the $1bn financing, which funds the conversion of about 15,000 screens to digital projection systems.
The consortium, which declined to comment, is also in advanced talks with Universal Studios. The four studios all declined to comment.
Digital systems enable the projection of 3-D movies, which can earn as much as five times per screen as films shown in 2-D thanks to the willingness of audiences to pay a premium.
Walt Disney’s recent Hannah Montana film highlighted the format’s potential when it set a box-office record, generating more than $65m in the US from only 700 3-D-capable screens.
There are about 40,000 cinema screens in the US, but only 700 can show films in 3-D. There are hardly any digital-ready screens in the international marketplace, so the studios have set their sights on the US first. However, they are also betting that the format will eventually transform the global box office.
JPMorgan Chase is leading the DCIP financing, which has been delayed by tightening credit markets and the reluctance of some studios to come on board. But with commitments falling into place, the consortium has moved closer to its goal.
Studios are producing more movies in 3-D, with 13 to be released in 2009. Fox has lined up James Cameron’s Avatar and Ice Age 3, while Disney will release Bolt this year and plans to reissue Toy Story next year in 3-D. It also has Toy Story 3 in the pipeline, which will be released in 3-D.
Universal will release the animated Coraline in the format next year, while Paramount, which distributes DreamWorks Animation’s films, puts out the 3-D Monsters vs Aliens in March.
George Lucas plans to reissue the Star Wars films in 3-D, which has given renewed impetus to the digital conversion plans because of the success of the series and its passionate fan base.